Business continuity of business models: Evaluating the resilience of business models for contingencies
Introduction
We have recently witnessed numerous cases in which technological progress has enabled newcomers to innovate business models that have severely threatened incumbents’ business continuity (BC) (Eggers & Park, 2017). These disruptions have not been market specific but have shaken nearly all fields from retail to transport and from manufacturing to service providers, and they have rendered many established business models obsolete. Companies, such as Uber, AirBnB, Amazon, and Alibaba, have not just challenged established companies but have also reorganised and renewed the markets. For instance, the forerunners of the platform economy (e.g. Amazon, Alibaba) with their innovative business models have become some of the world’s biggest players in just a portion of the time it took for the giants, such as Walmart, Target and others, to grow and which now find themselves under severe pressure to renew their business models or gradually fade into non-existence. It is therefore imperative for companies—whether market leaders or challengers—be proactive with their business models. They need to stay alert and periodically evaluate the resilience of their business models against environmental contingencies.
Environmental contingencies that threaten business models are strategic BC risks to companies. Multidisciplinary groups of scholars and practitioners have sought to provide companies the necessary tools and knowledge to help them proactively and holistically prepare for all kinds of contingencies (Herbane, 2010; Niemimaa, 2015b). As an ongoing effort, scholars have argued for and sought to establish BC amongst organisational strategic initiatives (e.g. Herbane, Elliott, & Swartz, 2004; Niemimaa, 2015a). In other words, BC is seen as strategic, as it ‘readies an organisation to preserve value derived from competitive advantage’ (Herbane et al., 2004, p. 439; Sawalha, Anchor, & Meaton, 2015). This kind of thinking feels rather intuitive because, after all, unanticipated contingencies ‘threaten the strategic goals of organisations’ (Richardson, 1994, p. 63). Operational disruptions may not only create immediate loss but, when prolonged, can also prevent the achievement of the strategic goals set. Whilst these may sound as less important considerations when it comes to organisational preparations for contingencies, they are significantly important, as strategic initiatives tend to be better resourced and win management buy-in more easily than operational initiatives do1 .
Business models are strategic assets for organisations and define the logic through which they transform the produced goods and services into profit (Foss & Saebi, 2017). The literature on BC has tended to focus on ensuring continuity by increasing the resilience of resources through which a specific business model is implemented. The resilience is inherently socio-technical in nature (Herbane, 2010; Järveläinen, 2012) and is built on diverse technological redundancy solutions (Bajgoric, 2006, 2010) and organisational social and structural arrangements (Niemimaa, 2017), such as high-availability servers, redundant network connectivity and deputy arrangements. For instance, if the business model is implemented in practice with the help of a dedicated web shop, BC aims to ensure that sufficient technological and human resources are available to ensure that the web shop can operate even under adverse circumstances (e.g. during power outage and denial-of-service attacks).
The innovative business models enabled by technological development provide significant opportunities for the companies that have innovated them but pose significant BC threats for other established companies and their business models. By focusing on the continuity of resources that implement the current business model, the business model itself is left out of consideration despite the strategic threat it poses to BC. For instance, ensuring the continuity of a company’s dedicated web shop does not provide a sufficient basis to assume BC when online sales are moving to centralised platforms (e.g. eBay and Amazon) that require rethinking, such as sales and provisioning logic. Evaluating the resilience of a company’s business model against disruptive business models may increase the company’s BC and help establish BC firmly amongst the strategic imperatives of the company. Business models need to adapt in response to the external contingencies (Demil & Lecocq, 2010) engendered by technology-driven innovations.
In this study, we focus specifically on the BC of business models because of their central role in companies’ business strategies and in ensuring the continuity of revenue streams (e.g. Amit & Zott, 2001; Bouwman, Faber, Haaker, Kijl, & Reuver, 2008; Chesbrough, 2010; Chesbrough & Rosenbloom, 2002). Incorporating business model resilience to BC has the potential to extend its value creation potential and thus make it more rightfully a strategic asset and activity. Whilst strategy-level decisions (including innovating business models (McGrath, 2010)) are often viewed as the responsibility of senior management, we can see that BC scholars and practitioners—when equipped with the right tools and knowledge—are also well apt to deal with these strategic issues (Wong, 2009). After all, dealing with environmental contingencies is customary for these experts. What is needed is merely a shift in the domain of application of this expertise and in the use of a practical method.
These considerations provide us the motivation to pose the following question: How can the BC of business models be evaluated and improved against potentially competing emergent business models? We are particularly interested in contingencies related to emergent business models enabled by technological development. Whilst technologies and business models are intimately linked, business models focus on the mechanisms through which technologies are transformed to value, as technologies do not have any inherent value outside of their use potential (Baden-Fuller & Haefliger, 2013). We turn to the literature on BC and business models to conceptually elaborate an approach called strategic business continuity management (SBCM). Our research can also be viewed as a response to calls to make BC holistic and strategic (e.g. Herbane et al., 2004; Gerber & von Solms, 2005; Gibb & Buchanan, 2006; Niemimaa, 2015b; Zuccato, 2007).
The rest of the paper is structured as follows. First, we outline the literature on BC and business models. Second, we propose the approach of SBCM and elaborate its main phases. Third, we demonstrate its use through two illustrative cases of how the approach might be used in practice. Finally, we discuss our main contributions and draw the conclusions.
Section snippets
The literature on business continuity
BC has roots that date back to 1970s research on disaster recovery plans (Herbane, 2010). This history is of importance to develop an understanding of current discussions and some of the limitations these BC approaches have. Whilst several definitions exist, each having its own small nuances, we use the term ‘business continuity’ to broadly refer to a company’s socio-technical ability to withstand and restore from intra- and extra-organisational contingencies (Niemimaa, 2015b).
As the word
Strategic business continuity management
Considering the identified shortcomings in the BC literature, we propose an extension of existing BCM approaches for organisations to meet the set goals to become a) holistic and b) strategic. Fig. 1 provides an illustration of the approach we propose.
Our extension proposes the business model as a key BC concept. In Fig. 1, the business model should not be seen as an espoused business model but rather as the actual business model that an organisation has implemented through various resources,
Illustrating strategic business continuity management
To illustrate SBCM, we use the case of an incumbent, ATaxi cooperative, which revised its business model under the circumstances of the deregulation of the taxi market in Finland in 2018. For simplicity, the use of SBCM is depicted in comparison with the well-known Uber business model by using the most salient elements of business model attributes (Haaker et al., 2017). The case study is based on data from public sources, such as company web pages, but we have also verified some data by
Discussion and conclusions
In this article, we have proposed an extension to BC approaches that aim to increase the scope of BC and its organisational significance by focusing on business model contingencies. This extension matches the aims of other scholars that have argued for holistic and strategic BC (Gerber & von Solms, 2005; Gibb & Buchanan, 2006; Herbane et al., 2004; Niemimaa, 2015b; Zuccato, 2007). However, the discussions have largely focused on arguing how value preservation can be viewed as strategic (Herbane
Dr. Marko Niemimaa (PhD), is a researcher at the Faculty of Information Technology, University of Jyvaskyla. His main research interests lie in the fields of information security and business continuity management. His work has been published in journals, such as European Journal of Information Systems and Computers & Security, and in the most prestigious conferences, such as International Conference on Information Systems. He has strong practical knowledge gained through years of work
References (74)
- et al.
Business models and technological innovation
Long Range Planning
(2013) - et al.
From strategy to business models and onto tactics
Long Range Planning
(2010) Business model innovation: Opportunities and barriers
Long Range Planning
(2010)- et al.
Business model: What it is and what it is not
Long Range Planning
(2014) - et al.
Business model evolution: In search of dynamic consistency
Business Models
(2010) Survival is not compulsory: An introduction to business continuity planning
Computers & Security
(1999)- et al.
Management of risk in the information age
Computers & Security
(2005) - et al.
A framework for business continuity management
International Journal of Information Management
(2006) - et al.
Business model stress testing: A practical approach to test the robustness of a business model
Futures
(2017) - et al.
Business Continuity Management: time for a strategic role?
Long Range Planning
(2004)
Nimbyism, dominoes and creaking infrastructure
Computers & Security
Business models: A discovery driven approach
Long Range Planning
The new importance of “business continuity” in data processing disaster recovery planning
Computers & Security
Information systems continuity process: Conceptual foundations for the study of the “social”
Computers & Security
A practical risk analysis approach: Managing BCM risk
Computers & Security
Business continuity planning
Computers & Security
Beyond disaster recovery: The benefits of business continuity
Computer Fraud & Security
Business models, business strategy and innovation
Long Range Planning
From information security to cyber security
Computers & Security
Business models: Origin, development and future research perspectives
Long Range Planning
Defining service innovation: A review and synthesis
Journal of Business Research
Holistic security management framework applied in electronic commerce
Computers & Security
Building enterprise-wide resilience by integrating business continuity capability into day-to-day business culture and technology
Journal of Business Continuity & Emergency Planning
Value creation in e-business
Strategic Management Journal
Information technologies for business continuity: An implementation framework
Information Management & Computer Security
Server operating environment for business continuance: Framework for selection
International Journal of Business Continuity and Risk Management
Business continuity planning and supply chain management
Supply Chain Forum an International Journal
A cyclic approach to business continuity planning
Information Management & Computer Security
Conceptualizing the STOF model
Mobile service innovation and business models
Achieving agility using business model stress testing
Electronic Markets
Societal security — Business continuity management systems — Requirements – Part 1: Code of practice
Towards systematic business model innovation: Lessons from product innovation management
Creativity and Innovation Management
Reliability, mindfulness, and information systems
MIS Quarterly
Disaster preparedness and business continuity planning at Boeing: An integrated model
Journal of Facilities Management
Business continuity planning: A comprehensive approach
Information Systems Management
The role of the business model in capturing value from innovation: Evidence from Xerox Corporation’s technology spin‐off companies
Industrial and Corporate Change
Ensuring business continuity for business process outsourcing companies
Journal of Business Continuity & Emergency Planning
Cited by (87)
The key role of innovation and organizational resilience in improving business performance: A mixed-methods approach
2024, International Journal of Information ManagementFrom theory to practice: Empirical perspectives on the metaverse's potential
2024, Technological Forecasting and Social ChangeAdaptive strength: Unveiling a multilevel dynamic process model for organizational resilience
2024, Journal of Business ResearchSystematic literature review of Business Continuity Management (BCM) practices: Integrating organisational resilience and performance in Small and medium enterprises (SMEs) BCM framework
2023, International Journal of Disaster Risk ReductionMapping pathways for building resilient supply chains: A systematic literature review
2023, Journal of Cleaner Production
Dr. Marko Niemimaa (PhD), is a researcher at the Faculty of Information Technology, University of Jyvaskyla. His main research interests lie in the fields of information security and business continuity management. His work has been published in journals, such as European Journal of Information Systems and Computers & Security, and in the most prestigious conferences, such as International Conference on Information Systems. He has strong practical knowledge gained through years of work experience in the field. He also holds the acclaimed CISSP certificate.
Dr.Sc. Jonna Järveläinen is a university lecturer in information systems science at University of Turku and has studied e-business and continuity management of IT services. Her current interests are security and continuity management practices, and electronic word-of-mouth. Her research work has been published in e.g. International Journal of Information Management, Information Management & Computer Security, Journal of Organizational Computing and Electronic Commerce, Electronic Markets and various conferences.
PhD Marikka Heikkilä is research manager at the University of Turku, Finland. She has an interest in business models and business model innovation, and collaboration and coordination in business networks, especially with regard to information systems and services. Marikka holds an MSc and a Licentiate of Science in Economics and Information Systems from the Helsinki School of Economics in Finland. She received her PhD from the Faculty of Information Technology, University of Jyväskylä, Finland. She has authored numerous scientific articles, the most recent ones appearing in the journal of small business and enterprise development, European Management review, and Electronic Markets. She has participated in various interdisciplinary and international research projects as a coordinator, project or WP leader.
Jukka Heikkilä a.k.a Jups is professor of IS, Work Informatics and Head of Department of Management and Entrepreneurship. His research interests are Business Mmodelling, Enterprise Architecture, and the consequences of Digitalization on consumer behaviour, industries and society.