Competing Business Models, Value Creation and Appropriation in English Football

Abstract

This article integrates the business model concept with an understanding of industry recipes to show how competing business models can co-exist in a competitive market. Drawing on data from the English Premier League, we show that alternative models -based on the acquisition of talent on one dimension and the internal development of shared team experience on the other -lead to differing value creation and value capture outcomes. Drawing on the time series nature of our data, we also show that transitioning between business models can involve a decline in performance (which may be temporary), and draw some implications for managers faced with the challenge of changing their business models.Ó 2011 Elsevier Ltd. All rights reserved. IntroductionThe central strategy problem for managers is relatively simple: how to formulate and implement strategies that create value for customers and capture profits for the firm. There are a multitude of possible resource and capability configurations a firm can choose to create value, but also many uncertainties that can prevent them from converting these configurations into products that create value for customers and thus profits for the firm. Industry recipes and business models are complementary concepts that can assist managers in understanding the range of resource and capability configurations and uncertainties they face in selecting a strategy with a realistic probability of generating value for customers and capturing profits for their firm.The essence of an industry recipe, as espoused by Spender, is as "the shared knowledge base that those socialized into an industry take as familiar professional common sense" which can be used as aids in the management of strategic uncertainties (Spender, 1989: 63). A challenge in researching industry recipes is that the process by which an industry recipe is identified and the links between resource configuration options, value creation for customers and value capture for the firm is not only particular to the industry and firm, but also must be measured qualitatively to account for the unique perspectives of both managers and the industry. While in their broadest form recipes are shared, taken for granted understandings of the industry, in practice they are overlaid by the specific assumptions and practices of individual decision makers and firm contexts, thus moving the focus from general guidelines towards the challenge noted above. Teece (2010) notes that one of the key contributions of the business model approach is that it offers clear guidance as to "how a firm delivers value to customers and converts payment into profit" a point captured by Baden-Fuller and Morgan's (2010) business models definitions table in their overview of the contributions to this journal's Business Models Special Issue. In this article we outline the essential recipe that applies to English Premiership Football industry -which we term a 'talent-based recipe' -and use the business model approach to define four business model types based on two value creat...

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