Emerald Management Reviews

Design/methodology/approach - Collects data on 170 firms which went public in Europe or the USA from April 1996 to May 2000. Uses hierarchical OLS regression techniques to show the discriminant validity of the business model.

Findings - Contingency theory suggests that various contingency factors in firm performance, rather than any one optimal strategy, determine optimum performance. The firm's product market strategy and its business model are distinct constructs which influence its market value. There are positive interactions between novelty-centred business models and product market strategies like cost leadership, early market entry, and differentiation, suggesting that product market strategy and business models are complementary. However, the expected positive interaction between an efficiency-centred business model and cost leadership strategy is not confirmed.

Research limitations/implications - Shows the need to examine the business model as a source of competitive advantage. Raises the issue of timing of the model and market strategy; they may or may not be determined simultaneously.

Originality/value - Focuses on boundary-spanning transactions between a focal firm and its system of partners, customers and suppliers, rather than the traditional concern with internal administrative structure.