The Evolution of Alternative Business Models and the Legitimization of Universal Credit Card Industry: Exploring the Contested Terrain where History and Strategy Meet

Abstract

Purpose – This paper focuses on a unique historical case study of industry evolution in order to develop a road map where historical and strategic research could develop a common ground for trans-disciplinary inquiry.

Design/methodology/approach – The industry I explore is the Universal Credit Card Industry since its inception with the Diners Club in 1949 until its maturity in late 1990s. My empirical objective here is to develop a historically detailed and theoretically rich case study in which evolutionary processes are discovered as a result of the historical narrative.

Findings – The historical account of the industry demonstrates how the evolution of alternative business models as organizing forms has led to the establishment of interorganizational platforms with unique ecosystems. These alternative business models, through various experimentations, have ultimately produced two critical interorganizational organizations, one based on an open-loop system represented by Visa and MasterCard, and the other based on a closed-loop system represented by Diners Club and the American Express. The historical account also shows that in a given industry competition is not only among specific firms in the industry but also among the business models and the platforms created by these models.

Originality/value – I conclude that historical analyses reveal the nature of competition not only among firms but also among alternative business models where traditional strategy research rarely covers.

Citation

Leblebici, H. (2012), "The Evolution of Alternative Business Models and the Legitimization of Universal Credit Card Industry: Exploring the Contested Terrain where History and Strategy Meet", Kahl, S.J., Silverman, B.S. and Cusumano, M.A. (Ed.) History and Strategy (Advances in Strategic Management, Vol. 29), Emerald Group Publishing Limited, Leeds, pp. 117-151. https://doi.org/10.1108/S0742-3322(2012)0000029009