Crafting business models for conflicting goals: Lessons from creative service firms

• Published in: Long range planning 2021-08, Vol.54 (4), p.102092, Article 102092
• Main Authors: Rozentale, Ieva, van Baalen, Peter J.
• Format: Article
• Language: English
• Subjects: Business models; Business schools; Case studies; Complexity; Creative industry; Decision-making; Environmental protection; Management science; Paradox; Strategic decision making
• ISSN: 0024-6301; 1873-1872
• DOI: 10.1016/j.lrp.2021.102092

The business model construct has become attractive to both managers and academics. It reflects how the most important organization's strategic and tactical choices regarding the allocation of resources interact in order to create and capture value. Yet with the growing entrepreneurial complexity, managers often end up pursuing conflicting and even paradoxical strategic goals, thus rendering the business modelling processes more complex, too. Well-known examples are profit versus social value, stakeholder versus company interests, exploration versus exploitation and environmental sustainability versus economic returns. The academic business model literature so far has provided limited insights on how to implement business models beyond a single goal and focused mainly on the initial strategic choice of a business model, ignoring that such salient tensions are often persistent and resurface within the business practice. In this study we leverage paradox theory to investigate how managers of creative firms make tactical choices to accommodate (not solve) salient tensions within their business models, focusing on the domains like services provided, choice of clients, networking and resourcing practices, revenue models and new venture creation. Based on qualitative case study research, we found four integrating and three differentiating decision-making tactics that managers deploy to create both economic and creative value through their business models. Adding to the business model theory, we show how business models are crafted in managerial practices by making tactical decisions to solve conflicts and paradoxes. The results equally enrich the paradox literature by providing for tactical-level approaches toward working through the paradox. •Pursuit of conflicting goals create tensions at the tactical business model level.•Firms apply tactical heuristics to accommodate tensions within business model.•We describe four differentiating and three integrative tactics.•Combination of tactics allows crafting complex business models for dual goals.