The Business Models Investors Prefer

This article presents an overview of new research indicating that the stock market particularly values business models based on innovation and intellectual property. The researchers developed a framework that includes 14 types of business models. (Surprisingly, we found there is no universally accep...

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Bibliographic Details
Published in:MIT Sloan management review 2011-06, Vol.52 (4), p.17
Main Authors: Weill, Peter, Malone, Thomas W, Apel, Thomas G
Format: Article
Language:English
Subjects:
Alliances
Business models
Innovations
Insurance policies
Intangible assets
Intellectual property
Investments
Investors
Manufacturers
Manufacturing
Securities markets
Stock exchanges
Studies
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Summary:This article presents an overview of new research indicating that the stock market particularly values business models based on innovation and intellectual property. The researchers developed a framework that includes 14 types of business models. (Surprisingly, we found there is no universally accepted definition of the important concept of a business model.) Then, using data from Compustat, they classified all the more than 10,000 companies that are publicly traded on U.S. exchanges within the framework by identifying the percentage of each company's revenue generated through each of the 14 business models; we used a combination of manual classification and a custom-developed rule-based software program. By classifying companies revenue into these 14 business models, a new picture emerged of not only individual companies, but businesses more generally.
ISSN:1532-9194