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Learning From Contingencies in Corporate Business Model Design -A Review of

Business Model Elements Completed Research Paper

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 Contingencies in Corporate Business Model Design

Learning From Contingencies in Corporate

Business Model Design – A Review of
Business Model Elements
Completed Research Paper

Lukas Julius
Ludwig-Maximilians-University Munich
Geschwister-Scholl-Platz 1, 80539 Munich
dss.lj.ext@som.lmu.de

Abstract
Business model (BM) design is complex and uncertain, especially for incumbents that face
external as well as internal contingencies. BM frameworks and design principles (DPs)
provide guidance in the design of BMs. According to contingency theory, a comprehensive
BM framework encompasses potential contingency factors through the incorporation of
BM elements. However, existing frameworks lack focus on contingencies affecting BM
design in incumbents. This literature review aims to increase our understanding on BM
design in incumbents. Adopting the perspective of entrepreneurship as design, this study
reflects on external and internal contingency factors identified in literature. The results
introduce a BM framework that builds upon existing frameworks by incorporating new
elements in areas where contingencies are not adequately addressed. Furthermore, it
proposes three DPs to assist BM designers in achieving dimensional fits between the BM
artifact and its internal and external environment. Finally, the study outlines potential
avenues for future research.

Keywords: Entrepreneurship as design, contingency theory, corporate business models, design

principles

Introduction
The research field of business models (BMs) continues to receive considerable attention. New trends, such
digitization or sustainability, encourage researchers to continuously investigate their effect on business
model innovation (BMI). This enduring interest underscores the necessity for incumbents, among others,
to regularly design new BMs or adjust existing ones in order to meet the ever-changing demands of a
dynamic environment (Chesbrough, 2010). Massa and Tucci (2013) define the process of BMI as either the
design of novel BMs or the reconfiguration of existing ones. BM design is the design of content, structure,
and governance of the transactions that a firm performs in cooperation with a network of partners to create
and capture value (Zott & Amit, 2010). In general, BMs can be conceptualized as a system of interdependent
structures, activities, and processes that transcends the focal firm and spans its boundaries (Afuah & Tucci,
2003; Sorescu et al., 2011; Zott & Amit, 2010).
Conducting BMI, especially BM design, is not an easy task. By definition, innovation implies creating
something new that contains elements that innovators do not comprehend at the beginning and about
which they are uncertain. Hence, making a design decision is moderated by a variety of uncertainty factors
residing in interdependencies between potential BM elements and internal (e.g., established routines and
structural inertia) as well as external contingencies (Schneckenberg et al., 2017). This uncertainty is
associated with the viability of new BMs and can be considerable, as BMs cannot be fully planned in advance
(Massa & Tucci, 2013). As recent literature points out, what to do in an increasingly uncertain and dynamic

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 Contingencies in Corporate Business Model Design

environment regarding BMI will play a vital role in the next decade, as uncertainty, once an episodic event,
is becoming the norm (Massa, 2023). Especially for incumbent firms as they show high inertia in the face
of disruption and dynamic markets (Christensen, 1997).
Scholars applied different theoretical lenses to achieve successful BMI. Notable theories, such as dynamic
capabilities or strategic entrepreneurship (Schneider & Spieth, 2013), guide researchers in their pursuit of
identifying BM elements that are essential for the design of BMs. However, these theories often focus on
either the firm’s external or internal environment. It is essential for incumbents to consider both external
and internal factors affecting the BM design process. The two sides must be taken into account, as
incumbents must align the BM with the firm's strategy and organization, as well as with its external
environment to achieve successful BMI and improve firm performance (Leppänen et al., 2023).
Contingency theory provides a more comprehensive approach on how to deal with ambiguity during BM
design by taking internal and external contingencies into account. Thus, this study sees contingency factors
for BM design as contextual variables that affect the suitability and performance of a BM. These factors
determine how well a BM aligns with the internal and external environment of an organization.
Moreover, recent research has identified the intersection of design science and BMI in incumbent firms as
a promising research area (Massa, 2024). They urged to embrace the principles and methodologies inherent
in the broader field of design as BM design distinguishes itself from traditional notions of BMI (Foss &
Saebi, 2017). As researchers in the IS discipline are concerned with the design of systems (Walls et al., 1992),
such as BMs, we draw on insights from the field of design science for BM design. The objective of this study
is to enhance the understanding of the design of BMs in incumbents (Massa, 2024). This will support
managers or employees entrusted with the task of designing BMs, to which we refer in the following as BM
designers. Hence, we aim to answer what can BM designers learn about the design of BM artifacts from
the contingencies affecting the process of BM design in incumbents?
To answer the research question, we employ the lens of entrepreneurship as design (Simon, 1996;
Venkataraman et al., 2012) in combination with contingency theory. This allows for an analysis of how
contingencies affect the BM design process and BM elements, considering external and internal
environmental factors. Scholars, who employ this lens, are interested in how entrepreneurial ventures deal
with inherently uncertain environments (Lehmann et al., 2022). In contrast to approaches that seek to
identify causal relationships, researchers in this tradition argue that entrepreneurial ventures enact an
effectual decision-making logic (Sarasvathy 2001) to embrace contingencies and to gradually reduce
uncertainty. When compared to other theories used in entrepreneurship, this theory allows us to see BMs
as designed artifacts that evolve iteratively at the interface between organized individuals and their
environment (Berglund et al., 2020). The artifact functions as the interface and connects these two
environments in such a way that it can fulfil a specific, designed purpose (Lehmann et al., 2022; Simon,
1996). This purpose is defined by a BM’s functionalities and its underlying elements. Figure 1 illustrates the
interactions between the external and internal environment and the BM’s functionalities from an
entrepreneurship as design perspective.

Figure 1. Interaction between the functionalities of a business model artifact and the
firm’s external and internal environment under the lens of entrepreneurship as design.

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We followed a three-step approach to provide a comprehensive BM ‘contingency framework’ for

incumbents together with codified design knowledge in form of design principles (DPs) as guidance for BM
designers. In the initial step, we identified contingency factors within academic literature, along with BM
elements outlined in existing BM frameworks. Second, through the juxtaposition of contingency factors and
elements, we were able to identify overseen BM elements and introduce a more complete BM contingency
framework for incumbents. Third, based on our results and existing literature, we propose DPs for the
creation of BMs that achieve a dimensional fit between its internal and external environment in form of a
functional, strategic, and organization fit.
Recent research highlights the importance of BMs in times of uncertainty as the next phase of BM research
(Massa, 2023; Nielsen & Aagaard, 2021). BM design is inherently uncertain and depends on contingency
factors. In an increasingly uncertain and changing environment, understanding such contingency factors
play an important role for BM design. Furthermore, BM design is complex. Understanding these
complexities is crucial for fostering cumulative progress in the field and deepening our comprehension of
what it truly means to design BMs (Massa, 2024). Principles and methodologies from the field of design
science are here promising research avenue for BM design in incumbents (Massa, 2024). This systematic
literature review follows their call for research and provides a foundation for future research. Results of this
study contribute in several ways to latest BMI conversation at the intersection of corporate
entrepreneurship and design science research in IS. First, this study situates the BM design process within
a context comprising both external and internal contingency factors affecting BMI by reflecting on
contingency theory in combination with entrepreneurship as design. Results show an overview of existing
contingency factors and BM elements described in literature. Second, by allocating identified BM elements
to the contingency factors, this study identifies shortcomings of existing BM frameworks and introduces a
more complete BM framework for incumbents that considers contingencies. Existing BM frameworks have
proven effective in the past. However, in the face of a rapidly changing and inherently unpredictable
environment, it has become imperative for incumbents to possess a BM framework that addresses
uncertainty by incorporating contingency factors that impact the BM itself. In this regard, adopting the lens
of entrepreneurship as design, which encompasses a comprehensive examination of both external and
internal factors, in conjunction with contingency theory offers a novel approach that facilitates the
identification of novel insights into effective responses to uncertain situations. Third, we introduce DPs as
design theory for corporate BM design that focus on the interaction of BMs with the firm’s external and
internal environment. By viewing entrepreneurship as design, we can better understand how incumbents
create BMs as artificial systems that fulfil specific purposes through their functions and achieve dimensional
fit with their environment. Fourth this study outlines paths for future research.
The remainder of this document is structured as follows. Section 2 sets out the theoretical background. This
includes a definition of BMs as systems of interrelated elements, entrepreneurship as design, DPs, as well
as contingency theory. Section 3 outlines the methodology of the literature review. Section 4 introduces the
results from the systematic literature review about contingencies and BM elements in the form of a BM
contingency framework. In addition, we introduce DPs. In the end, we finish we a discussion of our results,
propose future research avenues, and outline the limitations of this study in the conclusion.

Theoretical Background
Business Models as Systems of Interrelated Elements
There is no established typology of BMs due to the considerable variation in definitions and their underlying
elements (Foss & Saebi, 2018). Many definitions of BMs and its functions have emerged since the inception
of BM research. Originally, the term was associated with an operative activity for system modelling in the
context of information technology (Foss & Saebi, 2017; Wirtz et al., 2016). Definitions range from BMs
being formal conceptual representations, over BMs being defined as cognitive schemas, to BMs being seen
as attributes of firms (Massa et al., 2017). However, they often state directly or indirectly that BMs
incorporate two or multiple elements. Especially definitions seeing BMs as being formal conceptual models
use explicit, written down in pictorial, mathematical, or symbolic form to describe activities, structure, and
functions of BMs (Massa et al., 2017) and highlight the importance of elements (McGrath, 2010;
Osterwalder et al., 2005; Yunus et al., 2010). Demil and Lecocq (2010, p. 227) determine that the concept
BM “refers to the description of the articulation between different business model components or ‘building

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 Contingencies in Corporate Business Model Design

blocks’ to produce a proposition that can generate value for consumers and thus for the organization.” This
reinforces the concept that BMs are systems, given that a system is composed of interrelated components.
Hence, the design of a system is the design of its components and their relationships (Churchman, 1971).
Multiple scholars have built their definition upon this system concept. Afuah & Tucci’s (2001), for example,
define a BM as a system that is made up of components, linkages between the components, and dynamics.
Sorescu et al. (2011) define a BM as a well-specified system of interdependent structures, activities, and
processes that serves as a firm’s organizing logic for value creation (for its customers) and value
appropriation (for itself and its partners). Zott and Armit (2010) conceptualize a firm’s BM as a system of
interdependent activities that transcends the focal firm and spans its boundaries. They define a BM as
depicting the content, structure, and governance of transactions designed to create value through the
exploitation of business opportunities. Therefore, we see a BM as a system that designers create out of a set
of elements to fulfil certain functions for a specified purpose.
Comparing the various definitions across studies, Foss and Saebi (2017) highlight that most current
definitions of BMs and their functions are close to or consistent with Teece (2010, p. 172) definition of a BM
as the “design or architecture of the value creation, delivery, and capture mechanisms” of a firm. Scholars
extend these three core value mechanism (i.e., functions) often by value proposition (Chesbrough, 2007,
2010; Chesbrough & Rosenbloom, 2002; Demil & Lecocq, 2010; Magretta, 2002; Teece, 2010). In addition
to these value mechanisms, a core aspect of a BM’s functionality builds its strategic character (Chesbrough,
2007; Chesbrough & Rosenbloom, 2002; Morris et al., 2005). Although BM and strategy are distinct
constructs (Massa et al., 2017), they are closely related as a BM reflects the strategic choices that have been
made (Shafer et al., 2005). These five overarching aspects of a BM can also be referred to as core
functionalities (Chesbrough, 2010; Chesbrough & Rosenbloom, 2002). Hence, despite the disagreement
among scholars on what constitutes a BM, there is a broad consensus on these five overarching BM
functionalities, which we follow in this paper. These functionalities contain BM elements that serve to
delineate the design of the functionality, thus ultimately determining the BM and its purpose.
Specifying the compositional elements of a BM can render the BM concept more precise and tangible. By
systematically identifying the elements of a BM, managers or entrepreneurs can understand how a current
or possible future model fulfils a profitable value proposition using certain key resources and key processes
(Johnson, 2010). This facilitates the creation of BMs that are better suited for different purposes and
contexts (Fielt, 2013). However, these different purposes and contexts have led to an increasing number of
specialized BMs with varying elements. Some academics have already collated and compared elements of
BM frameworks from various publications, mostly highlighting elements like strategy, resources, network,
customers, value proposition, revenues service provision, procurement, and finances (Wirtz et al., 2016).
Nevertheless, neither framework contains all of these elements. Fielt (2013) highlights the importance of a
common understanding for BM definition and elements to fully grasp the BM concept. He defines BM
elements as compositional elements describing what a BM is made-off. Thus, BM elements form the
foundation for designing and managing BMs.

Entrepreneurship as Design
Most entrepreneurship research remains within a natural science paradigm (Berglund et al., 2020). The
premise here is based on the assumption that improving the understanding of natural phenomena and their
interconnections will lead to more accurate predictions of future events (Simon, 1996). In contrast stands
the paradigm of the science of the artificial as described by Simon (1996). It opposes the science of the
natural by adopting an engineering perspective asking how to design artifacts that have desired properties.
So instead of answering questions about what natural phenomena are and how they work, this field focuses
on the science of design and how to create the artificial (i.e., man-made objects). Thus, it is rather a form of
applied research that seeks to alter the variables of explanation. Instead of attempting to predict the future,
the science of the artificial states that the future is contingent upon actions.
Artificial artifacts assume either a material or abstract forms, such as digital market offerings (Lehmann et
al., 2022), or opportunities, such as new venture ideas, entrepreneurial theories, or BMs (Berglund et al.,
2020). According to Simon (1996), artifacts are designed as the interface between an inner and outer
environment. These three together build the tripartition of design (Berglund et al., 2020). As such, artifacts
do not function as a mere way of adapting either one environment to the other. Moreover, they might carry
out the function of negotiation between the two sides (Sarasvathy, 2003). They are a man-made and

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purposefully created objects with the intention to change existing situations into preferred ones (Lehmann
et al., 2022). In general, the external environment can be seen as the surroundings in which an artifact is
set to operate. It includes, for example, natural laws, market mechanisms and structure, institutions,
stakeholders, resources, and other conditions that govern the artifact’s behavior. The internal environment,
on the other hand, represents two distinct aspects. First, the organism creating the artifact including the
entrepreneur’s cognition, emotions, actions, and aspirations (Venkataraman et al., 2012). Second, the
working of the artifact itself. That is, its structure and organization of interconnected components, modules,
and subsystems, with varying degrees of independence between them (Lehmann et al., 2022). The artifact
as the interface connects these two in such a way that it can fulfil a specific, designed purpose (Lehmann et
al., 2022; Simon, 1996).
With his work, Simon (1996) paved the way for an entrepreneurship literature stream that has gained
momentum over the last two decades: Entrepreneurship as design instead of a form of social science
(Venkataraman et al., 2012). It incorporates the logic of effectuation as a rationale for how entrepreneurs
make decisions and act under uncertainty to gradually reduce the same. According to entrepreneurship as
design, these entrepreneurial actions are influenced by and have an impact on their environment, shaping
each other in an interactive relationship. Hence, entrepreneurship as design embraces the concrete actions
through which managers and entrepreneurs design artifacts and affect their inner and outer environments.
These artifacts serve as scaffolds that propel the formation of entrepreneurial ventures by embracing
contingencies and resolving sources of uncertainty without full forethought (Lehmann et al., 2022).
Taking the perspective of entrepreneurship as a design, this study considers BMs as artifacts, which can be
actively designed (Berglund et al., 2020). This lines up with the definitions seeing BMs as designed system
artifacts (Amit & Zott, 2001; Martins et al., 2015; Reim et al., 2015; Velu & Stiles, 2013; Zott & Amit, 2010).
Smith et al. (2010, p. 450), for example, define a BM as “[…] the design by which an organization converts
a given set of strategic choices about markets, customers, value propositions into value, and uses a
particular organizational architecture of people, competencies, processes, culture, and measurement
systems in order to create and capture this value.” This highlights how BMs functionalities reflect the
decisions made in response to the internal and external environment.

Design Principles
Within the field of design, DPs play an important role. The common purpose of DPs is to codify design
knowledge as prescriptive guidelines that support design and, given the consideration of respective
boundaries, enable its reuse (Möller et al., 2020). As a part of design theory, they assist designers in bringing
about an artifact that has a set of specific functionalities and results in the expected effects (Lukyanenko &
Parsons, 2020). In simple terms, DPs are prescriptive statements that indicate how to do something to
achieve a goal (Gregor et al., 2020). Artifacts can take different forms as presented in different definitions
of DPs. Gregor and Jones (2007, p. 322) define DPs as “the abstract “blueprint” or architecture that
describes an IS artifact, either product or method/intervention.” Sein et al. (2011, p. 39) state that the
purpose of DPs is to provide “knowledge about creating (…) instances of IT artifacts that belong to the same
class”. In their definition of the purpose of DPs, they make reference to product or process instantiations
with IT artifacts (Chandra et al., 2015). Other authors like Iivari et al. (2021) uses the term “IT artifact” in
a broad meaning covering constructs, models, methods, DPs, and instantiations (Hevner et al., 2004;
March & Smith, 1995). This is based on Gregor and Hevner (2013) who introduce DPs as generalized
knowledge contributions in design science research to supplement constructs, methods, models, and
instantiations. They state that the construction of an artifact and its description in terms of DPs and
technological rules are steps in the process of developing more comprehensive bodies of knowledge or
design theories. In fact, the characteristic that distinguishes design science knowledge from other forms of
knowledge is that it includes DPs (Gregor et al., 2020).

Contingency Theory
Contingency theory is an organizational theory that promotes the idea that there is no optimal
organizational structure, leadership style, or decision-making process for organizations. Instead, the
optimal course of action is contingent upon the internal and external situation (Weill & Olson, 1989). The
term contingency denotes the potential for a situation to arise that may require a different approach. Heeks
(2002), for example, explains in regard to IS that contingency theory sees no single blueprint for success

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 Contingencies in Corporate Business Model Design

and failure in organizational change. Instead, it recognizes that there are situation specific factors for each
information system that will determine success and failure, and hence strategies for success. In essence,
contingency theory implies the necessity for preparedness in all eventualities.
Inherent within much of the organizational literature on contingency is the idea of fit or congruence in
terms of mismatch and match between factors. Heeks (2002) therefore highlight the concept of
“dimensional fit”: the need for one or more different dimensions of organization and/or environment to be
brought into congruence at the same time. Hence, the contingency approach asserts that the design of a
process is contingent on context factors. Context factors are defined as any aspect outside the organizational
system that is examined. Contingency factors are context factors that moderate the relationship between an
organizational system and its performance. An organizational system that is in fit with its contingency
factors yields superior organizational performance (Donaldson, 2001). Therefore, contingency factors have
a major effect on the BM design process and are the source of uncertainty, risk, and complexity occurring
during BM design and create tensions along the process. Designing or reconfiguring BMs is complex and
involves making decisions under uncertain conditions (McGrath, 2010; Schneckenberg et al., 2017) as well
as risks (Euchner & Ganguly, 2014). The BM's complexity, modularity, and integrative nature are the
reasons for this (Brillinger et al., 2020).

Method
This study is following the three stage approach of Webster and Watson (2002) for conducting a structured
literature review to identify, analyze, and conceptualize relevant literature. To guarantee a review that is
both theoretically sound and methodologically rigorous, it is essential to have a coherent conceptual
framework and a clear and detailed description of the literature search process (vom Brocke et al., 2015).
BMI is a popular phenomenon that touches on many different disciplines based on its complexity and
consequences. Therefore, we consider work about BM design from IS, entrepreneurship, and management
literature. To provide a focused overview of the existing literature, this review has limited its scope to
include only English-speaking, peer-reviewed journal articles. BMI research spans a wide array of outlets.
To ensure that results of all three stages include relevant publications, we limited our search to highly
ranked journals. Following the rating assessment of the German Academic Association for Business
Research (VHB-JOURQUAL3), which provides ratings for sub-categories of business research, we
considered overall 19 A+ and A outlets. In addition, the search considered five B and two C outlets, based
on their relevance for BMI. We did not include any exclusion criteria in terms of time, as research on BMI
intensified at the end of 20th century (Wirtz et al., 2016).
For the first stage, we used Scopus and Web of Science as bibliographic databases for academic journal
articles, which both allow for complex search queries. Results were complemented by additional search via
Google Scholar. As mentioned before, the goal of this paper is to reflect on the effect of contingency factors
on BM design elements. Contingency theory suggests that the effectiveness of a particular organizational
strategy or structure depends on the fit between the organization's internal and external environments. In
other words, there is no one-size-fits-all approach. Instead, the best course of action depends on various
situational factors, known as contingency factors. When it comes to BM design, these factors can include
the structure of the organization (e.g., size or processes) or the external environment (e.g., competitors or
customers). In order to identify contingency factors identified in extant literature, we used search terms
describing aspects affecting the process of BM design as well as their relationship. We found that scholars
often address how such factors create tension, barriers, or challenges or induce complexity, uncertainty, or
risk into the BM design. For example, contingency factors such as organizational structure and culture can
create internal tension (Frankenberger et al., 2013). It is essential that a BM is designed in alignment with
these factors to minimize tensions and ensure optimal operational efficiency.
Therefore, we gathered relevant literature on contingencies arising during the BM design process due to the
combination of the keyword “business model” with either the word “contingenc*”, “tension*”,
“uncertaint*”, “risk*”, “complexit*”, “barrier*”, or “challenge*”. To collect relevant literature on BM
elements, we used a combination of the keyword “business model” together with either the word “element*”
or any variation like “component*”, “building block*”, “function*”, or “activit*”, or, on the other hand, with
“development” or any synonym, such as “design”, “creation” or “framework”. We then scanned the results
for relevant sources. The search and review process is documented in Figure 2, specifying databases,
screening criteria, and number of results (vom Brocke et al., 2015). The initial selection process produced

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a total of 342 articles for BM contingency related literature and 606 for BM element related literature. After
removal of duplicates, 253 articles for BM contingency related literature and 399 for BM element related
literature remains. With the exclusion of studies based on a first screening of title, abstract, and keywords,
that were not related to the topic, 53 articles on contingencies and 105 on BM elements remained for full
text review. In line with other structured review process, we carefully screened the articles and excluded
unrelated ones. Subsequently in the second stage, we conducted a backward search, the so-called
biographical mining. In doing so, reviewing citations for articles identified in stage one lead to
determination of prior relevant articles. The last stage is the forward search, where additional literature
citing the identified literature in the first two stages will be further investigated. However, neither stage
yielded any additional articles.
In the end, the literature search results show total of 22 studies for the search string focusing on BM
contingencies and 21 studies focusing on BM elements and frameworks. For the analysis matrix, we chose
10 out of the 21 publications about BM elements for the comparison with the identified contingency factors.
We decided on the most popular and broad frameworks from different fields to focus on the most relevant
studies and to cover a broad field of BM elements and to avoid redundancies.

Figure 2. Literature selection process.

Literature Review Results

Contingencies Affecting the Business Model Innovation Process
When looking at BM artifacts through the lens of entrepreneurship as design, three categories of
interactions become visible (see Figure 1): the interaction between the BM and contingency factors of the
external competitive environment, interaction between the BM and contingency factors of the internal
organizational environment, and interaction between the elements of the BM. Multiple publications have
identified contingency factors in those categories that induce complexity, uncertainty, or risk in the BM
design process. This happens often either in terms of technical or market uncertainties (Andries et al., 2013)
or by referring to structure, process, and content dimensions of BMs as potential sources of uncertainty
resulting in doubts and delayed actions in decision making (Schneckenberg et al., 2017). This study is based
on the literature review on BM uncertainties conducted by Brillinger et al. (2020), which we have expanded
with additional contingency factors identified through our literature review. In total, our results reveal 34
contingency factors, including 9 internal factors and 25 external factors. These build the foundation to
categorize existing findings about BM elements and to complement missing ones (see Figure 3). Identifying
such contingency factors holds significant value for entrepreneurs and managers who are developing BMs
as they help to identify threads to the viability of the BM.
In this study, we focus on contingency factors from the internal and external environment. However, during
our review, we identified two contingencies on the BM element level. In their work, Massa and Tucci (2013)
describe contingencies in form of computational and dynamic complexity. While the former induces

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uncertainty through complexity related to the large number of possible BM configurations, the latter
induces uncertainty through complexity arising from multiple non-linear interdependencies between BM
elements.

Internal Contingency Factors Affecting BMI

Especially early phases of BMI are characterized by cognitive barriers, preventing entrepreneurs from
conceiving and implementing new BMs (Bitetti & Gibbert, 2022; Chesbrough, 2010; Chesbrough &
Rosenbloom, 2002). For example, during early ideation, which refers to the generation of innovative ideas,
mangers need to overcome the potential trap of the prevailing business logic embedded in existing BMs by
focusing on BM thinking methods and apply tools for the creation of new BMs ideas (Frankenberger et al.,
2013). Related to this factor, new BMs may often conflict with the existing configurations of firm assets and
structures that support the prevailing BMs. Managers are likely to resist experiments that might threaten
their ongoing value to the company. The root of the tension in disruptive innovation is the conflict between
the BMs already established for the existing technology, and that which may be required to exploit
emerging, disruptive technologies (Amit & Zott, 2001; Brillinger et al., 2020; Chesbrough, 2010;
Christensen, 1997; Schneckenberg et al., 2017). Moreover, at the outset, it is frequently unclear what the
cost of providing the product or service will be and how those costs will behave as volume and other factors
change (Teece, 2010). In contrast, in later phases of the BM design process, existing corporate organization
and culture may exhibit resistance to change. Incumbents need to overcome this resistance through clear
communication and to implement the new BM in a step-by-step process that includes pilots, trial-and-error,
and experimentation (Frankenberger et al., 2013; Muhic & Bengtsson, 2021). In this phase, it is also
important to guarantee that all BM elements of the new BM are aligned and integrated (Frankenberger et
al., 2013).
More phase independent factors are, for example, internal business processes that are often connected to
errors in human or technical behavior (Al-Debei & Avison, 2010; Brillinger et al., 2020; Frankenberger et
al., 2013). Another example are aspects related to internal activities such as critical capabilities or resources
required to realize a certain BM, such as special equipment, data, or human and technical resources
(Brillinger et al., 2020; Frankenberger et al., 2013). Especially the lack of dynamic capabilities, combining
IT- and business competencies through re-aligning structures, might hinder the opportunities to transform
the firm’s BM and strengthen competitive advantage (Muhic & Bengtsson, 2021). Competencies of
individual employees, specific to the pursuit of corporate entrepreneurship, are fundamental to companies’
ability to nurture and sustain innovation in general, including BMI. The lack of such competencies can be
a risk to successful BMI (Hayton & Kelley, 2006; Sarasvathy, 2001). Further relevant contingencies
regarding financial resources encompass all aspects that impact the BM manager's capability to finance the
BM. This also includes high investments and capital tie-up necessary to create, deliver, or capture a value
proposition of the BM, including production plants or inventory costs (Brillinger et al., 2020; Euchner &
Ganguly, 2014).

External Contingency Factors Affecting BMI

External contingencies, highlighted by literature to affect BM design, include aspects related to political
factors, social factors, governmental factors, environmental factors, or economic factors (e.g., currency
exchange rates or economic cycle), and all aspects regarding the commitment of regulatory and legal
circumstances (Brillinger et al., 2020). One major external factor covers all critical aspects relating to
existing or new competitors affecting the success of novel BMs (Al-Debei & Avison, 2010; Brillinger et al.,
2020; Teece, 2010). Also contingencies regarding industry and market evolution affect BM design, for
example, in form of established or missing market standards (Schneckenberg et al., 2017; Teece, 2010).
Similar, the target market is of high relevance for BMI. This factor covers all aspects such as unknown
market size and subsegments or unawareness of relevance of sales approach and geographical scope
(Andries et al., 2013; Teece, 2010). The ongoing technological change (Brillinger et al., 2020;
Frankenberger et al., 2013; Teece, 2010) that incumbents face, includes uncertainty or risk factors that are
linked to the utilization of technologies that are new or still in a premature state, highly complex, or for
which the company lacks experience (Andries et al., 2013; Brillinger et al., 2020; Chesbrough, 2010).
Similar, it is important to consider complements that are already available in the market to gain insight into
how the product or service in question adds value for the consumer. BM designers must assess whether the

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proposed BM requires the provision of complements or if the necessary complements are already available
to the consumer (Teece, 2010).
Closely related to the market are the customers and their needs, which stand at the heart of BMs. Hence,
we have identified multiple contingencies within this category. Customer demand refers to all those
contingencies related to misinterpreting or not meeting customer demand, such as not focusing on the
customer and customer needs, not attracting, or retaining customers, or not meeting the community
requirements (Brillinger et al., 2020; Frankenberger et al., 2013). Risk of misinterpreting based on the
customer needs, what the ‘deep truth’ about what customers really value is, and how the firm’s service or
product offering will satisfy those needs through the value proposition (Teece, 2010). Closely related to the
value proposition are factors such as availability and maintenance, data (e.g., in form of data quality),
quality of an offer (e.g., functionality), and factors linked to the dependency on the innovativeness of the
value proposition of a company or BM (e.g., not using state-of-the-art technology) (Brillinger et al., 2020).
Furthermore, Brillinger et al. (2020) describe in their study major contingency factors in form of risks and
uncertainty regarding customer relationship (e.g., inflexible agreements), customer solvency, and
customer’s access (e.g., missing market access).
BMs can be seen as the conceptual and architectural implementation of a business strategy (Richardson,
2005). Thus, hosting multiple BMs can lead to possible tensions and challenges in managing conflicting
BM strategies simultaneously. Examples for critical aspects attributed to the emergence of multiple BMs
within one organization are cannibalization of the existing customer base, losing loyal customers, or
offending existing customers by becoming a competitor (Brillinger et al., 2020). Therefore, literature
promotes the implementation of paradoxical strategies that are necessary to deal with two or more
conflicting BMs simultaneously (Foss & Saebi, 2017; Markides, 2013; Massa et al., 2017).
A BM often spans across firms’ boundaries, including other firms to contribute to the BM. Hence, factors
regarding business ecosystem and value network, which constitute multilateral relationships between the
different parties (Brillinger et al., 2020; Euchner & Ganguly, 2014), are of high relevance. In addition,
organizations are part of social networks, where participants of the same network can be partners in the
pursuit of a given goal, and competitors regarding a different issue. These complex relationships suffer
contextual pressures that must be reflected on the BM with all critical aspects within the cooperation and
bilateral relationship with partners or customers that impact the stability of the relationship (Brillinger et
al., 2020; Costa & Da Cuhna, 2008; Euchner & Ganguly, 2014; Frankenberger et al., 2013). Cooperations
also raise the concern regarding the drainage of intellectual property or know-how, such as sensitive data
on the firm’s customers (Brillinger et al., 2020).
Many identified contingencies also referred to how firms capture value from its customers. One important
factor is monetization including all aspect that could risk the monetizability of a certain value proposition
(Brillinger et al., 2020). Also, factors related to the revenue mechanism of a BM, which influences the
buying sensitivity for a certain value proposition and the choice of a revenue model, are relevant. This has
an impact on taxation and accounting as there may be model-specific regulations a company has to comply
with (Brillinger et al., 2020). This category comprises also aspects related to the price setting of a BM and
directly corresponds to the customer price sensitivity and its value perception of the value proposition
(Brillinger et al., 2020; Teece, 2010). The BM’s lifecycle also bears risk and uncertainty factors that come
with a possible uncalculated change of costs and revenues over time (Brillinger et al., 2020). It is also crucial
to consider the aspect of profit allocation. Challenges can arise when consumers are reluctant to pay as
much as before, unless they perceive that a significant value has been added to the offering (Rayna &
Striukova, 2016).

A Business Model Contingency Framework for Incumbents

In general, a BM framework addresses what a BM is made-off (Fielt, 2013) and functions as a tool that helps
to develop BMs by providing an overview of their elements (Dijkman et al., 2015). In recent years, scholars
developed various frameworks for diverse purposes or contexts. For example, they created the e-business
model framework (Weill & Vitale, 2001), the business model canvas (Osterwalder & Pigneur, 2013), the
technology-market mediation model (Chesbrough & Rosenbloom, 2002), the four-box business model
(Johnson, 2010; Johnson et al., 2008), or the RCOV framework (Demil & Lecocq, 2010). Although the
quantity, naming, and definition of their elements vary across frameworks, they frequently overlap in terms
of their elements. To establish a more cohesive comprehension, several studies have gathered and

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 Contingencies in Corporate Business Model Design

contrasted BM elements from different studies to discover similarities. For example, in an early work Shafer
et al. (2005) collected 42 elements from predominantly e-business focused BMs and categorized most of
them into four groups: strategic choices, value network, create value, and capture. In a more recent study,
Wirtz et al. (2016) categorize BM elements among popular frameworks in a bottom-up approach into nine
groups: strategy, resources, network, customers, market offering (value proposition), revenues, service
provision, procurement, and finances.

Legend: author-added (italic & grey highlighted); literature-derived (roman)

Figure 3. Matrix with juxtaposition of BMI contingency factors and BM elements.

Figure 3 provides an overview of the identified contingencies affecting BMI and BM elements extracted
from existing BM frameworks. In this study, elements from 10 major BM framework studies (Baden-Fuller
& Haefliger, 2013; Betz, 2002; Chesbrough, 2007, 2010; Demil & Lecocq, 2010; Hamel, 2001; Hedman &
Kalling, 2003; Johnson et al., 2008; Magretta, 2002; Morris et al., 2005; Rayna & Striukova, 2016) are
allocated to the respective contingency factor according to their definition. However, definitions of elements
do not always align with each other and can encompass various aspects of a BM. For example, Hamel (2001)
includes in the element of value network both partners and suppliers, while Chesbrough and Rosenbloom
(2002) only include suppliers. Therefore, one element can represent multiple factors and in turn, one factor
can be reflected in multiple elements. The findings of this literature review build on past research and
enhance existing knowledge by identifying BM elements influenced by both incumbent external and
internal contingencies.
Findings show, that in total 14 out of the 34 contingencies are not reflected by elements in major
frameworks (marked in italic and grey in Figure 3). With regard to internal factors, frameworks do not
include elements for contingency factors regarding BM integration and prevailing BM logic. In the former
case, we introduce BM elements alignment to ensure that the elements of the new BM are harmonized and
integrated into the organization. In the latter case, we highlight the importance of cognitive capabilities,
for example, in form of dynamic capabilities such as sensing, seizing, and transforming (Teece, 2018), to

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 Contingencies in Corporate Business Model Design

overcome the dominance of existing business logic. Regarding external contingencies, 12 factors are not
reflected in current BM frameworks. Especially two groups are missing. First, frameworks do not include
trend analysis elements regarding political, environmental, economic, and legal trends. Second, they do
not include any form of management of maintenance, data, innovation, intellectual property, and BM
lifecycle. Beyond these, frameworks did not account for paradoxical strategy, customer solvency
management and customer interfaces related factors. In the end, we introduce new elements for the
respective contingencies to fill in the gaps to create a more complete BM framework for incumbents. Table
1 provides an overview of the definition of these new elements based on the description of their respective
contingencies in existing literature. In addition, we further group all elements according to their definition
to one of the five BM functionalities.
Table 1. Definition of newly introduced business model elements.
Business Model Element Definition
Governance structures that ensure all components of the business model
BM elements alignment
are harmonized and integrated effectively.
The ability to overcome existing business logic and conceive innovative
Cognitive capabilities
business models.
Maintenance Processes to manage and ensure the availability and upkeep of the offer
management and its performance.
Processes to manage data usage to handle and optimize data quality, data
Data management
security, data ownership, and data privacy.
Innovation management Processes to manage, foster, and implement new technologies and ideas.
Methods and processes to facilitate access and interaction with the
Customer interface
customer to enhance their experience and engagement with the offer.
Processes to protect, manage, and leverage the firm's intellectual property
Intellectual property
and sensitive information to avoid drainage of know-how and achieve a
management
competitive advantage.
Processes to oversee the stages of a business model's life to manage costs,
Lifecycle management
revenues, and adaptation over time.
Customer solvency Processes to assess and ensure the financial stability of customers.
management
Approaches and strategies to manage and balance conflicting business
Paradoxical strategy
models within one organization.
Continuous monitoring and adapting to political factors that impact the
Political trend business model to ensure alignment to political, social, or governmental
changes.
Continuous monitoring and adapting to environmental factors that impact
Environmental trend
the business model.
Continuous monitoring and adapting to economic factors that impact the
Economic trend business model to ensure alignment to economic conditions and
fluctuations.
Continuous monitoring and adapting to legal factors to ensure compliance
Legal trend
with legal and regulatory requirements relevant to the business model.

Design Principles for Business Model Design

From the perspective of entrepreneurship as a design, BM artifacts function as the interface between the
external and internal environment, which interfere with one another (Simon, 1996). In their work, Al-Debei
and Avison (2010) emphasize that for businesses to survive and succeed, it is essential to harmonize and
continually review the business strategy, the BM, and business processes. This ensures their consistency
with both the external and internal environment. The business strategy reflects on the interaction between

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the BM artifact and the external environment, while the business processes reflect on the interaction
between the BM artifact and the internal environment. In accordance with the principles of contingency
theory, which underscores the importance of dimensional fits between the BM and its internal and external
environment, we derive three DPs based on the study of Al-Debei and Avison (2010) to achieve such fits.
These DPs complement our findings on BM elements and functions.
First, the functions of BM artifacts should be designed in such a way, that they create an interface to
negotiate between the internal and external environment (Sarasvathy, 2003). Hence, designers need to
create a functional fit between the BM and the two sides. This includes the design of the four value
mechanisms in such a way, that the organization can create, deliver, and capture the offered value. Second,
BM designers need to achieve an organizational fit to align internal organizational processes and activities
with BM artifacts in order to create value for the customer. This encompasses strategic BM elements (e.g.,
change management) to ensure cultural alignment as well as to establish appropriate governance structures
for BM alignment. Third, in contrast to new ventures, incumbents often host multiple BMs. Hence,
corporate BM designers need to ensure a strategic fit through paradoxical business strategies between a
dynamic market and one or multiple BM artifacts and their underlying organizational structures. In
addition, BM elements focusing on upcoming trends in the external environment (e.g., market trend) are
necessary to ensure an ongoing strategic fit.
Therefore, we promote the following three DPs to create dimensional fits and achieve harmonization
between the BM artifact and the internal as well as external environment:
● DP1 – Functional Fit: BM elements of the four value mechanisms (value creation, value delivery,
value capture, and value proposition) should be designed in such a way that the functions of the
BM artifact fit to the related internal and external contingency factors.
● DP2 – Organizational Fit: BM elements interacting with the internal environment should be
designed in such a way that they fit with the organizational processes of the internal environment.
● DP3 – Strategic Fit: BM elements interacting with the external environment should be design in
such a way that they achieve an ongoing strategic fit with the external environment.

Discussion
The design of BMs in incumbents requires the ability to deal with contingencies affecting the process from
both within and outside the firm. This can be a challenging task, given the inherent uncertainty, risk, and
complexity of BMI, paired with the inertia of incumbents towards change. BM frameworks aim to support
BM designers. According to contingency theory, they are obliged to address all possibilities that design
decisions are contingent upon. However, extant BM frameworks are deficient in this regard in two ways.
Firstly, in an increasingly dynamic and uncertain environment, they lack incorporation of contingency
factors described in BMI literature in order to support BM designers during times of increasing uncertainty.
Secondly, they neglect the relevance for incumbents to reflect on both internal and external factors that
affect the BM design process.
This study takes the perspective of entrepreneurship as design to show that BMs can be seen as artifacts
that are actively designed through BM elements to create desired functionalities to fit as an interface
between the company's internal and external environment. This lens helps us to identify the contingency
factors that affect corporate BM design to derive a more complete BM contingency framework for
incumbents. Hence, in a first step, we identified contingencies affecting BMI from existing literature.
Second, we collected and assigned BM elements to the respective contingency factor. Third, we allocated
new BM elements to stand-alone factors, to complement frameworks’ content.
The lens of entrepreneurship as design together with contingency theory supports the identification of
pertinent BM elements to proactively design BMs in an iterative experimental process. This allows scholars
and practitioners to view BM frameworks not only as a means of predicting the future and to managing
uncertainty based on a causal understanding of BMs as natural phenomena, but also as a tool for identifying
customer needs and actively shape them. So instead of being reactive to changes in the environment that
affect BM elements, BM designers can actively create opportunities. This approach is closely related to
effectuation logic in entrepreneurial decision making and reflects on the theory of opportunity creation as
opposed to opportunity discovery theory (Alvarez & Barney, 2007).

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Contingency theory highlights the need of fit between one or more dimensions of an organization and the
environment (Heeks, 2002). From an entrepreneurship as design perspective, we advocate the use of three
dimensional fits as DPs based on our findings and existing literature. First, BMs as design artifacts achieve
their purpose through the functional relations they establish between the inner and outer environment.
Their functions should be designed in such a way, that they create an interface to negotiate between the two
sides. Hence, designers need to create a functional fit between the BM and the inner and outer environment.
This includes the design of the four value mechanisms in such a way, that the incumbent can create, deliver,
and capture the offered value proposition. By outlining the functionalities of BMs through designing the
respective elements, the presented contingency framework supports BM designers to identify the relevant
aspects necessary to embrace uncertainty as well as to leverage contingencies to create opportunities.
Second, BM designers must achieve an organizational fit to align internal organizational processes and
activities with novel BMs in order to create value for the customer. This also encompasses cultural
alignment as well as governance structures to ensure adaptability and resilience towards dynamic markets
through the establishment of clear responsibilities and dynamic capabilities. Third, in contrast to new
ventures, incumbents often host multiple BMs. It is essential to ensure a strategic fit between market
dynamics and the organizational structure and strategy for multiple BMs.

Limitations and Future Research

This study has several limitations. First, the focus of this literature review is on general BM elements.
Therefore, literature focusing on specific areas such as digital BMs was not included. However, the advent
of digital technologies offers new pathways for creating and delivering value, thereby providing
entrepreneurial opportunities and enable the development of novel BMs (Nambisan et al., 2017). Thus, it
becomes increasingly important for businesses to embrace digital BMI to cope with changes brought about
by emerging digital technologies and to capitalize on them (Böttcher et al., 2022). Especially incumbents
face difficulties in dealing with change and disruption in their competitive environment due to digital
transformation (Vial, 2021). We therefore advocate further research on digital BM elements, to support BM
designers in the complex endeavor of digital BM design (Zott et al., 2011). Second, the scope of this paper
is on the design of novel BMs. Hence, the applicability of the presented framework to BM reconfiguration
might be limited. Although, it could be argued that, despite the design of new BMs or the reconfiguration
of existing BMs, contingency factors tend to remain largely unchanged. Future research could challenge the
applicability of the introduced BM contingency framework to BM reconfiguration. Third, our results are
based on a theoretical analysis of relevant BMI literature. Further empirical research, for example through
expert interviews, will provide further insights on the validity of our findings.
Viewing entrepreneurship as a form of design enables the analysis of areas in current BMI research that are
not yet understood and outlines future research opportunities. First, the interaction between a BM and its
environment is an interesting area to further examine. This study has not reflected on the dynamic character
of BMI. Therefore, providing insights on when single contingency factors affect the BMI process and how
to overcome possible arising tensions can assist BM designers in better proactively addressing these issues.
Second, interaction effects between a BM and its environment in form of feedback loops are a promising
avenue for further research. Experimentation plays an important role during the process of BM design to
overcome uncertainty. Chesbrough (2010) emphasizes the significance of BM frameworks in elucidating
the underlying BMI processes. This, in turn, enables them to serve as a basis for experiments involving
different process combinations. Business modelling can be seen as the managerial equivalent of the
scientific method where you start with a hypothesis, which you test in action, and revise when necessary
(Magretta, 2002). Thus, we promote further investigation how to conduct experimentation in connection
with hypothesis-based entrepreneurial decision making under uncertainty (Camuffo et al., 2020).
Connected to this and building up on the iterative approach of BMI, future research may get a better
understanding of the role of feedback loops in BMI processes (Andreini et al., 2022).
Third, we recommend using the three categories of interactions between the BM itself and its environments
as guiding points for further research. For example, this study did not examine the dynamic character of
BM itself. Hence, we suggest that future research considers the complexity and dynamics of BM elements.
This opposes existing BMs definition that often describe a static character (Foss & Saebi, 2018). However,
consecutive process steps imply a relationship between elements of an earlier phase with elements of a later
phase. This is either due to the case of building up on findings in the preceding BM design phases or by

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influencing subsequent elements based on changes of the environment leading to new insights. This path
dependency of decisions taken at different points in time and how earlier decisions constrain future changes
in a BM, remains an interesting question to be answered (DaSilva & Trkman, 2014).

Conclusion
BM design is important for incumbents to create, delivery, and capture value from market offerings.
However, BMI success rates in incumbents suffer from tensions arising from contingencies during the
process. Providing guidance on how to navigate such tensions and to reduce uncertainty, risks, and
complexity throughout the BM design process empowers BM designers to actively create their own
opportunities. Therefore, this literature review yields two outcomes. First, we present a comprehensive BM
contingency framework for incumbents, derived from a comparison of literature on BM elements with
literature on contingencies affecting the BM design process. Second, we introduce DPs that guide BM
designers in creating BM artifacts that are in alignment with the incumbent’s external and internal
environment, ensuring a functional, strategic, and organizational fit.

Acknowledgments
I would like to express my deepest gratitude to Professor Dr. Johann Kranz and Dr. Niklas Eschner for their
invaluable guidance and support throughout this research.

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