Value Creation in E-Business

VALUE CREATION IN E-BUSINESS

RAPHAEL AMIT1* and CHRISTOPH ZOTT2

1

The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania, U.S.A. 2 INSEAD, Fontainebleau Cedex, France

We explore the theoretical foundations of value creation in e-business by examining how 59 American and European e-businesses that have recently become publicly traded corporations create value. We observe that in e-business new value can be created by the ways in which transactions are enabled. Grounded in the rich data obtained from case study analyses and in the received theory in entrepreneurship and strategic management, we develop a model of the sources of value creation. The model suggests that the value creation potential of e-businesses hinges on four interdependent dimensions, namely: efficiency, complementarities, lock-in, and novelty. Our findings suggest that no single entrepreneurship or strategic management theory can fully explain the value creation potential of e-business. Rather, an integration of the received theoretical perspectives on value creation is needed. To enable such an integration, we offer the business model construct as a unit of analysis for future research on value creation in e-business. A business model depicts the design of transaction content, structure, and governance so as to create value through the exploitation of business opportunities. We propose that a firm’s business model is an important locus of innovation and a crucial source of value creation for the firm and its suppliers, partners, and customers. Copyright © 2001 John Wiley & Sons, Ltd.

INTRODUCTION

As we enter the twenty-first century, business conducted over the Internet (which we refer to as ‘e-business’), with its dynamic, rapidly growing, and highly competitive characteristics, promises new avenues for the creation of wealth. Established firms are creating new online businesses, while new ventures are exploiting the opportunities the Internet provides. In 1999, goods...