Abstract
German municipal electricity utilities (MEU) have in recent years seized the chance to access the broadband services market through different kinds of cooperation models in order to try to open up new business opportunities and thus offset profit reductions in their native markets. As these companies did not enter this new market afresh, but brought existing organisations, processes and business networks affected by their “native market conditions” with them, they have been confronted with major challenges regarding a structured transformation approach. This paper examines these organisations’ efforts to transition to the new market environment of broadband services by developing a holistic business model framework that can be used as a corresponding transformation tool. The lack of such frameworks in the literature makes this research project especially relevant both for academics and practitioners. Framed in a constructivist research paradigm and guided by Grounded Theory as research strategy, this qualitative research project rested on two thematic pillars: business network and business model theory. The overall analysis was supported by an extensive collection of data in the empirical phase which comprised 25 in-depth interviews, covering two case studies from the German broadband services industry. The empirical data analysis revealed that the value creation structure relevant for MEUs on the German broadband service market differs quite drastically from those of established incumbent broadband service providers. The structure relevant for such MEUs is based on a complex set-up within which both elements of value chain and value network approaches coexist. With regard to that structure both cultural and organisational aspects risk stifling innovation and limiting differentiation potential, with direct effects on the competitiveness of the MEU’s overall value creation system. Additionally, different synergy expectations for positive market entry decisions in most cases cannot be realised in operational reality. These synergy expectations often go along with strategic decisions that are framed by the dynamics of the native energy supply market rather than those of the broadband services market being targeted. On basis of these empirical research findings, a new and improved business model framework - the BSM business model framework - was developed. This framework not only accommodates the need of considering both value chain and value network specifics, but also the impact of the broadband services market’s external environment on value creation. For companies that have only recently entered, or plan to enter, the broadband services market, the BSM business model framework deliberately reflects the perspective of these new market entrants.