Consider three examples. First, replacing al. Thus, even if only a single water quality repositories are blossoming RepRap, The num- tester is printed, the costs of the open source 3D printing ber of libre designs have been shown to be growing at manufacturing technology are more than justified for the an exponential rate Wittbrodt et al. Similarly, the majority of mechanical fixtures for repository now holds more than 1 million designs.
Such savings can scale dence that the Open Hardware model creates more flex- to many research laboratories once the initial designs are ible and adequate scientific equipment at far less expense produced and licensed with Open Hardware licenses. For than has been developed using proprietary models. The Open Source syringe pump designs. To discuss business models to supply this novel library can facilitate matching a scientists needs through- type of expert consumer, profitable Libre Hardware-based out this spectrum of pump sophistication.
As each of the products in the sciences will be reviewed. These business designs can be replicated for little more than the cost of models will be generalized to other types of customers materials and modest electricity to run 3D printers, the who are capable of distributed digital fabrication of libre economic value for the scientific community is substan- designs to meet their own needs. Finally, conclusions will tial Pearce, ; Pearce, Because open hard- This investment could provide return on investments ware costs less, it provides ironically a perverse incentive ROIs enjoyed by the scientists to their funders, such as for universities to avoid it in order to acquire as much the National Institutes of Health NIH and the National overhead as possible.
This bias is not in the best interest of place to better harness this opportunity by having specific science, however, there are also legitimate reasons why CFPs calls for proposals for Open Hardware as well as most scientists still favor proprietary tools due to long preferential purchasing policy to be set for Free and Open track records and traditional customer service of estab- Source solutions when available in quantity and sufficient lished suppliers.
Many scientists are not comfortable with quality e. Even these 3. Conceptual and Practical Challenges: labs, however, may be tempted to save costs by using the Customers Capable of Distributed Digital distributed manufacturing model for non-critical tools or Fabrication to Meet Their Own Needs custom components.
As the preceding section made clear, scientists are now The distributed manufacturing Libre Hardware phe- turning to Libre Hardware to conduct their experimental nomena has been made possible with the development science in greater numbers than ever before.
However, of inexpensive global communication and a wide vari- A careful inspection of the citation years e. The Arduino platform has Hardware is a very recent phenomena. There is still con- been used for many scientific applications including: low- siderable inertia in the scientific equipment funding, cost UAVs for oceanographic research Busquets, et al.
There are three primary obstructions to gain- ments Fobel, et al. First, , electrophysiology Newman, et al. In addition, the fer patent protection for their investments3 Demsetz, Ardunio-enabled RepRap has been modified to work as a ; McGaughey, ; Smith, ; May, It should be pointed out here that Libre There is already considerable evidence that this approach Hardware is much more likely than proprietary hardware slows innovation in some fields such as nanotechnology to be adopted as a platform because it is easier to hack and Pearce, b.
Regardless, this approach is now firmly build upon Zimmermann, For example, the for scientists. First, lower costs in time and money are National Science Foundation NSF recently revised their enjoyed for direct manufacturing equipment. Although there are exam- in a decrease in overall research costs. Second, greater ples of government funding for Open Hardware devel- flexibility and customized equipment that would be opment,4 there has not been specific programs.
Most expected to lead to better experiments and faster evolu- major equipment grants such as those for the NSF Major tion of science Pearce, Rather than being limited Research Instrumentation MRI program go towards to buy only what is commercially available, scientists can funding the purchasing of proprietary tools from con- create scientific instruments to meet their exact needs ventional vendors or specialty equipment development, and specifications, expanding on Open Hardware design which is later commercialized as proprietary equipment.
The ability to customize research tools is particu- Secondly, because of the nature of distributed manufac- larly helpful to those on the bleeding edge of science, turing there are nearly no examples of open scientific who need customized never-seen-before equipment.
If a scientist has the legal and Type 1 technical ability to alter the code for hardware and soft- 4. Kit Suppliers ware in their labs, they will never be left with stranded At the present stage of Libre Hardware development the assets such as non-functioning equipment when com- majority of complex scientific hardware can not be fabri- mercial vendors go out of business, drop a product line, cated solely by low-cost digital manufacturing tools, such or loose key technical staff.
With libre hardware, the as polymer-based single-material 3D printers. Thus, the equipment, at least, has the potential to evolve rather equipment demands non-printed parts, which is what than being discarded. Acknowledging these advantages scientists can thus be For complex equipment, these vitamins may not be read- categorized by their adoption of Libre Hardware into four ily available or may represent a major time investment categories. The first three provide markets for potential to source, thus there is a market for firms to provide all Libre Hardware-based businesses.
First, some scientific the vitamins for a specific tool in a kit form. For example, research groups Type 1 fabricate their own equipment a firm could produce kits to fabricate an open tool such using Libre Hardware designs in-house.
Second, some scientific sensitive Open Source microbalance. Kit suppliers can research groups Type 2 would be willing to pay more differentiate themselves following the sucessful business for equipment by having someone else fabricate for example of Adafruit, which is well known for providing them. This would include well funded groups, groups high-quality tutorials for building Open Hardware projects on strict timelines, and those who lack appropriate Zimmermann, For example, some scientific research groups, particularly those outside of physics and engineering, 4.
Specialty Component Suppliers might lack the expertise to use Open Source tools to In the maker scientific community there will be customers fabricate equipment themselves. Other research groups who still want some level of specialization of their equip- Type 3 outsource their experiments to core facilities ment beyond common kit models. Businesses can supply or businesses, and these organizations could conduct custom parts in materials that are not commonly avail- research for a fee.
Finally, some research groups Type able for digital fabrication in desktop 3D printers such as 4 would remain with the traditional proprietary suppli- Shapeways, which enable scientists to order custom print ers in order to continue to outsource their risk, which is Open Hardware components in exotic materials such as one of the benefits of the traditional model.
However, it bronze, porcelain, castable wax, and aluminum Shapeways, should be pointed out that the diminished market from Although RepRap printers have been developed to the first three groups of scientists may eliminate tradi- print in wax Pearce, et al. In their online store, OpenQCM provides not only full kits, but also the relatively uncom- 4.
In addition, as mak- creates, delivers, and captures economic value Hedman ers favor the so-called Open Hardware vitamins, there is a and Kalling, The business model is essentially a competitive advantage to offering open versions of mass plan that a company uses to generate value.
Compa- produced components. For example, OpenBeam is an alu- nies developing and distributing FOSS can not depend minum extrusion construction system that can be used to on their control of the source code for their business make optical rails Zhang et al. Even though indi- model, they rely on non-traditional models to provide vidual scientists could use the plans to make their own sources of revenue instead Krishnamurthy, In runs, the quantities they would need make it much more the Open Source context, the definition of business likely they would purchase the beams a few at a time from model can be made up of three components: 1 value the original supplier, OpenBeam.
Calibration and Validation Services primary focus of most Open Source business model In order to provide scientists with the assurance that their research , and 3 logistics Mahadevan, In this tools are operating at specification, calibration and vali- section, business models serving different types of sci- dation is often necessary.
For example, a calibrated light entific users makers, Open Hardware buyers, and out- source from Ocean Optics may be necessary to perform sourcers will be discussed to address the larger Libre accurate experiments in an Open Source-based optics Hardware community. It should be noted that a single setup for photoluminescence.
Businesses can service the business can use more than one model to generate needs of scientists either by shipping calibrated or vali- revenue. This service jects for substantial contributions or enhancements to be is extremely important in the scientific community5 as it offered with skills and costs that a single company would provides researchers with security in the knowledge that not be able to afford Zimmermann, This includes their measurements or functionality with a given tool are developers who may not want to work for a company full accurate.
This warranty of calibration and validation is time, retired engineers, or those who live in other coun- well established for proprietary vendors. This advantage tries. One method to compete against incumbents in the lies primarily with the relatively new Libre Hardware field, business world, which is well established, is to utilize however there is no technical reason that Open Hard- innovation, with radical innovation being more profit- ware could not be equally well calibrated and validated.
It has also been shown that col- Although there are hundreds of open scientific hardware laborative expert networks are of crucial importance in designs, only a small fraction have been formally validated achieving a higher degree of novelty in product innova- and an even smaller amount are sold as calibrated units.
Thus, Aleph Objects As soon as the Libre Hardware community begins to offer enjoys the benefits of a free global engineering base that this service, the cost advantage would help shift some of rapidly innovates on their products as part of the RepRap the scientific market to Libre Hardware.
The rate of adop- community. Thus, an open hardware company can compete on quality, warranty, and other conventional business metrics 4. Hardware Buyers Type 2 There are numerous examples of successful Open 4. What they have in common is matching This open business model is perhaps the most similar to their free designs with strong branding.
Although there traditional business models in that the firm fabricates are many Arduino low-cost clones on the market for exam- and sells hardware, which happens to have its design ple, the substantial majority of customers continue to buy fully documented and freely available. Examples in the from the original provider even at higher costs Thompson, scientific hardware community include products like OT.
Both of these devices trust the original team garnered from their initial Open offer a considerable discount to scientists when compared Source release and continued support of the community to proprietary versions with comparable functionality. In addition Hardware business is mature can be seen in the success of to this model, there is also the possibility of a standard Aleph Objects, which sells the Lulzbot Open Source soft- reseller business model.
These printers can be used to make a long list of The online retail stores such as Amazon, Ebay, and Makershed. Lulzbot printers are derivatives of earlier RepRap printers: It is interesting to note that all of these companies are Aleph Objects uses its own 3D printers to fabricate many resellers of authentic Arduino boards.
Although munity also enables firms to sell products made with oth- anyone could fabricate a Lulzbot 3D printer using Aleph ers. This ucts. The firm Evil Mad Scientist Laboratories used this model can be seen as a commercial enhancement one approach when developing its product Egg-Bot, a compact as customers have some assurance that an Aleph Object CNC art robot that can draw on spherical or egg-shaped printer will work to specification, which is more than what objects.
Entrepreneurs wishing to develop a new Libre is guaranteed by self-assembly or rival clones. In exchange Hardware product could work with one of these firms to for the risk of rival copiers undercutting its market, Aleph develop derivative products and split the costs to share Object enjoys lower research and development costs and the revenue with the more established brands.
The grate Open Source components into their existing prod- value of this feedback should not be underestimated, as uct lines. As more Open Source components Cloners can be a threat, however, and there are two were developed as replacements for components in the approaches to dealing with this threat as an Open suite, the entire system could eventually be commercial- Hardware business. The first is to simply harness the ized as Libre Hardware. The Open Source labeling already Open Hardware community to out innovate the cloners.
Their CEO next organic or fair trade Gibb, label. The Open unfit - they suffer from IP Obesity. There have been numer- Source labeling has already resulted in misuse and abuse ous companies in history that have had long periods of by some companies that do not develop and release Open prosperity only to be quickly left behind when technology Source technologies however.
Cloners are likely to copy a success- Association is trying to rectify the abuse by providing a ful product whether it is open hardware or proprietary. For example, bring better products to the market. In this way on services as discussed below. IP can help companies raise growth Solomon, Proprietary firms are, in general, limited by inno- in order to expand the market of other parts of their prod- vation occurring within the firm however, whereas Open uct line.
NECi recently collaborated by open sourcing the inventors of the hardware itself. Using this model, a photometer, which radically undercut the cost of other cloners are a net benefit as they ensure that the inven- methods to detect nitrates Wittbrodt, et al.
The ser- As any firm can manufacture Libre Hardware, the most vice model for Open Hardware businesses can be further efficient manufacturer will in the end have the lowest divided into five strategies. It is unlikely that NECi, a small enzyme company, First, firms can sell a subscription for a package of services will have the least expensive nitrate testing photometer around an Open Source product such as Red Hat uses for its on the market after a few years of international cloning.
It is already routine for scientists to buy service NECi is protected from this competition as cloners will contracts on expensive scientific equipment e. This model would be particularly useful at large copycat businesses. Cloners can actually extend the reach need to be maintained. Marketing and SCM are reducing overhead at the interface, and transferring often considered by functional managers as separate and responsibilities among members for task execution. Integration distinct entity from one another as they do not collaborate or encompasses co-operation alignment of interests and co- co-ordinate activities Flint and Mentzer, ; Johnson and ordination alignment of action.
Borger, Within organizations, inter-functional collaboration is difficult Integration is comprised of two essential components, to implement Hansen and Nohria, ; Nunes and Cespedes, interaction and collaboration. Interaction represents the , not properly understood Tjosvold et al.
Only few activities, while collaboration represents the willingness of organizations have learned how to collaborate effectively, departments to work together. Collaboration enhances suggesting that a collaboration capability is rare, valuable, exchange of information by reducing information asymmetries and hard to replicate Frohlich and Westbrook, ; Fawcett and reduces operational down-times and product errors et al.
Collaboration has been called the driving force Kandemir et al. Collaboration skills reduce counter- necessary for effective marketing and SCM integration and productive behavior by promoting goal alignment, more DCM development. DCM facilitates firms in enhancing frequent and open information sharing, higher levels of market responsiveness capabilities as it is based on a managerial interaction, the exchange of expertise and customer-focused organization culture and making customized resources, and a willingness to share risks and rewards value offerings Wayland and Cole, ; Walters, , real- Morgan, ; Rai and Bajwa, ; Eng, ; Green et al.
According to Stevens , collaboration should over-stocking, and continuous replenishment in small quantity Lee, ; Lee, ; Simchi-Levi et al. A resource is an observable but not necessarily SCM could create differential advantage. Porter a tangible asset that can be valued and traded. Capabilities are contends that differentiation strategies need strong co- the ability to perform a particular task or activity and refer to ordination among functions.
They generally facilitates decision synchronization through give the firm the ability to integrate, build and reconfigure providing relevant, timely, and accurate information required internal competences.
They can also be described as the to take effective decisions for marketing and SCM members. A resource is firm-specific asset transfer among functional units, and enhances information to which a monetary value can be attached. While, a capability flows across functional areas. Coordinating capabilities.
The former allows a firm to deepen its functional activities across functional and inter-organizational boundaries knowledge, such as marketing, and SCM expertise. The latter are difficult Stevens, ; Ellinger et al. Conflicting integrates different functional capabilities Verona, Several researchers have identified a close integration Juttner et al.
In addition to, examining DCM. As a result, the current literature focuses mainly on resource dependency relationships, the research also critically benefits of integrative relationships of marketing and SCM looks at tangible and intangible organizational resources driving Ellinger et al, Such a scenario raises some key such integration and success of DCM.
Is it possible to identify a relationship between DCM According to RBV, sustainable competitive advantage derives and organizational resources? Can certain organizational from valuable, rare, difficult to imitate and imperfectly resources and capabilities be identified that can be considered substitutable resources Barney, Based on the resource critical in context to DCM on account of their peculiarities? It also or substitute and organizationally activatable Wernerfelt, provides a research framework for further empirical validation With these resources, it is possible for organizations to develop intangible resources are tacit and difficult to transfer across and maintain competitive advantages for superior performance context and location Villalonga, Intangible resources Collis and Montgomery, Resource tangibility also are viewed as the key building blocks for developing and contributes to competitive advantage.
The RBV finds highly context and resource dependent Priem, According to the RBV, Framework organizations allocate resources towards developing capabilities and competencies to improve performance with The view of the consumer as an integral part of the chain is the least expenditure Day and Wensley, The focus of DCM is on real-time flow of demand- RBV argues that organizations in possession of strategic related information from point of inception end-users to resources will earn rents or super normal profits.
Strategic the point of use suppliers. Different customer segments resources must be valuable, i. Firms must be market-driven so that they available, be at a premium; and they must be non-imitable and can respond to the market characteristics quickly and non-substitutable, i. A market-driven firm has market specific relationship interaction Das and Teng, Market Resources that are valuable cannot become sources of orientation enhances market responsiveness capabilities of competitive advantage if they are in plentiful supply.
Rarity firms Agrawal and Gupta, At first it was Inimitability, caused by the social complexity of the resource, introduced as a replacement of SCM and it highlighted issues creates the potential for sustained advantage. RBV places such as customer focus, market mediation, demand driven heavy emphasis upon inimitability of the resources as a activities and agility by addressing development and prerequisite to sustaining whatever competitive advantages management of demand driven supply chains Heikkila, ; they generate Rumelt, Finally, resources and Hines et al, ; de Treville et al, ; Vollmann et al.
However, these types of issues were also addressed in to which they are able to add value may depend upon the SCM and therefore there were no major differences between presence of complementary assets Christmann, RBV considers the organization as a bundle of resources and capabilities which, when combined become sources of However, more recently, DCM has been introduced as an economic rents and sustainable competitive advantage Grant, approach to capture the synergies between marketing, and Assets are defined as anything tangible or intangible SCM Walters, Assets can serve as inputs to a process, processes across functional, organizational and inter- or as the outputs of a process Srivastava et al.
In necessary for creating demand and are closely linked to contrast, capabilities transform inputs into outputs of greater marketing, while the demand fulfillment processes comprise worth Christensen and Overdorf, ; Schoemaker and all the activities necessary for fulfilling demand and are closely Amit, Capabilities can include skills, such as managerial linked to SCM.
This implies that a framework of DCM may ability, or processes, such as collaboration or integration. Thus, inter-functional collaboration this approach also needs to be clearly expressed in the business allows diverse functions to converse, learn and work across strategy, otherwise the conventional view, where marketing the functional silos that have characterized organizational sets the strategy and SCM executes it, will rule.
A DCM structures Liedtka, Internal collaboration in the approach should incorporate all major demand creation and organization is aided by strategic alignment between cross- fulfillment processes within the organization. As can be seen functions, the existence of a shared vision, mutually held goals, in Figure 1, examples of major demand creation processes are and joint rewards Kahn and Mentzer, Internal strategic marketing planning, market research, market collaboration was found to positively impact organization segmentation, product development, and marketing and sales performance Stank et al, Collaboration between the Kotler et al, , while examples of major demand demand creation and the demand fulfillment processes are fulfillment processes are strategic supply chain planning, important in all business environments; however, the required supply chain design, and supply chain operations Gibson et level of collaboration to succeed differs greatly.
The al, The collaborative efforts can be clustered into four categories as ultimate goal of DCM is to gain competitive advantages by shown in matrix of Figure 2. The matrix is having four differentiating not only the products, but also the delivery quadrants. Mart and Zara. Firms in this quadrant to low level of resources and capabilities and ultimately derives are market laggard. Such firms are having high level of they missed the shift in customer expectations and did not SCM efficiency.
In the scenario when SCM efficiency is high appear to respond to those expectations. Hence, organizations need to focus on availability Piercy, This implies that competition demand chain also along with supply chain.
They have the air Tagliabue, Zara has made significant operating and resource and capability to develop an effective DCM and financial improvements by better matching supply and satisfy different customer needs with differentiated SCM demand through better integration of marketing and SCM and capabilities.
This type of firms focused on customer needs effective development of DCM. The ultimate goal of DCM is to Quadrant -4 Q-4 become a market leader and to take care of markets Firms in this category, marketing specialists, have strengths characterized of intensive competition, high product variety, in identifying unique customer needs and in developing strong large amounts of customer-adapted products, and short brands.
However, a marketing strength that is not linked to product life cycles. In the scenario when both marketing SCM advantage usually leads to a high cost base and slow collaborative efforts as well as SCM collaborative efforts are delivery Piercy, Since firms that are unable to deliver high supported by high level of resources and capabilities, as according to the promises made eventually will lose credibility shown in Q-3, full integration occurs between marketing and and customer satisfaction will decrease.
This results faced by this type of firm are under-delivering and lost into optimal result for the firm as explained below with opportunities if the firm cannot capitalize on the differentiated illustration of Zara. Zara stores use handheld devices i. In this situation, a purely mechanistic supply assistant PDA to send Inditex HQ, all information regarding chain approach entirely driven by cost efficiency needs to be sales trends and insights on what customers would like to replaced with a broader view of overall effectiveness.
The mailers increased store traffic and the cornerstone of success. However, the marketing efforts were not backed by SCM. As a result, there were The demand chain of Zara identifies a demographic segment frequent shortages of promoted sale items. Customers came of 17 to 22 year olds that are fashion but budget conscious. It incurred and sent for completion by outsourced workshops that are huge losses even as its competitors became more profitable.
Zara Madhani, b. The distribution centre of Zara is built on two levels, one for Research Methodology folded apparel, boxed in cardboard cartons, the other for plastic-covered garments on hangers Walters, Its The research focuses on development of a business value system is capable of handling 40, items an hour and added framework for DCM. The advantage the organization may obtain. Certain firm-level value chain is a tool to segregate a business into strategically conditions such as organization culture, environment of mutual relevant activities Brown, This categorization enables trust etc.
To demonstrate the ways in which organizational advantage. The theoretical foundation for this study is the resources and capabilities can generate overall business values, RBV.
The main purpose of DCM design is to increase revenue, to better market performance and higher profitability Barney reduce cost, increase return on asset ROA and ultimately , RBV asserts that the more rare a value-generating enhance shareholder value creation. In this framework, resource, the more likely it will be the source of a sustained organizational resources and capabilities act as an independent competitive advantage.
The more intangible nature of resource, variable while marketing and SCM competence, integration make it harder to imitate. In addition, tacit elements of process of marketing and SCM and finally development of DCM are knowledge make it harder for competitors to imitate. The role of added value has long been accepted that require a major change in the organization climate and as a means of securing competitive advantage Naumann, culture, are more likely to be unique to the organization and, and long-term success of the firm de Chernatony and therefore, more difficult to imitate by competitors Madhani, McDonald, Organizational resources include competences As shown in business value added framework Figure 2 , in and organizational capabilities.
Our objective in the current paper is to use the business model literature in order to analyse case studies of small digital businesses, and to uncover the entry choices and post-entry strategic decisions that digital entrepreneurs make when developing and operating their digital business models. This is because past decisions entry choices can facilitate or constrain future changes post-entry decisions in a business model as a result of contextual factors e. We focus on smaller businesses to illustrate the growing efforts by entrepreneurs in developing countries to exploit home-grown digital solutions to societal problems e.
A business model is also an essential tool for use by any entrepreneur to create and commercialise products or services, to co-ordinate its activities and to capture revenue and profits Osterwalder and Pigneur, ; Schlie et al.
Empirically, we draw on Cameroon as our research context, from which we content- analysed interviews with entrepreneurs and owner-managers Kimbu and Ngoasong, , leading to the development of 12 mini-case studies of digital business models. Thus, in addition to applying the business model framework to uncover the nature of digital business models in under-researched settings, this paper also contributes to strategic change literature by showing the effects of contextual factors technology, environment and organisational Gomes et al.
The study is organised as follows. A conceptual framework is presented followed by the research methods. The findings, discussion and conclusion are then presented. Digital Business Models: a conceptual framework Our theoretical base builds on the emerging literature on digital entrepreneurship and business models.
It is similar to traditional entrepreneurship with regard to identifying and pursuing entrepreneurial opportunities for generating a return financial and social , and being written into business activities by creating new enterprises or commercialising innovations Davidson and Vaast, However, our empirical focus is not a comparison of digital and traditional entrepreneurship.
Our aim is to analyse digital entrepreneurship on its own, and their underpinning business models. The uniqueness of digital entrepreneurship lies in the fact that ICTs provide the infrastructure which supports most, if not all, value chain activities and on which they are dependent. Two types of businesses fit this definition: 1 Businesses that use ICTs to reduce costs, improve internal operations and customer services through the adoption of digital platforms Schlie et al.
This includes businesses that provide online accounting, Wi-Fi hotspots, phone backup, artificial intelligence software Vasilchenko and Morrish , social computing and digital platforms for music consumption, mobile and Internet-enabled cataloguing, search engines, buy-sell marketplaces Javalgi et al.
To examine the nature of digital businesses, we use the business model concept as a theoretical lens. While there is broad acceptance of the core elements of a business model, there is no agreed theoretical and practical definition Baden-Fuller and Morgan, ; Teece, ; Morris et al.
To uncover the nature of digital business models, we consider the main component parts of the business model necessary for examining how the firm's resource base, strategy, markets and networks shape its creation and operations Chesbrough and Rosenbloom, ; Mason and Spring, ; Richardson, ; Berman, From this strategy context, we adopt an approach that focuses on three parts of a business model see Mason and Spring, ; Richardson, ; Ghezzi et al. A rationalistic approach to the study of models has been shown to be unable to fully account for practical challenges Morris et al.
Phase two is associated with the early dot. Though the SimplySeven framework was primarily designed for Internet businesses, we extend its use in consideration of other ventures harbouring high degree of digital dependence, including IT-based social and community-based enterprises.
This is where contextual factors technology, environment and organisational can be crucial Rashidirad et al. By applying this theoretical basis to the case of Cameroon, we also complement recent research on digital business models in emerging economies, which explore the servitization strategies of emerging market firms, the practical implications for globalizing digital businesses Xing et al. Table 1. Indeed, government policy, complemented by foreign aid financial and technical advice , has contributed positively to the mushrooming and growth rate of ICT penetration in various sectors in Cameroon.
The Network Readiness Index, which measures the national propensity to exploit the opportunities offered by ICTs, ranked Cameroon at out of countries in Gathege and Moraa, This positive development is evident in success cases such as mHealth, a project that uses SMS and mobile phones to remind patients to attend hospital appointments Bigna et al.
However, digital entrepreneurs grapple with challenges facing all types of businesses, including limited know-how, financing constraints, complex business registration processes and tax structures, and logistics and transport difficulties Kimbu and Ngoasong, ; Hinson and Adjasi, ; Van der Vorst et al.
However, Cameroon is seeing the emergence of a new generation of digital entrepreneurs, largely helped by a specially-created ICT Hubs model, the Activspaces Model, with branches across the four main regions of the country, incubating new digital start-ups Gathege and Moraa, Thus, Cameroon is akin to a developing African country with a nascent digital sector and resource-constrained environments Gomes et al. Research design, data collection and analysis This study therefore adopts a case-based approach to producing context-relevant Rashidirad et.
Based on a cross-sectoral selection of cases, this study uses the critical incident approach to produce a richer picture of digital business models in SSA. From a Cameroonian perspective, the application is expected to provide insights into the emergence and development of ICT-based businesses and the localised challenges to entrepreneurial success. We also selected Cameroon for ease of access to digital businesses facing entrepreneurship-related questions that can facilitate new theory in under-researched developing world contexts Vendrell-Herrero et al.
Using purposive sampling Yin, we recruited study participants through one of the co-author's local professional network and through the ActiviSpaces incubator, an incubator that has branches in three regional capitals of Cameroon Gathege and Moraa, We created a list of 31 potential participants, who were then interviewed.
The interviews included face-to-face interviews and informal email exchanges Table 2. We also examined the websites of the emergent list of digital enterprises, where they existed. They included two government authorities Ministry of Small and Medium-Sized Enterprise and Handicraft and Ministry of Communication , an ICT consultant for a large telecom provider, two University lecturers entrepreneurship and computer sciences , and one owner-manager of a medium-sized technology firm.
Table 2. Demographics of digital businesses Case Legal Digital business No. We then undertook a content-analysis of the interview transcripts, which involves a detailed case-by-case and cross-case review of interview transcripts to isolate themes and patterns in data Brady and Saranga, ; Ngoasong and Kimbu, For each transcript we identified and classified themes under the three parts of a digital business model digital value proposition, network architecture and digital value capture theorised earlier.
Both authors analysed all transcript manually independently and later compared the analyses to validate the findings. While doing this, we highlighted sections of the accounts provided by participants Gomes et al. The findings are reported below. From the table, the three parts of the business model are broken down to detail the strategy of each small digital business studied.
Regarding value proposition offering, target customers and delivery strategy Richardson, , we note that the business models cover a range of value creation across different sectors of the economy travel and tourism, public information, agribusiness, security services and ICT.
Table 3. Key features of the digital business models studied Case Value proposition Network architecture Value Capture A - Online chatroom for anyone - Digital platform? G - B2B security, networking systems - Externally-hosted server - Cash payments and telecom services - Service sales H - E-payment platform - Digital platform? Two revenue creation options were notably missing from the firms studied, namely digital license sales the purchase of a digital product and financial management skills taking a position according to an expected financial outcome Schlie et al.
This partly suggests that the emerging digital business models in resource-scarce settings such as Cameroon are very basic in their approach, and rely on limited knowledge. Regarding network architecture, that is, the infrastructure in which transactions are executed, and interactions among stakeholders take place Mason and Spring, , the entrepreneurs studied emphasised the challenges rather than successes of their business models.
We examined our data with regard to these contextual factors in Cameroon. Consider Cases A and H, for which a question mark? To successfully operate business models, digital businesses must be able to collect payments for services provided. This includes on-time online payments directly linked to financial services, especially in situations where cash payments are either not feasible or are costlier to implement Schlie et al.
As shown in the following quotation, a major contextual challenge is convincing banks and financial services providers to join as partners, to ensure that payments can be captured. When customers log in to our platform if they have money in your account you can transfer it to some other person or you can use the money in that account to buy from a website that uses one of our APIs, just like PayPal does it.
Banks convert physical cash deposits into digital cash for customers to use on our platform. Thus, despite creating business models that have value-creating potential, Table 3 shows that most of the entrepreneurs collected cash payments directly cash-in-hand rather than implementing built-in financial management systems e.
This scenario of mistrust and reduced interface through linkages with financial institutions e. The entrepreneurs further explained that cash payments are also preferred due to the low internet and mobile penetration rate, especially for people in rural areas without bank accounts. As a business that connect rural farmers to urban consumers of food crops, Case E is a typical example. Without interventions to develop online payment infrastructre, emerging digital businesses in Cameroon will continue to be unable to implement revenue creation models, such as those used in advanced economies, to undertake digital business sales and online financial management Schlie et al.
Another notable feature of the emerging digital business models studied relates to access to the information needed to develop the various parts of the business models. All the entrepreneurs studied explained how they had to spend considerable time and money collecting market- or industry-relevant information e. Also, individual customers are hard to reach due to limited connectivity.
The entrepreneurs have developed innovative ways in which they are trying to resolve this e. These are built into their network architecture to ensure the effective operation of their business activities.
Discussion and Conclusion This article applies the business model concept Richardson, ; Schlie et al. It focuses on three parts of a business model, namely digital value proposition, network architecture and digital value capture. In addition to this theoretical significance, our findings have two important practical implications for entrepreneurs wishing to learn how to articulate parts of the business models in order to seek legitimacy from resource providers Doganova and Eyquem-Renault, as well as create and capture revenue and profits DaSilva and Trkman, This restricted their capacity to capture the revenue they could potentially create, particularly over longer term.
This is line with Ghezzi et al. Secondly, the importance of prior planning, identifying and interlinking the features of the three parts of a business model before launching the business entry decisions , and understanding the significance of their interconnections to managing their growth post-entry choices DaSilva and Trkman, These business models had all component parts fully integrated in their design, while contextual factors such as poorly resourced external infrastructure e.
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