Business Model Innovation in the Digital Economy

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Author(s): Chung-Shing Lee (Pacific Lutheran University, USA)and Nicholas S. Vonortas (George Washington University, USA)
Copyright: 2004
Pages: 19
Source title: Social and Economic Transformation in the Digital Era
Source Author(s)/Editor(s): Georgios Doukidis (Athens University of Economics and Business, Greece), Nikolaos Mylonopoulos (Athens Laboratory of Business Administration, Greece)and Nancy Pouloudi (Athens University of Economics and Business, Greece)
DOI: 10.4018/978-1-59140-158-2.ch011

Keywords: Human Aspects of Technology / Information Science Reference / Knowledge Society / Social Sciences & Humanities

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Abstract

A viable business model in the digital economy must follow the fundamental economic principles and be able to capitalize on the disruptive characteristics of the Internet commerce. This chapter presents an analytical method to assist business executive and entrepreneurs in evaluating and building a viable business model in the digital economy. This method is based on the concept of disruptive innovation, economies of scale and scope, and the theories of switching costs and transaction cost economics. It takes into account various cost models from both demand- and supply-side perspectives. The chapter contrasts the business transformation process and value creation strategies in the physical and digital economies, and discusses several e-commerce revenue models and pricing issues in the digital economy.

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