Value Creation in Multi-Level Networks: A Development of Business Model Theory

Currently, business model theory does not describe how the phenomenon of value co-creation is affected by interactions that span organisational levels in the network. Such interactions include the sharing of customer data and logistical information in addition to exchanges of products and services for cash payment. This paper seeks to develop business model theory to include the business models of networks by incorporating concepts from the value creation systems literature. A theoretical framework is developed to examine how value is exchanged between stakeholders in a network. A value perspective enables the theorisation of what motivates the stakeholders as well as what capabilities they may provide to the network. This framework is use to analyse a multi-level careers guidance network in the UK, to check the sustainability of its network business model. The contribution of this paper is an addition to the literature on network business models, using concepts from the Value Creation Systems literature, and a method for assessing the sustainability of network business models. An analysis of the value-flows between network stakeholders can show how choices of grain, extent and criteria affect the mutual satisfaction of the network’s stakeholders, and hence the sustainability of the network.