The Role of Business Models in the Development of New Technology-Based Firms

In the process of development of new technology-based firms (NTBFs), the crucial role belongs to establishing an effective and efficient business model to deploy the focal technology in a sustainable way. As such, it becomes clear that the business model design and testing/validation become the essential parts of a startup process; yet, so far, the topic of the business model in the context of NTBFs has received insufficient attention in the literature. Drawing on the basic theoretical and empirical insights from entrepreneurship and strategy research, this chapter scrutinizes the topic of the ontological nature of a firm’s business model within the NTBF context, and its relatedness and distinction from strategy, technology, and innovation. From definitional issues, we proceed to discussing the role of the business model in the process of development of NTBFs. Then, we summarize the available empirical material to formulate the most frequently occurring problems with new ventures’ business models that prevent their development, paying particular attention to ways of preventing and dealing with such problems. The developed conceptual framework of business model-related NTBF challenges is illustrated and corroborated with the mini-cases of technology ventures.