WORKSHOP – RESEARCH METHOD COURSE - 2010
Do entrepreneurs need to enrich their value
proposition? Revisiting business models for
early-stage ventures
F. Giones, F. Miralles
Abstract—The popularity of the business model concept
contrasts with the controversial academic research findings on
its relationship with early-stage entrepreneurial venture
survivability. This research aims to find support on
complementary business model components that would better
fit to entrepreneurs, investors, and stakeholders’ needs when
assessing entrepreneurial opportunities.
Index Terms—Business Models, Entrepreneurship, Grounded
Theroy, Value Proposal.
I. INTRODUCTION
A definition of a business model should give answers to
basic, but key, questions such as: How is value
created? Who do we create value for? How is value
captured? How are we going to be competitive? [1,2]
Business models are popular in entrepreneurial settings; they
are used by entrepreneurs to communicate their business
ideas and by investors and stakeholders to assess the
attractiveness of the proposed business venture [3]. However,
there is a limited evidence of its relationship to
entrepreneurial venture survival options and recent studies
are controversial to the adequacy of the business model
concept to entrepreneurial opportunities identification [4,5].
Entrepreneurial settings combine high levels of uncertainty
on both the entrepreneurs’ ability to exploit the opportunity
and the market opportunity itself. In addition early-stage
venture evolution is driven by the use of trial-and-error
approaches, the development of dynamic capabilities, and the
reconfiguration of value proposal to best fit with the market
[6]. Moreover the experimental and discovery character can
be hardly reconciled with the conventional nature of the
business model. Scholars have indicated the need for a
revisited business model concept that would merge the
conventional components with these new market trends,
mainly based on experimental and discovery traits [2,6,7,8].
This work in progress aims to shed some light on the
suitability of introducing complementary components in the
business model concept that would better fit with
entrepreneurs, investors, and stakeholders’ needs in the
assessment of early-stage entrepreneurial opportunities.

F. Giones is with Innova Institute La Salle – Ramon Llull University, c/
Lluçanes, 41 08022 Barcelona, Spain (phone: (+34) 932902404 e-mail:
fgiones@salle.url.edu).
F. Miralles is the Innova Institute Director La Salle – Ramon Llull
University, c/ Lluçanes, 41 08022 Barcelona, Spain (e-mail:
fmiralles@salle.url.edu).
1
II.LITERATURE REVIEW
A. Entrepreneurs
Entrepreneurs are able to organize heterogeneous
resources to create incremental wealth exploiting market
opportunities [9]. Entrepreneurs promote growth and foster
technological innovation, bringing new products and/or
services to market [8]. The relevant contribution of
entrepreneurship in the economic development, justifies the
interest of institutions and academic educations in fostering
entrepreneurial initiatives. On the other hand, efforts from
institutions to promote the use of tools and instruments to
improve the survival rate of entrepreneurial ventures, receive
very limited support [10]; only finding evidence for more
general insights such as that ventures that used business
planning tools had less chances to end up disbanded shortly
after their constitution [11].
The lack of clear models or tools for organizing early-
stage ventures, puts both entrepreneurs and institutions under
pressure. While current entrepreneurship education
curriculums are build upon in-use business models, studies
show none or limited use of detailed business plans by
successful start-ups [4]. This apparent contradiction, is
justified in the literature review as the origins of the
instrument and the current reality of entrepreneurs are
understood.
B. Business Model
The emergence of the business model concept was linked
to the disruption of the dotcom's. Internet based ventures
became business models best known users, at some times
being the most valuable asset of the company [3]. A
definition of a business model should give answers to few
basic, but key questions to understand how a business makes
money [1], such as: How is value created? Who do we create
value for? How is value captured? How are we going to be
competitive?[2].
Extant literature provides definitions and taxonomies of
the business model concept, authors converge in placing the
value proposal or unit of business as the central element of
the business model definition. In a second level of detail, the
list of key four components is completed with customer
interface, infrastructure management or activity
configuration, financial aspects (cost and revenue) [12].
Despite the concept of the business model is abstract and
simple enough: how do we plan to make money? There are
different usage patterns, one is the business model as a
market device or instrument [3], and the more abstract or
WORKSHOP – RESEARCH METHOD COURSE - 2010
related to strategic planning of business model as a concept
[1].
C. Early-stage ventures in emerging sectors
In an entrepreneurial setting, the definition of the business
model is unarguably a significant and prominent issue [13],
but its usage as an instrument to assess the value of the
venture fails to deliver either its communicative or
ceremonial function [14]. In dynamic, complex and uncertain
markets of emerging sectors, organizations are forces to
frequently re-evaluate their value delivery and capture
proposal in order to sustain its market fit [15].
Entrepreneurs develop mechanisms and practices such as:
trial and error, effectuation [16], heuristics decisions-making
[17], sense-making processes [18], to successfully navigate
this environments. At the same time, entrepreneurs in early-
stage ventures are influenced by cognitive abilities that
current literature describes as: entrepreneurial cognition ,
positive affect [19] , optimism , self-efficacy and motivation
[20].
In the early-stages of the venture entrepreneurs interaction
with the market is therefore driven by experimentation, not
exploitation, in an uncertain environment.
D. Research Question
This work-in-progress aims to get a better understanding
on whether the business models are adequate instruments to
assess the value of early-stage entrepreneurial ventures in
emerging sectors.
III. RESEARCH DESIGN
The authors are using a qualitative research method,
following a grounded theory approach. In-depth interviews
are being conducted with a group of entrepreneurs and data is
being studied and encoded by a team of three researchers.
The selection of a grounded theory approach is based on
both the subject and objective of the research [21]. The aim
of the authors is to better understand how actors interpret a
reality [22] and to gain insights in the way they organize
their transition from a business idea into a venture. Aiming to
uncover theories and frameworks from the data collected,
following iteration of theory review and further data
collection.
IV. EXPECTED OUTCOMES
What this research posits is that the usual structure of a
business model is not enough to represent all the tenets that
should be considered to assess, in their early-stages, the
survivability of an entrepreneurial venture in today’s global
dynamic environment.
The authors expect to get some clues to propose an
enriched business model concept that better acknowledges
the assessment complexity of the viability of a new
entrepreneurial venture.
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2
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