sanders j scriptie def.pdf

ThebusinessmodelcanvasofNGOsJ.Sanderse Page1

ThebusinessmodelcanvasofNGOs

JudithSanderse837572403

OpenUniversiteitFaculteitManagementwetenschappenEindscriptievoordewomasteropleidingManagement Begeleider/examinator: Dhr.Dr.F.deLangenMedebeoordelaars: Dhr.Drs.M.VanLuik,

Dhr.W.OomsMsc,Dhr.Prof.Dr.J.Semeijn

3Maart2014


PrefaceThisresearchisconductedaspartoftheMasterofScienceinManagementdegreeattheOpenUniversityintheNetherlands.HavingstartedmycareerinthecorporatesectorandnowhavingspentthelasteightyearsintheNonGovernmentalOrganisations(NGO)sector,IwantedtoconductaresearchthatcombinesmybusinessbackgroundwiththerealityoftheNGOsectortoproducesomethingthatwouldbeofpracticalbenefittoNGOsandtheacademicworld,somethingthatwouldnotbeanotherreportgatheringdusk,butatoolthatNGOscoulduseintheirdailywork.Afterhavingdevelopedaconceptualmodel,itwastestedwithseveralFoundationsandInternationalNGOs.Duringthistestingphasetwooftheorganisationsstartedusingthetoolstraightaway,oneforcommunicationpurposesandtheotherforinternaldiscussions.Thiswasverymotivating.TherearealotofpeopleandorganisationswhoIwouldliketothankfortheircontribution,supportandtime.First,IwouldliketothankDrFrankdeLangen,whowasmysupervisorduringthisresearch.Hehasgreatindepthknowledgeonthesubjectofbusinessmodelsandthatincombinationwithhiscommunicationskillsandapproachableaswellassupportivementoringstyle,madeitbothapleasureandagreatlearningexperienceworkingforhim.Second,IwouldalsoliketothankallthepeopleandorganisationswhomIhaveinterviewedfortheirtime,insightandcommentsontheconceptualbusinessmodelcanvas.AndfinallyIwouldliketothankmyhusbandDevendraRanaforallhissupportandpatience.

ExecutiveSummaryIn1999theglobalnonprofitsectorhadaturnoverofover$1trillionwith19millionfullypaidemployees.Itwastheequivalentoftheeighthlargesteconomy(Sustainability2003).Despitethis,itwaspoorlyunderstood.In2008Lambell,Ramia,NylandandMichelotticoncludedthatnongovernmentalorganisations(NGO)arestillrelativelyabsentfromthemainstreamscholarlymanagementandbroaderbusinessstudiesliterature.Ontheotherhand,businessmodelsandbusinessmodelcanvasisasubjectthathasbeendiscussedandmuchresearchedsincethepublicationofOsterwaldersdissertationin2004.TheimportanceoftheNGOsectorandadesiretobetterunderstandtheirbusinessmodelswastheinspirationforthisresearchthecreationofatoolusefulforNGOs,academicsandpractitioners.Hence,themainobjectiveisthedevelopmentofaspecializedbusinessmodelcanvasforNGOs.ThecentralresearchquestionofthisstudyisdefinedashowisaNGObusinessmodelcanvasstructured?AbusinessmodelcanvasforNGOswasconceptualisedutilisingOsterwalderandPigneurs(2010)thirdpartyfundedmodelasthefoundation.Thebuildingblocksanddefinitionswereinitiallybasedonliteraturereviewsources(business,socialbusinessandNGOmanagementliterature).FollowinginterviewresponsesandanalysisofannualreportsofNGOsboththebuildingblocksanddefinitionswereadaptedtoalignbettertoNGOterminology.Thesearepresentedbelow.ThisconceptualbusinessmodelcanvasforNGOswastestedthroughinterviewswithfourNGOexpertsandleadersoftwoFoundationsandfiveInternationalNGOs(INGO)usingthecasestudymethod.Thistestingledtothedevelopmentoftwoseparatebusinessmodelcanvases.ThecanvasforFoundationsisaslightadaptionfromOsterwalderandPigneursthirdpartyfundingbusinessmodel(2010).TheothercanvasisapplicableforINGOswithmultiplestreamsofincome.Thisismadeupoftwosections,oneforprogrammaticandtheotherforfundraising/marketingandfinancingactivities.Thisdivisionistheresultofadesiretomaintainclarityandhencetheusabilityofthebusinessmodelcanvasasatoolforcommunications,visualizationofbusinessmodelsandanalysis.Theintervieweesconfirmedthepracticalrelevanceandutilityofthebusinessmodelcanvas.Inaddition,ithasacademicrelevanceduetothebusinessmodelcanvassspecificusageforNGOs.Thisprovidesabasisforfurtherresearch,suchas,comparativeanalysisandhistoricalanalysisofNGObusinessmodelsandsoforth.BusinessmodelcanvasforFoundationsVision:


Relationships UltimateBeneficiaries

Valueproposition

KeyActivities

KeyPartners Mission Main

ProgrammesKeyResources Programmedelivery

methods Brand

Expenditure Income

Impact


BusinessmodelcanvasforINGOsVision:

Fundraising/Marketing&Financing

Programmatic

KeyResources

RelationshipsKey

Partners

Channels

Customer/DonorSegmentsRelationships

Programmedeliverymethods

KeyResources

IncomeExpenditure

UltimateBeneficiaries

ValuePropositiono Missiono KeyProgrammes

o Brand

Impact

ImpactKeyActivities

KeyActivitiesKeyPartners


Keydefinitions SourceBusinessmodel Abusinessmodeldescribestherationaleofhowan

organizationcreates,delivers,andcapturesvalue.Osterwalder&Pigneur(2010)

Vision Outlineswhattheorganizationwantstobe.Itcanbeemotiveandisasourceofinspiration.Forexample,acharityworkingwiththepoormighthaveavisionstatementwhichreads"AWorldwithoutPoverty."

Adaptedfrominterviews

KeyPartners Thenetworkofcooperativeagreementswithotherpeopleororganizations(includinggovernments)necessarytoefficientlyofferanddistributetheorganisationsmissionandprogrammes.

AdaptedfromMichelini&Fiorentino(2012)andinterviews

KeyActivities Themainactionswhichanorganisationneedstoperformtocreateitsvalueproposition.

AdaptedfromOsterwalder&Pigneur(2010)andinterviews

KeyResources Thephysical,financial,intellectualorhumanassetsrequiredtomakethebusinessmodelwork.

Osterwalder&Pigneur(2010)

ValueProposition

Theorganisationsmission,itsmainprogrammesandbrand.

AdaptedfromBaguley(2009);Collins(2005);Michelini&Fiorentino(2012);Osterwalder&Pigneur(2010),NGOannualreportsandinterviews

Mission Definesthefundamentalpurposeofanorganization,succinctlydescribingwhyitexistsandwhatitdoestoachieveitsvision.Forexample,thecharityworkingwiththepoorcanhaveamissionstatementas"providingjobsforthehomelessandunemployed".

Adaptedfrominterviews

Relationships Thetypeofrelationshiptheorganisationhasestablishedorwantstoestablishwitheachkeybeneficiaryordonorsegment.

AdaptedfromOsterwalder&Pigneur(2010)

Programmedeliverymethods

Themethodwhichtheorganisationusestoachieveitsmissionorprogrammeactivitiestothebeneficiaries.

AdaptedfromOsterwalder&Pigneur(2010)andinterviews

UltimateBeneficiaries

Thetargetgroupwhotheorganisationprincipallyaimstoreachandservetoachieveitsvision/mission.

AdaptedfromSleurink(2002)andinterviews

Channels Themethodsofcommunication,distributionandsalesusedbytheorganizationtointerfacewithitscustomer/donorsegments.

AdaptedfromOsterwalder&Pigneur(2010)

Customer/DonorSegments

Thedifferentgroupsofcustomersand/ordonorsegmentswhichtheorganisationtargetsforitsfundraisingactivities.Inthiscomponentcustomerstendtobemorerelatedtothemerchandisingsectionoftheorganisationanddonorstendtoberelatedtothefundraisingsectionoftheorganisation.

AdaptedfromOsterwalder&Pigneur(2010);Sleurink(2002)andinterviews

Income Theincomeorfundingstreams,thiscouldbe:donations,merchandises/sales,investmentsorotherincomestreamsavailablefortheorganisationtoworkonitsvalueproposition.

AdaptedfromNGOannualreportsandinterviews

Expenditure Thetotalexpenseswhichtheorganisationincurred(orwillincur)toimplementtheagreedactivities.

AdaptedfromOsterwarlder&Pigneur(2010),NGOannualreportsandinterviews


Impact Thehigherlevelsituationthattheprojectorprogrammeaimstoachieve.

AdaptedfromintervieweewhobaseditontheBritishDevelopmentAgency(DFID)terminology

TableofContentsPreface..................................................................................................................................................... 3ExecutiveSummary ................................................................................................................................. 41Introduction.......................................................................................................................................... 91.1Driveroftheresearch.................................................................................................................... 91.2Researchobjectiveandresearchquestion ................................................................................. 101.3Scientificrelevance...................................................................................................................... 101.4Practicalrelevance ...................................................................................................................... 101.5Methodofresearch..................................................................................................................... 111.6Structureofthereport ................................................................................................................ 11

2Theworldofbusinessmodels,socialbusinessandNGOs ................................................................. 122.1BusinessModeldefinition ........................................................................................................... 122.2UseofBusinessModelandBusinessModelFramework............................................................ 142.3Socialbusiness............................................................................................................................. 152.4BusinessModelComponentsorBuildingBlocks ...................................................................... 162.5NGO ............................................................................................................................................. 192.6ConceptualModel ....................................................................................................................... 21

3Methodology ...................................................................................................................................... 273.1Sourcesofinformation................................................................................................................ 273.2Researchstrategy ........................................................................................................................ 273.3Unitofanalysis ............................................................................................................................ 283.4Qualityofthecasestudydesign ................................................................................................. 293.5Casestudymethod...................................................................................................................... 293.6Casestudyselectioncriteria........................................................................................................ 303.7Datacollection............................................................................................................................. 303.8Interview...................................................................................................................................... 313.9Dataanalysis................................................................................................................................ 34

4Results ................................................................................................................................................ 354.1NGOexperts ................................................................................................................................ 35


4.1.1OutcomeoftheinterviewswithNGOexperts ..................................................................... 354.1.2Changestotheconceptualbusinessmodelcanvasanddefinitions.................................... 37

4.2Foundations................................................................................................................................. 384.2.1BackgroundontheFoundations .......................................................................................... 384.2.2AdjustedconceptualmodelanddefinitionsforFoundations.............................................. 394.2.3OutcomeoftheFoundationinterviews ............................................................................... 39

4.3INGOs........................................................................................................................................... 414.3.1INGOintroductions............................................................................................................... 414.3.2AdjustedconceptualmodelanddefinitionsforINGOs........................................................ 424.3.3OutcomeoftheINGOsinterviews ....................................................................................... 44

4.4NGObusinessmodelcanvasanditsdefinitions.......................................................................... 454.4.1Foundationsbusinessmodelcanvastemplate .................................................................... 464.4.2INGOsbusinessmodelcanvastemplate .............................................................................. 474.4.3ExampleINGObusinessmodelcanvasProActNetwork ................................................... 49

5.Conclusions,ReflectionsandDiscussions ......................................................................................... 505.1Conclusionsfrominterviews ....................................................................................................... 505.1.1Differencebetweentheconceptualmodelandthefinalcanvases..................................... 505.1.2Usability................................................................................................................................ 515.1.3Easeofcompletion............................................................................................................... 515.1.4Observations ........................................................................................................................ 51

5.2Reflection..................................................................................................................................... 515.2.1Reflectionontheresearchmethodology............................................................................. 515.2.2Reflectiononlessonslearnt................................................................................................. 53

5.3Discussion .................................................................................................................................... 535.3.1Academicrelevance ............................................................................................................. 535.3.2Practicalrelevance ............................................................................................................... 54

5.4Recommendations ...................................................................................................................... 54References............................................................................................................................................. 55Annex1Definitionsofabusinessmodel .......................................................................................... 60Annex2BusinessmodelcomponentsmatrixI ................................................................................. 61Annex3Osterwaldersandthisresearchsbusinessmodelcomponentscomparison.................... 62Annex4BusinessmodelcomponentsmatrixII ................................................................................ 63Annex5InterviewpreparationNGOexperts.................................................................................. 64


Annex6InterviewpreparationFoundations .................................................................................... 66Annex7InterviewpreparationINGOcasestudies ........................................................................... 69Annex8ProActNetworkbusinessmodelcanvas ............................................................................. 72

1Introduction1.1DriveroftheresearchIn2008Lambell,Ramia,NylandandMichelottimentionintheirresearchthattheprofileofNongovernmentalorganisations(NGOs)inrelationtobusiness,managementandsocietyhasincreasedsignificantlyoverthepasttwodecades.DespitethisNGOshavebeenrelativelyabsentfrommainstreamscholarlymanagementandbroaderbusinessstudiesliterature.They,thusremainsignificantlylesswellunderstoodthantheirforprofitcounterparts.Toaddressthisshortcoming,itwasdecidedtoconductresearchthatcombinesNGOsandbusinessliterature.TheoriginalobjectiveofthisresearchwastoreviewthechangingbusinessmodelsofNGOsoverthepast15to20years,andtoexaminethecasualfactorsforthesechanges.However,whenconductingthisresearchitwasdiscoveredthatatestedtoolforexaminingandmeasuringchangingNGObusinessmodelswasnotavailable.Thischangedtheoriginalfocusoftheresearch.BusinessmodelcanvasisasubjectthathasbeendiscussedandmuchresearchedsincethepublicationofOsterwaldersdissertationin2004.Thisinitiallymostlyfocussedonebusinessandcompanies.Inthelastfewyearsthebusinessmodelresearchareahasexpandedtoincludesocialbusiness(Michelini&Fiorentino,2012;Yunus,Moingeon,&LehmannOrtega,2010),NGObusinesssectorpartnerships(Yaziji&Doh,2009),solutionorientatedbusinesses(Storbacka,2011),sustainablebusinesses(Boons&LdekeFreund,2012),livingsystems(Senge,Smith,Kruschwitz,Laur,&Schley,2010)andindividualbusinesses(Svejenova,Planellas&Vives,2010).However,thistopicisstillunderresearchedandhaspotentialforfurtheracademicresearch,asstatedbyMicheliniandFiorentino(2012,573)furtherresearchshouldstrivetoextendtheanalysistoallthehybridkindofbusinessmodelsthatarebeingdevelopedwiththeaimofcreatingsharedvalue.Ingeneral,relativelylittlehasbeenwrittenwithregardstothebusinessmodelsofNGOs(alsocallednonprofitornotforprofitorganisations).Thiswashighlightedasfarbackas1991byDabbs(68),Organizationalresearchshouldtakenoticeofthegrowingnonprofitbusinesses,asthenumericalsignificanceofnonprofitscannotbedisputed.TheSustainabilityreport(2003)statedthatin1999theglobalnonprofitsectorhadaturnoverofover$1trillion,with19millionfullypaidemployees,equivalenttotheeighthlargesteconomy.However,itisstillverypoorlyunderstood.OneofSustainabilitysfindingswasthatonecouldexpectgrowinginterestinNGOpriorities,strategies,accountabilityandbusinessmodels.SincetheSustainabilityreport(2003)theacademicliterature,newspaperarticlesanddiscussionsonNGOtransparencyandaccountabilityhasincreasedsignificantly.Nonetheless,thesubjectofNGObusinessmodelscanstilltobefurtherexplored.Thecombinationofalackofatestedbusinessmodelframeworkorcanvas1forNGOsandthenascentstageofthebusinessmodelliteratureledtoachangeinfocusofthisresearchtowardsdevelopingandtestingabusinessmodelcanvasforNGOs.

1Thetermsbusinessmodelframeworkandbusinessmodelcanvasareusedinterchangeably


1.2ResearchobjectiveandresearchquestionIn2010OsterwalderandPigneurdevelopedthebeyondbusinessmodel,avariationoftheirninebuildingblocksbusinessmodelcanvas.Thebeyondbusinessmodelhastwovariants,one,thethirdpartyfundedbusinessmodelisaimedatnonprofits,andtheother,thetriplebottomlinebusinessmodelisaimedatsocialbusiness.LiteraturereviewindicatesthatthethirdpartyfundedbusinessmodelhasnotbeentestedonexistingNGOs.ItalsoappearsthatabusinessmodelframeworkforNGOshasyettobedeveloped.MicheliniandFiorentiono(2012)concludedthatfurtherresearchshouldbeconductedonallhybridkindsofbusinessmodelstobeabletocreatesharedvalue.TheobjectiveofthisstudyistodevelopabusinessmodelcanvasforNGOsfollowstheaboveconclusion.Thiswillexpandtheknowledgeofonehybridbusinessmodelandprovideapracticaltoolforpractitioners,academicsandnongovernmentalorganizations.AtthesametimeitprovidesgreaterclarityonthebusinessmodelsofNGOs.Centralresearchquestionbasedontheliteraturereviewandcasestudies:howisaNGObusinessmodelcanvasstructured?Subquestions1. Whatisabusinessmodel?2. Whatisabusinessmodelcanvasandwhatareitscomponents?3. Whatistheuseofabusinessmodelframeworkorcanvas?4. WhatisaNGO?5. WhichbusinessmodelsaresuitableforNGOs?6. Whatarethebuildingblocks2ofabusinessmodelcanvasforNGOsandhowwouldtheybe

defined?7. Howdoestheconceptualbusinessmodelcanvasanditscomponentsbasedontheliterature

reviewrelatetothecasestudies?8. Basedontheresultsofthecasestudies,howshouldtheconceptualmodelbeadaptedtodrawa

businessmodelcanvasforNGOsthatcanbeusedbypractitioners,academicsandnongovernmentalorganizations?

Thisresearchfocusesfirstoninvestigatingthesubquestionsinordertoanswerthecentralresearchquestion.ThecentralresearchquestionisopenendedasaccordingtoEdmondsonandMcManus(2007),thelessthatisknownaboutaspecifictopic,themoreopenendedtheresearchquestions.1.3ScientificrelevanceFollowingMicheliniandFiorentiono(2012),OsterwalderandPigneur(2010),theSustainabilityreport(2003),andVivesandSvenenova(2011)thisstudywillbroadentheacademicknowledgeofbusinessmodelsbyresearchingahybridkindofbusinessmodeland creatingatestedbusinessmodelcanvasforNGOs,henceexpandingtheexistingbusinessmodelliterature,andalsocontributingtoabetterunderstandingofhowNGOsfunction.ThedevelopedbusinessmodelcanvaswillenablefurtherresearchofbusinessmodelsofdifferentNGOsandtheirevolutionovertimetheoriginalaimofthisresearch.1.4PracticalrelevanceTheliteraturereviewhasrevealedthatatestedbusinessmodelcanvasforNGOsdoesnotexist.SuchacanvaswouldbeatoolthataddsvaluetoNGOsfordifferentpurposes:sharing,communicating(internalandexternally),describing,analysing,managing,planningandfundraising

2Thetermsbusinessmodelcomponentsandbusinessmodelbuildingblocksareusedinterchangeably


(section2.2).Kindstrm(2010)highlightsthatforresearchingaparticularorganisation,abusinessmodelapproachoffersausefulanalyticalframeworktounderstandtheorganisationanditsinherentparts.AsacontributorinOsterwalderandPigneursbook(2010)identified,oneofthebiggestobstaclesfornonprofitstoinnovatetheirbusinessmodelistheinabilitytounderstandtheirexistingmodel.Therefore,atestedbusinessmodelcanvasforNGOswouldhavepracticalrelevancetosupportorganisationstobetterunderstand,communicateanddesigntheirbusinessmodels.1.5MethodofresearchAresearchmodelwasdesigned,usingthemethoddescribedbyVerschurenandDoorewaard(1998),toactasmapthroughouttheresearchprocess.Figure1showstheresearchmodelandhowthedifferentsectionsofthereportarerelatedtotheresearchquestions.5rt4mnFigure1:ResearchmodelforthisstudyadaptedfromVerschurenandDoorewaard(1998).Usingseveralmethodsofresearch,aconceptualbusinessmodelframeworkwasfirstpreparedbasedonananalysisofthebusinessmodel,socialbusinessandNGOliterature.ThisconceptualmodelwastestedwithfourNGOexpertsandonseveralNGOs(FoundationsandINGOs).FoundationsareatypeofNGO.ThekeydifferencebetweenaFoundationandanINGOisthatwhilsttheformerfunctionsprincipallyasagrantmakerthelatterdoesnot(Baguley,2009).ThecasestudiesmethodprovidedinsightintothestructureandcomponentsoftheNGObusinessmodel.Casestudiesweredevelopedbasedoninterviewsandsecondarymaterials(media,brochures,articlesandannualreports).Chapter3providesfurtherdetailsoftheresearchmethodology.1.6StructureofthereportThischapter(chapter1)providestheintroductionandstructureoftheresearchandthereport.Thesecondchaptercontainstheresultsfromtheliteraturereviewonbusinessmodels,businessmodelcanvas,businessmodelcomponents,aswellas,socialbusinessesandNGOs.Thisleadstothedevelopmentofaconceptualbusinessmodelcanvas.Thethirdchapterprovidesanoverviewofthemethodologyusedthroughoutthedifferentstagesoftheresearch.Chapterfourshowstheresultsoftheindividualcasestudiesandprovidestheanalysisoftheinterviewresults.Thereportfinisheswiththemainconclusionsdrawnfromtheresearchandtheconcludingrecommendationsforfurtherstudies.

Analysetotalresultsandsummarize.Researchquestion:8Sections:4.4and5.1

AnalyseresultsResearchquestion:7Section:4.1


NGO/Nonprofit

literatureResearchtions:4,ques 5

Secti 2.3,2.5

and6ons:

Businessmodel

literatureResearchestions:1,3and5

Section:2.1,

qu 2,

2.2and2.4

ConceptualNGObusinessmodelcanvas

Researchquestion:6Sections:2.6

NGOExpertsResearchquestion:7

Section:4.1

FoundationsResearchquestion:7

Section:4.2 NGObusinessmodelcanvas

Centralresearchquestion

Section:4.4

INGOsResearchquestion:6

Section:4.3



2Theworldofbusinessmodels,socialbusinessandNGOsInthischapterthedifferentdefinitionsoftheresearchquestionsarediscussed.ThebuildingblocksofthebusinessmodelcanvaswillbedefinedtoidentifythosecomponentsrequiredtoanalysebusinessmodelsofNGOs,therebyenablingthedraftingofaconceptualmodelbasedontheliteraturereview.2.1BusinessModeldefinitionInterestinthebusinessmodelconcepthasincreasedsignificantlysinceOsterwalder(2004)identifiedthattheconcepthadhardlybeenresearched,andthatitwasintheearlystagesofitsevolution(Mansfield&Fourie,2004).Despitetheincreasedattention,forexample,viathespecialbusinessmodeleditionofLongRangePlanning(2010)andthepublicationoftwospecialissuebooksonbusinessmodelsbyHarvardBusinessReviewin20102011,thereisstillalackofclarityaboutthemeaningofbusinessmodels,(Zott,Amit,&Massa,2011),andnowidelyaccepteddefinition,(CasadesusMasanell&Ricart,2010;Dahan,Doh,Oetzel,&Yaziji,2010).Zottetal.(2011,1034)refertoGladwin,Kennelly,&Krauses(1995)statementthatdefinitionalandconceptualdisagreementistobeexpectedduringtheemergentphaseofanynewpotentiallybigideaofgeneralusefulness.Thelackofclarityaroundthemeaningofbusinessmodelandnodefinitivedefinitionhascatalysedresearchers,likeAlbei,ElHaddadehandAvison(2008);Brettel,StreseandFlatten(2012);Chesbourg(2006);Dahanetal.(2010);Osterwalder,PigneurandTucci(2005);PerkmannandSpicer(2010);Zottetal.(2011)andmanymore,toresearchbusinessmodelsandbegintoidentifydifferentstreamsandmeaning.Thelackofadefinitedefinitionhasmeantthatmostofthestudiesstartwithasummaryoverviewofthedifferentbusinessmodeldefinitionswithsomeofthemgroupingthedefinitionsintocategories.Thelackofdefinitionalclarityhasalsomeantthatmostpapersdefinetheirmeaningofbusinessmodeltosetthecontext.Someresearchersstudiedthedifferentwaysbusinessmodelsaredescribed,likeZottetal.(2011).Theirconclusionisthatdependingonthefocusoftheresearch,businessmodelscanbeusedtodescribe:a) Ebusinessandtheuseofinformationtechnologyinorganizations;b) Strategicissues,suchasvaluecreation,competitiveadvantage,andfirmperformance;c) Innovationandtechnologymanagement.Inaddition,theyidentifiedthat:1) Thebusinessmodelisanewunitofanalysisthatisdistinctfromtheproduct,firm,industry,or

network.Itiscenteredonafocalfirm,butitsboundariesarewiderthanthoseofthefirm;2) Businessmodelsemphasizeasystemlevel,holisticapproachtoexplaininghowfirmsdo

business;3) Theactivitiesofafocalfirmanditspartnersplayanimportantroleinthevarious

conceptualizationsofbusinessmodelsthathavebeenproposed;and4) Businessmodelsseektoexplainbothvaluecreationandvaluecapture.Othersfocussedonidentifyingthedifferentstreamsinthebusinessmodelliterature,likeBoonsandLdekeFreund(2012),orthedominantconceptions(Perkmann&Spicer,2010),orhowbusinessmodelscanbeseen(Bask,Tinnil,&Rajahonka,2010).WhileAlbeietal.(2008,8)approachedtheissueinadifferentmannerbygroupingthedifferentbusinessmodeldefinitionstodevelopaconsensusdefinition,whichisdescribedasanabstractrepresentationofanorganization,beit


conceptual,textual,and/orgraphical,ofallcoreinterrelatedarchitectural,cooperational,andfinancialarrangementsdesignedanddevelopedbyanorganizationpresentlyandinthefuture,aswellasallcoreproductsand/orservicestheorganizationoffers,orwilloffer,basedonthesearrangementsthatareneededtoachieveitsstrategicgoalsandobjectives.Thoughthedefinitionisforthedigitalbusinessorganization,itcanbetakeninabroadersetting.Incomparingthebusinessmodelresearchbetweentheperiod20022004andthepresentday,therenowappearstobegreaterconsensusofthebusinessmodeldefinition,asmostconceptualizationsofthebusinessmodelcontaincommondefinitionalelements(Dahanetal.,2010).Anotherfindingwhenreviewingthedifferentstudiesisthatresearchershavemostlyusedthesameauthorsanddefinitionsasuntilquiterecentlyitwasalittleresearchedsubjectandasatthebeginningthebusinessmodelconceptmainlyfocussedonebusinessandtechnology.Hence,theoriginalacademicliteraturestreamsdealingwithbusinessmodelswerelimited,withthesameliteraturestudiedfromdifferentperspectives.Overtimethebusinessmodelconcepthasbroadenedtoincludeothertypesoforganisationsandwiththisthebusinessmodeldefinitionandresearchscopehasexpanded.Initiallyitsmainfocuswasonebusinessandthedigitaltechnology,Zottetal.(2011),expandingtoincludeothertraditionalprofitmakingbusinesses.Withthedefinitionwidenedbyreplacingbusinesswiththetermorganisationorindividuals,thebusinessmodelconceptisseentobeapplicabletoeveryorganisation(CasadesusMasanell&Ricart,2010;Osterwalder&Pigneur,2010;Vives&Svejenova,2011).Withregardstothislastpoint,eventhoughresearchersmaynotalwayshaveadjustedtheirdefinitionofabusinessmodel,theyhavestartedtoprovideexplanationsregardingtheapplicabilityofthebusinessmodel,likeCasadesusMasanellandRicart(2010,129)everyorganisationmakeschoices,whichallhaveconsequences,everyorganizationclearlyhasabusinessmodelofsomekind.OrlikeAspara,Lamberg,LaukiaandTikkanen(2011)byhighlightingthecorporatebusinessmodeldefinitionintheirresearch,insteadofmentioningitasabusinessmodel,aselectionofthedifferentdefinitionsofabusinessmodelshowthisevolution(annex1).Shafter,SmithandLinder(2005,202)notethatthedefinitionofabusinessmodelshouldbesimpleenoughsothatitcanbeeasilyunderstood,communicatedandremembered.ThiscriteriawillbetakenintoaccountinconceptualisingthebusinessmodelcanvasforNGOs.Zottetal.(2011,1020)arguethat:

Itappearsthatresearchers(andpractitioners)haveyettodevelopacommonandwidelyacceptedlanguagethatwouldallowresearcherswhoexaminebusinessmodelconstructthroughdifferentlensestodraweffectivelyontheworkofothers.Scholarsdonotagreeonwhatabusinessmodelis.Thisisbecauseresearchersfrequentlyadoptidiosyncracticdefintionsthatfitthepurposeoftheirstudiesbutaredifficulttoreconcilewitheachother.Asaresult,cumulativeprocessishampered.

Keepingtheissuesmentionedaboveinmindandbuildingontheexistingevolutionofbusinessmodeldefinitions,thisresearchhasadaptedthefollowingdefinition:Abusinessmodeldescribestherationaleofhowanorganizationcreates,delivers,andcapturesvalue,(Osterwalder&Pigneur,2010).Thisdefinitionwaschosenasit:o meetstheabovementionedsuggestionsofShafteretal.(2005)andZottetal.(2011);o allowsfortheinclusionandanalysisofotherbroaderorganisationalbusinessmodels,Casadesus

Masanelletal.(2010)andOsterwalderetal.(2010);o enablesvalueaddedanalysis;


o allowsforvaluestobeinterpretedinabroadermanner,Vivesetal.(2011)andZottetal.(2011),and;

o canbeusedasabasistodevelopabusinessmodelcanvasthatcanbeusedtoanalyseawidervarietyoforganisations.

2.2UseofBusinessModelandBusinessModelFrameworkItdoesnotalwaysseemtobeclearinwhichcontextthebusinessmodelshouldbeanalysednorisitclearwhichcomponentsexactlyconstituteabusinessmodel,Bretteletal.(2012,87).Thissectionwillfocusonprovidingclarityonthebusinessmodelframeworkanditsuse,bydefiningthetermsoastosearchforasuitablebusinessmodelframeworkforNGOs.Oneofthemajordifferencesbetweenthebusinessmodeldefinitionandthebusinessmodelframeworkisthatthebusinessmodeldefinitionexplainswhatabusinessmodelis,while,thebusinessmodelcanvasshowsthemodeloftheorganization.Osterwalder(2004)highlightsthatthebusinessmodelframeworkcanhaveseveralfunctions:1)Understandingandsharing,2)Analysing,3)Managing,4)Prospecting,and5)Patenting,witheachfunctionhavingseveralsubfunctions.WhileDemilandLecocq(2010)identifytwodifferentusesoftheconcept:a)astaticapproach,asablueprinttofulfilthefunctionofdescriptionandclassification,and;b)atransformationalapproach,asatooltoaddresschangeandfocusoninnovation.ThesecanbeseenascomponentsofOsterwaldersunderstanding,analysingandmanagingfunctions.DeLangenandBitterRijkema(2012)highlightthatthebusinessmodelframeworkcanbeusedbyacompanyororganizationtoaskitselffundamentalquestionsconcerningitsresources,activitiesandpartnershipsforitscurrent,aswellas,futurepotentialusers.ThisisanalogoustoOsterwaldersunderstanding,analysingandmanagingcomponent.BadenFullerandMorgan(2010,157)statethatoneoftherolesofabusinessmodelistoprovideasetofgenericleveldescriptorsofhowafirmorganisesitselftocreateanddistributevalue.Itcanalsobeusedasascalemodel,offerrepresentationorshorthanddescriptionsofthingsthatareintheworld,orrolemodels,thatofferidealcasestobeadmired.ThiscouldbeseenassimilartoOsterwaldersunderstandingandanalysingcomponent.Shaferetal.(2005),includeintheirdescriptionalsothecommunicationaspectofthebusinessmodel.WhileCasadesusMasanellandRicart(2010)highlighttheunderstandingandanalysiscomponentofthebusinessmodel.Inadditiontotheuseofbusinessmodelframeworksbyforprofits,Seelos(2010,23)highlightstheuseofthebusinessmodelfornonprofitsto,facilitatebetterinternalcoordinationofactivitiesandexternalevaluationofanorganizationspotential.Fororganizationsinthenotforprofitsectorthismightfacilitateinteractionwithphilanthropiststohighlightthemostproductiveusesofdonations,forexample,toidentifyandeliminateimportantbottlenecksinthebusinessmodeltoachievescale.Sleurink(2002)mentionsthatbusinessmodelscanhelpNGOsinguidingtheirorganizationsmissionandtheirstrategytoaccomplishthis,aswellas,providingaclearframeworkforunderstandingtheNGOinrelationshiptoitsenvironment.Therefore,itcanbeconcludedthatthebusinessmodelframework:1) Describes(BadenFuller&Morgan,2010;Demil&Lecocq,2010),Captures(Osterwalder,2004),

Understands(CasadesusMasanell&Ricart,2010;Osterwalder,2004);2) Shares(Osterwalder,2004)andCommunicates(Osterwalder,2004;Seelos,2010;Shaferetal.,

2005)tointernalandexternalstakeholders(Seelos,2010);3) Analyses(Osterwalder,2004;Shaferetal.,2005),whichcanbedoneobjectivelyandsubjectively

(Doz&Kosonen,2010);4) ManagesandPlans(Demil&Lacocq,2010;Magretta,2002;Osterwalder,2004);


5) Prospects(Osterwalder,2004;Seelos,2010),and;6) Patentsbusinessmodels(Osterwalder,2004).2.3SocialbusinessBeforegoingintothebusinessmodelcomponents,someattentionwillfirstbegiventosocialbusiness,asthisbusinessmodelhasbeenincludedinthecomponentanalysis.Socialbusinesssitsbetweenforprofitandnonprofitsectorsandcontainselementsofboth.Ithasamajoroverlapwithforprofitsbythatfactthatitisabusinessinwhichprofitsaremade;howevertheowner(s)donotintendtomakeprofitsforthemselves(Yunusetal.2010).Theoverlapwiththenonprofitisthatithasastrongsocialfocus;butitisnotacharity(Yunusetal.).Hence,socialbusinessisbasedontheconceptofsharedvalueandblursthelinebetweenforprofitandnonprofitorganizations(Michelini&Fiorentino,2012).ThesocialbusinessconceptasexplainedbyYunusetal.(311)isanoloss,nodividend,selfsustainingcompanythatsellsgoodsorserviceandrepaysinvestmentstoitsowners,butwhoseprimarypurposeistoservesocietyandimprovethelotofthepoor.BoonsandLdekeFreund(2012,7)explainthatthepremiseofsocialbusinessistodevelopselfsustaininginsteadofprofitmaximizingbusinesses,givespacetoentrepreneursandmanagerstofocustheirbusinessmodelsonsocialissues.MicheliniandFiorentino(2012)distinguishbetweentwobusinessmodelswithinthesocialbusinesssphere,thesocialbusinessmodelandtheinclusivebusinessmodel.Theformerreferstoventuresthataimtosolveasocialproblembyusingbusinessmethods,includingtheproductionandsaleofproductsand/orservices.Thesebusinessactivitiesshouldbeundertakeninawaythatisatleastselfsustaining,andifeconomicsurplusisgenerated,itshouldbeusedtoimprovethesocialobjectives.Theinclusivebusinessmodelofasocialenterprisecontributestowardspovertyalleviationbyincludinglowerincomecommunitieswithinitsvaluechainwhilenotlosingsightoftheultimategoalofbusiness,whichistogenerateprofit.Inclusivebusinessesconnectbothsupply(producers)withdemand(consumers),andthelocalwiththeglobaldimension,therebycreatingapositiveselfreinforcingprocessofeconomicwealthcreationandsocialempowerment.OsterwalderandPigneur(2010)callthesocialbusinessmodel,thetriplebottomlinebusinessmodel,associalbusinesseslookforecologicalandsocialbenefits,inadditiontotheeconomicbenefits.Theyhaveaddedtwoadditionalbuildingblockssocialandeconomiccostsandbenefitstotheirwellknownninebuildingblockbusinessmodelcanvas.ItisrelevanttostudythesocialbusinessmodelforthedesignofanappropriatebusinessmodelcanvasforNGOsasitcombinescomponentsoftheforprofitandnonprofitbusinesses,andarehencesimilartooroverlapwiththeNGObusinessmodel.Thesecomponentsare:1) Primaryfocusonthesocialand/orecologicalbenefits,notprofitmaximisation;2) Workwiththemorevulnerablesectionsofsociety;3) Workalotwithpartners;4) Ultimateperformanceismeasuredbytheimpactthattheyhaveontheground;5) Recipientoffundingfromoutsideparties.AshighlightedbySeelosandMair(2007)oneofthe

advantagesofsocialbusinessisthattheycanstillapplyandreceivefundingfromgovernments,aidagenciesorotherdonorsfortheiroperationsorexpansions.ThislastpointmovesawayfromYunusetal.(2010)definitionofsocialbusiness;and

6) Followingfrompoint5,thoughmostsocialbusinessesrunbybeingatleastbreakeven,theydohaveamajoradvantagecomparedtofullprofitbusinessinthatsocialbusinessesdonotnecessarilyhavetopaybacktheirinvestors.

Yunusetal.(2010)havedevelopedafiguretodistinguishthedifferentorganisationaltypes.Takingintoaccounttheissuehighlightedinpoint5and6,twogreyzoneshavebeenaddedwherethereis


anoverlapbetweentherespectivebusinessmodels(figure2).Basedonthisfigureonecanseetheoverlapbetweenthesocialbusinessmodelandboththenonprofitandfullprofitbusinessmodel.Thereforethesocialbusinessmodelisaninterestingandrelevantmodelforthisthesisandisincludedinthebusinessmodelcomponentsresearch.

Figure2:SocialbusinessmatrixdeveloppedbyYunusetal.(2010)includingthegreyzones.

2.4BusinessModelComponentsorBuildingBlocksThetermbusinessmodel.,generallyspeaking,theconceptreferstothedescriptionofthearticulationbetweendifferentbusinessmodelcomponentsorbuildingblockstoproduceapropositionthatcangeneratevalueforcustomersandthusfortheorganization,DemilandLacocq(2010,227).Inthissection,thebusinessmodelcomponentsorbuildingblocksof14businessmodelframeworksarereviewedandcompared.Thiswillbeusedforthedevelopmentoftheconceptualbusinessmodelcanvasthatwillbetestedinthisresearch.14studiesconductedbetween2003and2012werechosenforcomparison(annex2).Shaferetal.(2005)lookedatthecomponentsofabusinessmodelinstudiespublishedbetween19982002.Duetothisonlyonepublicationbefore2002hasbeenchosen,asthiswasnotincludedinShaferetal.sresearch.Alltheotherstudiesarefrom2003onwards.Incaseswherearesearcherhaspublishedmorethanonce,themostrecentpublicationhasbeenchosen.Publicationdatesofthe14studiesrangefrom2001:1study,2003:1,2004:1,2005:1,2009:1,2010:7,2011:1and2012:1.ForJohnson,materialwasusedwhichhepublishedin2010and2011togetherwithEyringandNairintheHarvardBusinessReview.Shaferetal.s(2005)overviewidentified20individualbusinessmodelcomponents,whichweregroupedintofouroverarchingcomponents:strategicchoices,createvalue,valuenetworkandcapturevalue.Thishasbeenusedasthebasisforthecomparison.ItcanbeseenthatseveralbusinessmodelcomponentsdonotexactlymatchShaferetal.sbusinessmodelcomponents,inaddition,othercomponentshavebeenincluded.Forexample,theChannelbuildingblockfromOsterwalderandPigneur(2010).Whenlookingatthebusinessmodelcomponents,severalpointscanbenoted:1. Severalofthemainbusinessmodelcomponentsappearimplicitorexplicitinnearlyallthe

reviews,irrespectiveofwhetheritconcernsthebusinessmodelcomponentsrelatedtotheearliernarrowerdefinitionorthemorerecentbroaderdefinitionofabusinessmodel.Theseare:Customer,ValueProposition,Revenue/Pricing,Output/Offering,Resources/AssetsandProcesses/Activities.ThisisinlinewiththeoutcomeofYunusetal.(2010).

2. Ifsupplierandpartnersarecombinedasasinglebusinessmodelcomponentitwouldbementionedinninestudies.Earlierstudiesusedthetermsupplierwhile,morerecentstudies


refertopartnersorvaluenetwork,withpartnersbeingdefinedassuppliersandotherpartnersthatmakethebusinessmodelwork(OsterwalderandPigneur,2010,38).ItamiandNishino(2010)usethetermtradingpartnerswhichincludesuppliers.

3. Ingeneral,mostofthebusinessmodelframeworksfocusonthevaluepropositionanditscustomersand/orstakeholders.Threebusinessmodelframeworksseemtodifferfromtherest.TheseareCasadesusMasanellandRicart(2010),ItamiandNishino(2010)andStorbacka(2011).CasadesusMasanellandRicartseeabusinessmodelasthechoicesandconsequencesthatanorganizationmakes.Thesechoicescanbedividedinto:Assets,PoliciesandGovernance.ItamiandNishinolookatthebusinessmodelasacombinationofabusinesssystemandprofitmodel.Thestudylooksmoreatthevaluecreationanddistributionprocess,internallyandexternallywithitspartners,itdoesnotseemtofocusonthevaluepropositionandalsodoesnotseemtofocusonitscustomers.Storbackaidentifieswiththesolutionorientatedbusinessmodelthattheorganisationandthecustomerworktogetherfromthestarttolookforasolutionuponwhichtheorganisationthentriestoselltheultimatesolutiontoitsclientthisbeingthesamecustomer.Toensurethatthebusinessmodelcapturesthiscollaborativerelationship,Storbacka(2011)identifiedthesolutionorientatedbusinessmodelasaframeworkthat:developssolutions,createsdemand,sellssolutionsanddeliverssolutions.

4. Incomparingbusinessmodelcomponentsbetween20002003(basedonOsterwalders2004dissertation)andthepresent,itcanbenotedthatinbothreviewsthevaluecreation/valueconfigurationelementwasmostcited(annex3).ThevaluepropositioncomponentinOsterwaldersstudywascitedasoftenasthevalueconfiguration,whileinthisresearchitwassecondmostfrequentlycited.

5. Thenumberofbusinessmodelcomponentsthatthestudieshaveincommonhasincreased(annex3).Thisconfirmsanearlierfinding(section2.1)thatthereisnowamoregeneralconsensusofthebusinessmodeldefinition,itsmeaningandhenceitscomponents.

InthefollowingpagesIwilldiscussthecomponentswhicharefoundinnineormoreframeworks.Customer:Thiscomponentdefinesthecustomerasbeingdifferentgroupsofpeopleororganisationsthataretargeted,hencethetargetmarket.Yunusetal.(2010)definestakeholdersasabusinessmodelcomponent,anddoesnotspecificallymentioncustomers.Valueproposition:Thisbuildingblockdescribesthebundleofproductsandservicesthatcreatevalueforaspecificcustomersegment,OsterwalderandPigneur(2010,22).Chesbourg(2010,355)articulatesitasthevaluecreatedforusersbyanofferingbasedontechnology.HedmanandKalling(2003)discusstheofferingofthecompanytoitscustomers,butnotthevaluecreationorvalueproposition. Thisisalsothemaindifferencebetweentheoutput/offeringandthevalueproposition.Thevaluepropositionincludesthevaluecreationcomponentoftheorganisation.Petrovic,KittlandTeksten(2003)seeitaspartoftheirvaluemodelwhicharecoreproducts/servicesandothervalueaddedservices.Thesolutionorientatedbusinessmodelexpressesvaluepropositionthatwillultimatelyenablecustomerstocreatevalue.Itfocuseslessontheorganisationsownvalueaddedactivities,butmoreonwhatitcancreateassolutionssothatthecustomerscancreatevalue.ForLindgardt,Reeves,StalkandDeimler(2009)thevaluepropositionalsoincludestherevenuemodel.Revenue/Pricing:Therevenuecomponentrepresentsthecashanorganisationgeneratesfromeachcustomersegment,aswellas,thepricingoftheoffering,volume,thestructureandthetiming.MicheliniandFiorentino(2012)alsoincludethewayacompanymanagesitsmoney.Yip(2004)doesnotexplicitlymentionarevenuecomponentinhisbusinessmodel,neitherdoCasadesusMasanell


andRicart(2010).HedmenandKalling(2003)andStorbacka(2011)emphasisethepricingcomponentoftheproductorservice,andnottheorganisationsrevenuemodelperse.Output/Offering:Theoutputorofferinggenerallyreferstoaproduct,service,orsolutionthattheorganisationhasgeneratedforitscustomer(s).Inmoststudiesoutput/offeringispartofthevalueproposition,seeannex2.Chesbrough(2010)andOsterwalderandPigneur(2010)articulateoutputmoreasthevaluepropositioninitstotalpackageandlessintheirvaluepropositioncomponentasopposedtostudies,likeYip(2004),Petrovicetal.(2003)andYunusetal.(2010).Resources/Assets:Resources/AssetsandProcesses/Activities,togetherrepresentthevaluecreationcomponentofabusinessmodel.Resources/Assetsdescribethoseessentialelementsrequiredforabusinesstoprosper.Resourcesallowtheorganisationtocreateandofferavalueproposition,reachmarkets,maintainrelationshipsandearnrevenue.Theresourcescanbephysical,financial,intellectual,orhuman.SomeresearcherslikeDemilandLacocq(2010);HedmenandKalling(2003);andOsterwalderandPigneur(2010)haveaspecificresources/assetsbusinessmodelbuildingblock,whileotherslikeChesbourgh(2010)haveitaspartoftheassetsrequiredtosupporttheorganisationsvaluechain.TheresourcescomponentishiddenandnotspecificallymentionedinItamiandNishino(2010),whofocusmoreonthecurrentandfuturecoreinvisibleassetsthatcanbegainedfromanorganisationslearningsystem.MicheliniandFiorentino(2012)havealsonotmentionedexplicitlythiscomponentthoughitispartofthevaluechainactivitiesorcompetences.Thisistheonlystudyinthisreviewthatdoesnothaveresourcesorassetsasacomponentoftheirbusinessmodelrepresentation.Seelos(2010)pointsoutthatwhenconstructingabusinessmodelanimportantissueistoclearlydefinetheroleofresourcesinanorganisationsbusinessmodel.Processes/Activities:Describesthemostimportantprocesses/activitiesanorganisationmusttodotomakeitsbusinessmodelwork.ThisistheotherbusinessmodelcomponentwhichishighlightedasaspecificbuildingblockbyallthestudiesexceptCasadesusMasanellandRicart(2010).Chesbourg(2010);Lindgardtetal.(2009);MicheliniandFiorentino(2012);andYunusetal.(2010)includekeyactivitiesaspartoftheorganisationsvaluechain.Whileotherslike,Eyring,JohnsonandNair(2011)andOsterwalderandPigneur(2010)havetermeditkeyactivities.Yip(2004)callsitHowtotransforminputandPetrovicetal.(2001)ProductionModel.Partners/Suppliers:Describesthenetworkofsuppliersandpartners.Chesbourgh(2010)referstothevaluenetworkofwhichsuppliersareacomponent,asdoesDemilandLacocq(2010)andYunusetal.(2010).Howevertheothercomponentsofthevaluenetworkcandifferbetweenthesestudies,forexample,bothChesbourgandDemilandLacocqincludecompetitors,whileYunusetal.includeotherpartners.ThedefinitionforthepartnershipcomponentinabusinessmodelusedbyMicheliniandFiorentino(2012,566)is:Portraysthenetworkofcooperativeagreementswithotherorganizationsnecessarytoefficientlyofferanddistributevalue.HedmanandKalling(2003)referonlytosuppliesasbeingthesupplyoffactorandproductioninputsanddonotrefertosuppliers.WhileYip(2004)doesnotdescribethesuppliers,butmentionstheproductinputintothebusinessmodel.Followingtheabove,asixthpointcanbeaddedfromthestudyofthebusinessmodelcomponents:6. Thevaluepropositionandtheoutput/offeringcomponentscanbecombined.

Thebusinessmodelcomponentswereregroupedbasedonthesefindingsandthenreorderedfrommosttoleastusedcomponents(annex4).Themostusedcomponents(9ormore)inthebusinessmodelcanvassesmakeuptohalfofthebuildingblocksoftheirrespectivemodels.Inordertogainamoreholisticpictureofanorganisationsbusinessmodel,additionalcomponentsneedtobeconsidered.Thisrequiresconsiderationofafurtherfivecomponents,thesetop10componentsare


foundinoverhalfthecanvases(8)andcover70%ormoreofeachindividualcanvastherebyprovidingsufficientcoverageforthecanvas.Hence,indevelopingtheconceptualcanvasthetop10willbeconsideredforinclusion(annex4).AstheresearchisfocussedonthebusinessmodelofNGOs,ananalysisofthisorganisationalformisundertakeninthenextsection.2.5NGOIfyouwanttounderstandNGOsallyouneedtobeabletodoisunderstandChristopherColumbus.Whenhesetofhedidntknowexactlywherehewasgoing,andwhenhecamebackhedidntknowexactlywherehehadbeen.Buthehadahugeimpactontheworldandhediditallonsomebodyelsesmoney.KumiNaidoo,CEOofGreenpeace(2011WWFAnnualConference)explaininghowNGOsingeneraloperatedbeforetheirprofessionalization.Eventhoughthetermhasonlyexistedforslightlyover62years,NGOsandInternationalNGOshaveexistedmuchlonger.Associationsoflikemindedpeople(i.e.NGOs)havebeenpartofancienthistory(Yazijietal.2009),andtheinternationalizationofNGOshasbeenaroundsincethetransnationalaspirationsofreligionslikeChristianityandIslam(Anheier,2005).TheactivemoderninternationalNGOemergedfromantislaverysocieties(1839)andfromtheInternationalCommitteeoftheRedCross(1874)(Anheier,2005;Davies,2008;Sustainability,2003).In1910,132internationalNGOsdecidedtocooperatewitheachotherunderthelabelUnionofInternationalAssociations.ThetermNGOwasintroducedin1945bytheUnitedNations(UN),inoneoftheirarticlestodescribethearrangement/relationshipbetweentheUNandthesetypesofinternationalorganisations.ThetermNGOenteredintothepopularusage,fromtheearly1970sonwards(Willet,2006).Withregardstothebirthdateoftheterm,YazijiandDoh(2009)mentionthatthetermNGOdatesfrom1950.EventhoughWilletandYazijietal.havementionedtwodifferentdates,theydorefertoapproximatelythesameperiodandtheybothagreethatthetermwasintroducedbytheUN.AshighlightedbyGray,BebbingtonandCollison(2006)andWillet(2006),NGOisatermthatdoesnothaveasinglerecognisedandagreedupondefinition.Intheliteraturethetermsnongovernmentalorganizations,nonprofit,thethirdsector3andcivilsocietyareoftenusedinterchangeably(Baguley,2009;Karajokov,2007;McGann&Johnstone,2005;Sustainability,2003;YazijiandDoh,2009).ThereforemanyarticlesdefinethetermNGOordescribethekeyfeaturesintheirintroductions.Sustainability(2003,13)notedthatthemostwidelyusedtermfororganizationsthatareneitherrunbygovernmentnorprofitmakinghasbeennongovernmentalorganization.Sustainability(2003,5)definesNGOasselfgoverning,private,notforprofitorganizationgearedtowardsimprovingthequalityoflifeofdisadvantagedpeople.WhiletheUNsDepartmentofPublicInformation(DPI)(2010,1)definesthemasanotforprofit,voluntarycitizensgroup,whichisorganizedonalocal,nationalorinternationalleveltoaddressissuesinsupportofthepublicgood.NGOMonitor(2010,1)definesaNGOas:autonomousnonprofitandnonparty/politicallyunaffiliatedorganizationsthatadvanceaparticularcauseorsetofcausesinthepublicinterest.Baguley(2009,2)definesthemasorganisationsworkingoutsidethemarketsection(theyarenonprofitmaking),arenotpartofthestatesectoreitherandcharacteristicallyhaveavoluntarygoverningbody.InWillets(2006,5)studytheyaredefinedasanindependentvoluntaryassociationofpeopleactingtogetheronacontinuousbasis,forsomecommonpurpose,otherthan

3Thefirstsectoristhepublicsector,thesecondsectoristheprivatesectorandthethirdsectoristheNGOs(McGann&Johnstone,2005).


achievinggovernmentoffice,makingmoneyorillegalactivities.Lewis(2003)identifiesNGOsonthebasisoffivekeycharacteristicsfromSalamonandAnheier(1999),theyare:a) organizedandpossesssomeinstitutionalreality;b) privateandinstitutionallyseparatefromgovernment;c) nonprofitdistributinginthesensethattheydonotreturnprofitstodirectorsorowners;d) selfgoverninginthattheyhavebroadcontrolovertheirownactivities,and;e) voluntarysuchthattheyinvolveadegreeofvoluntaryparticipationatthelevelofactivityor

governance.Lambell,Ramia,NylandandMichelotti(2008)defineNGOsasorganizationsthatdonotbelongtoeitherthegovernmentortheforprofitsector,andhighlightthatNGOsformasubsetoforganizationswithincivilsocietythatareinternational,regional,nationalorlocallybased.Clearly,differentstudiesdefineNGOsdifferently.BasedonthesestudiesandforthepurposeofthisresearchNGOsareconsideredas: Aregisteredinstitutionallyrecognisedorganisation(Baguley,2009;Lewis,2003;NGOMonitor,

2010); Anorganisationwithanunderlyingmissionorideathatguidestheirprojectactivitiesand

providesaffinityrationaleformembership(Spar&LaMure,2003;Teegen,2003),andaddressissuesinsupportofthepublicgood(DPI,2010);

Institutionallyseparatefromgovernment(Lewis,2003)andnotseekinggovernmentalpower(Bendell,2006);

Notprofitmaking(Baguley,2009;DPI,2010;NGOMonitor,2010;Sustainability,2003),withmoneybeinganinputnotanoutput(Collins,2005)and;

Recipientofthemajorityofitsincomefromdonationsorgrantsfromthirdparties(OsterwalderandPigneur,2010).

ThislastpointisaddedtodistinguishbetweenNGOsandsocialbusinesses,asmyhypothesisisthatthelatterreceivesthemajorityofitsincomefromthesalesoftheiroffering,withaminorityfromdonationsforinvestmentsorassets,whilstitisviceversaforNGOs.ToshowthisdistinctionCollins(2005)developedamatrixcalledtheeconomicengineinthesocialsector,inwhichorganisationsaremeasuredaccordingtotwocriteria,onethecharitabledonationsandprivategrantsandtheotherbusinessrevenue.Thisisshowninfigure3.Thisdifferentiationhasaneffectontheorganisationsbusinessmodel.OrganisationsinquadrantIrelyheavilyongovernmentfunding.Theresourceengineinthisquadrantdependsheavilyonpoliticalskillsandmaintainingpublicsupport.QuadrantIIreliesheavilyuponcharitablesupportbyprivateindividuals.Theresourceengineinthisquadrantdependsheavilyonpersonalrelationshipsandexcellentfundraising.ThehybridquadrantIIIconsistsofthoseorganisationsthatblendcharitabledonationswithbusinessrevenue,whichrequiresbothbusinessacumenandfundraisingskills.QuadrantIVcapturesthoseorganisationsthatrelyheavilyonbusinessrevenue;organisationsinthisquadrantresemblemostcloselythatofaforprofitbusiness.Figure3:Collins(2005)fourquadrantsoftheeconomicengineinthesocialsectors.

QuadrantII

QuadrantI

QuadrantIII

QuadrantIV

DependuponBusinessrevenue Low High

High

Low

DependuponCharitabledonations&Privategrants


Collins(2005)alsohighlightsthatthesocialmissionisthekeydriverorheartoftheNGOandhenceitsperformanceisdefinedbytheresultsandefficiencyindeliveryofitsmission.GiventheimportanceofthesocialmissionforNGOs,thisissueneedstobeclearlyreflectedintheNGObusinessmodel.BuildingupontheNGOdefinition,anINGOcanbeconsideredasANGOthathaspartnersorbranchesoverseastowhichtheyprovidefunds,servicesorinformation,Baguley(2009,4).2.6ConceptualModelTheapplicationofthebusinessmodelcanvasisinnowaylimitedtoforprofitcorporations.Youcaneasilyapplythetechniquetononprofitorganisations,charities,publicsectorentitiesandforprofitsocialventures.aseveryorganizationhasabusinessmodel,evenifthewordbusinessisnotusedasadescriptor.Tosurvive,everyorganizationthatcreatesanddeliversvaluemustgenerateenoughrevenuetocoveritsexpenses.Hence,ithasabusinessmodel.Thedifferenceismerelyamatteroffocus,OsterwalderandPigneur(2010,264).Theliteraturereviewhighlightedthefactthattherearefew,ifany,businessmodelcanvasesdevelopedandtestedonNGOs.ThethirdpartyfundedbusinessmodeldescribedbyOsterwalderandPigneur(2010)isacategorywithinthebeyondprofitbusinessmodel.Theothervariationiswhattheycallthetriplebottomlinebusinessmodel(section2.3).Thebeyondprofitbusinessmodelconcernsorganizationsthathavestrongnonfinancialmissionwithecology,socialcauses,andpublicservicemandates.OsterwalderandPigneurdescribethethirdpartyfundingmodelasonethatcanbeusedwhentheproduct/servicerecipientisnotthepayer.Theyarepaidforbyathirdparty,whichmightbeadonororthepublicsector.ThiswouldbeequaltoquadrantIandIIinCollins(2005)economicenginematrix.Thethirdpartypaystheorganizationtofulfilitsmission.Thethirdpartyfundedbusinessmodelisshowninfigure4below.Figure4:OsterwalderandPigneurs(2010)Ninebuildingblockcanvaswiththethirdpartyfundedmodel.KP:keypartners,KA:keyactivities,KR:keyresources,C$:costs,VP:valueproposition,CR:customerrelations,CH:channels,R$:resources,CS:customer.Inthissection,theconceptualmodelforanNGObusinessmodelcanvaswillbedeveloped.Theconceptualmodelisbasedonthefindingsfromtheearliersections,OsterwalderandPigneursthirdpartyfundedmodel(2010),theresearchquestiontogetherwiththeresearchersexperienceinthissector.Thisconceptualmodelwillbetestedonseveralcasestudies.OsterwalderandPigneursmodelisusedasabaseforconceptualisation,asthisisrelativelygenericandhasnotbeentestedonexistingorganisations.Thismodelwillbecombinedwiththeresultsoftheearliersections,suchas,theoutcomeofthebusinessmodelcomponentsresearch.

KP KA VP

KR

CR

CH

CS

C$ R$

Donor

Recipient

Mission

ProductorServices

Free

Donation


Theresearch(section2.4)concludedthatthetop10businessmodelcomponentswerefoundinoverhalfofthecanvases,covering70%oftheirrespectiveframework.Onecanconcludethatthesestudiesareingeneralagreementregardingthemeaningofabusinessmodelandwhichcomponentsabusinessmodelneedstocontain.Therefore,inreviewingtheappropriatebusinessmodelcanvas,focuswillbeonthemorefrequentlyusedones.SeveralcomponentsoftheNGObusinessmodelframeworkwillbedifferentfromthoseforforprofitbusinessmodels,asNGOsingeneralfocusonsocialgoodsratherthandeliveryofeconomicvaluetotheirtargetpublic,Dahanetal.(2010).ThefocusisonChesbrough(2010),OsterwalderandPigneur(2010),Johnson(2010),Eyringetal.(2011),Lindtgardtetal.(2009),DemilandLacocq(2010),Yunusetal.(2010),Petrovicetal.(2001)andMicheliniandFiorentino(2012),astheyscoredmorethan70%(highlightedinyellowinannex4).TakingtheNGOsituationintoaccountasdescribedearlier,andOsterwalderandPigneurs(2010)canvas,thebusinessmodelcomponentsdefinitions(section2.4)willberelooked,toanalysewhetherornotthesecomponentscanbeusedwithoutmodificationintheNGObusinessmodelcanvas.Valuecreation:consistsoftwomajorcomponents,activitiesandresources,whichareshownseparatelyinthebusinessmodelcanvas.Lambell,Ramia,NylandandMichelotti(2008)refertoTeegenetal.2004researchinwhichtheyhighlightthevaluecreatingactivitiesorNGOsanditsworthyofanalysis.Toemphasisethatthisbuildingblockfocusesonthemainactivitiesandresources,itwillfollowOsterwalderandPigneurs(2010)definition.

Keyactivities:thekeyactivitieswhichanorganisationneedstoperformtocreateitsvalueproposition.Keyresources:thephysical,financial,intellectualorhumanassetsrequiredtomakethebusinessmodelwork.

Collins(2005)identifiedthekeyresourcesoftheNGOtobetime(humanassetsreceivedforfreeoratratesbelowwhattheirtalentswouldyieldinbusiness),money(financial)anditsbrand.Inthisconceptualmodelbrandhadbeenincludedinthevalueproposition,seebelow.Valueproposition:inadditiontobeingdefinedasthebundleofproductsandservicesthatcreatevalueforthecustomer,OsterwalderandPigneur(2010)mentionthatanorganisationsmissionshouldalsobeshowninthevaluepropositioncomponent.ApointsupportedbyShaferetal.(2005)andMicheliniandFiorentino(2012).Collins(2005)alsodistinguishesthefactthataNGOsmissionisattheheartofitsoperationandisseenasakeycharacteristic.ThevaluepropositionforadonorofaNGOcouldbedifferentfromthatofarecipient.Donors,mostlyprovidedonationsforaspecificpurposeorproduct/serviceofferedbytheNGO(calledprogrammes)andnotpersetotheorganizationsoverallmission,Baguley(2009)andMiller(2003).AnotherdecidingfactorfordonorstoprovideresourcestoaNGOisbasedonthevaluecreationprocessorkeyactivities,forexample,thewaythattheNGOsetsouttoachieveitsmissionsuchasthroughconfrontationalcampaigning(i.e.Greenpeace)orworkingcloselywithgovernments(i.e.WWF).Fromexperience,donationsdecisionsareoftenmadebasedupontheorganizationsvalueproposition(mission,productandservices),aswellas,itsvaluecreationprocess,itschannels,therecipient/enduseranditsbrand.AnorganisationsbrandisalsoincludedinOsterwalderandPigneurs(2010)detailingofavalueproposition.AsalsohighlightedbyCollins(2005),theNGOsbrandisofgreatimportancetotheorganisationasitcultivatesanemotionalgoodwillamongstpotentialsupporters.TheNGOsbrandbuildsupontangibleresultsandemotionalgoodwillso,asCollinsexplains,potentialsupportersbelievenotonlyintheorganisationsmission,butintheorganisationscapacitytodeliveronthatmission.AstheorganisationsbrandissocloselylinkedtotheNGOsmission,theconceptualmodelwillfollowOsterwaderandPigneurbyincludingbrandintheNGOsvaluepropositiondefinition.The


productandservicesforwhichtheNGOsfundsaredevotedisoftencalledprogrammeactivities,Baguley(2009).Basedontheabove,thevaluepropositioncomponentinthisresearchwillbedefinedas:

Valueproposition:theorganisationsmissionanditsprogrammesbeingtheorganisationsbundleofproductandservices(thatcreatevalueforitscustomers,stakeholdersandpartners),aswellasitsbrand.

Customer:DeLangenandBitterRijkema(2012,5)stateforthedesignofthebusinessmodelitisessentialtoclearlydefineitstargetgroup,thecustomer.InthecaseofNGOsthecustomercanbeseenas:1)thetargetgroup,towhomtheNGOisprovidinggoodsorservices(forexample,inthecaseofHepatitisvaccinations,thepersonwhoisreceivingthevaccination),thenationalgovernmentwheretheprojectistakingplaceorcivilsocietyingeneral.2)ThedonorwhoprovidedthefundingastheyexpectacertainresultmostlydefinedinadvanceviaacontractbetweenthedonorandtheNGO.Sleurink(2002)dividestheclientsofNGOsintotwocategories,thefirstbeingtheprimaryclient(beneficiaries)andthesecondbeingthesecondaryclient(donor,otherstakeholders).OsterwalderandPigneur(2010)namethisfirstgrouprecipientandDeLangenandBitterRijkema(2012)proposetoreplacethewordcustomerwithenduserasinsomecasestherealityismorecomplexduetodirectrelationshipbetweenoutputsandusersbeingdiffuse.ThisisprobablyoneofthereasonswhyOsterwalderandPigneursplitthecustomercomponentintorecipientanddonor,whilstkeepingitinthesamebusinessmodelbuildingblock.Yunusetal.(2010)mentionstakeholderwhichincludesboththeenduserplustheshareholdersinthesocialbusiness.OneoftherisksidentifiedbyOsterwalderandPigneurofthethirdpartyfundedbusinessmodelisthatthevaluecreationincentivescanbecomemisalignedwiththedonorbecomingthemaincustomer,whiletherecipientbecomesamerereceiptduetostrongerincentivefordonorvaluecreationthanfortherecipients.Baguley(2009)highlightsthesameissueandlikeYunusetal.,callsthembothstakeholders.Sleurink(2002)mentionsthatintheNGOenvironmentthefocusofthesegroupsrequiretheadoptionofdifferentapproachesaimedatthedifferentgroups.EventhoughNGOshavetwodistinctlydifferentcustomers:thedonorandtherecipient,atpresenttheywillbekeptinthesamebuildingblock,thoughmentionedseparatelywithinthebuildingblock.Duringthetestphaseitmaybecomenecessarytosplitthisintotwoseparatebuildingblockssothatthebusinessmodelcanvasiswellorganizedandusable.ThebuildingblockfortheNGOsectorwillbeadaptedfromOsterwalderandPigneur(2010)asthiswillallowtheorganisationtoshowthedifferentsegmentstoidentifytheircustomer(s)and/orstakeholders.

CustomerSegments:thedifferentstakeholders(recipients,donorsandothers)anorganisationaimstoreachandservetoachieveitsmission.

Channels:ordistribution;concernsthewayanorganisationcommunicateswithandreachesitscustomersegments,plusthelogicbehindthedeliveryprocessofthevalueproposition.InthecaseofNGOs,forexample,deliveryofproductorservicecanbeviapartnerorganisationsorlocalgovernment.Therefore,thechannelcomponentinthisresearchwillbedescribedas:

Channel:thecommunication,distributionandsaleschannelsusedbytheorganizationtointerfacewithitscustomersegmentsandpartners.

Relationships(Customer,Partner):aswithforprofitandsocialbusiness,itisimportantforNGOstomaintainstrongrelationshipswiththeirpartnerstoachievetheirmission.Baguley(2009)andYunusetal.(2010)highlightthatrelationshipswithstakeholdersareimportantforbothsocialbusinessandNGOs.OsterwalderandPigneur(2010)explainthatthiscomponentshouldclarifythetypeofrelationshiptheorganisationwantswitheachcustomersegment.Hence,thisbuildingblockwillberecraftedtoprovidetheopportunitytodescribethedesiredrelationshipwithcustomersegments,partnersandotherstakeholders.


Relationships:clarifiesthetypeofrelationshiptheorganisationhasestablishedorwantstoestablishwitheachcustomersegment,partnerorothers.

EconomicfeaturesorEconomicequation:showstherevenue,costsandprofitcomponentsofthebusinessmodel.InordertosustaintheiroperationsNGOsareconcernedwithbalancingtheireconomicneedswiththeirvarioussourcesoffinancing(Dahanetal.,2010).Therefore,theNGObusinessmodelcanvasshouldshowboththerevenuecomponentandthecoststructure.HoutgraafandBekkers(2010)suggestthattherevenuecomponentcanhaveanothermeaningforNGOsandshouldbetakeninabroadmanner.TheyprovidetheexampleofUnicefforwhomtherevenuecomponentcouldmeanthenumberofchildrentheysupported.Thisisaninterestingpoint.Therefore,howNGOsdefinetheirrevenuestreamwillbeexploredinthecasestudies.Forthedevelopmentoftheconceptualmodelthefollowingdefinitionswillbeapplied:

Revenue:theincomestreams,thiscouldbedonations,merchandises/sales,investmentsorotherincomestreamsavailablefortheorganisationswork.Costs:thetotalcostswhichtheorganisationincurred(orwillincur)toimplementtheagreedactivities.

Partners:arepartofthevaluenetworkofanorganisation.NGOsrelyonscarcedonationstofundtheirprojectsandhencetakecaretoensureefficientutilizationofthoseresources(Teegen,2003).Theystretchtheirfundsbyinvolvingotherpartners(andtheirresources).Intheforprofitbusinessmodeltheprinciplepurposeofpartnersareassuppliers.ThisisclearlynotthecaseforNGOs.AbroaddefinitionadaptedfromMicheliniandFiorentino(2012)willbeusedtocapturethisfeature.

Keypartner(s):thenetworkofcooperativeagreementswithotherpeopleororganizations(includinggovernments)necessarytoefficientlyofferanddistributethevalue.

TheabovementionedbusinessmodelcomponentsarebasedonOsterwalderandPigneurs(2010)ninebuildingblockcanvaswithadjusteddefinitionstocreateacanvasthatcapturesthebusinessmodelofNGOs.Whencomparingthiswiththetop10businessmodelcomponentsasidentifiedinannex4,itcanbenotedthatitcoversmostofthecomponentsexcepttwo.Firstitdoesnotcovertheprofitbusinessmodelcomponent.Asdiscussedaboveintheeconomicfeaturessection,thisisalesscriticalcomponentforaNGO.Second,itdoesnotcoverthecapabilities/competenciescomponent.DemilandLacocq(2010,231)definecompetenciesastheabilitiesandknowledgemanagersdevelop,individuallyandcollectively,toimprove,recombineorchangetheservicestheirresourcescanoffer.WhileMicheliniandFiorentino(2012,566)outlinecompetenciesasthespecificrangeofskills,knowledge,orabilityofacompany.ThishasasimilarmeaningtothelearningbusinessmodelcomponentofItamiandNishinos(2010)model.TheexamplesprovidedbyMicheliniandFiorentino(2012)indicatethecorecompetencieswithinthevaluechainatwhichtheorganisationexcels,forexample,marketing,customerserviceorresearch&development.Thecompetenciesoftheorganisationwillalreadybeshownintheiroverallbusinessmodelas,ingeneral,aNGOfocusesonitsstrongpointsinitsmission,keyactivities,keypartnersandfundraisingsection.Thissuggeststhecaseforinclusionofthiscomponentisweakand,itisproposedtoexcludeitfromtheconceptualmodel.Thefinalstageforfinalizingtheconceptualmodelwastoreexaminethebusinessmodelcomponentshighlightedinannex4toensurenoelementsweremissingforaNGObusinessmodelcanvas.Thiswasdoneinthreesteps.Thefirststep,basedonthecomponentsdefinitions,wastocheckthatthebusinessmodelcomponentsseparatelyhighlightedhavenowbeenincludedinthecanvas.Thesewere:


BusinessModelcomponents LocationwithinbuildingblockCustomerinformation/communication ChannelsBranding ValuePropositionMission/Goaloftheorganisation ValuePropositionStakeholders CustomersegmentTable1:OverviewlocationofliteraturebusinessmodelcomponentswithinbusinessmodelbuildingblocksThesecondsteplookedatwhetherthefourkeyareas(purposes,resourceacquisition,stakeholdersandgovernance,andculture)wherecompaniesandNGOsdiffer(Baguley,2009)arecoveredintheproposedbusinessmodelcanvas.Purposesisrepresentedinthemodelastheorganisationsmission.Resourceacquisitioniscoveredbyseveralbusinessmodelcomponentsthevalueproposition,valuecreation(keyactivities),thedonorelementofthecustomersegment,channel,relationshipsandrevenuestreams.Stakeholdersandgovernanceispartiallycoveredbystakeholders,howevergovernanceiscurrentlynotmentionedintheconceptualmodel.MicheliniandFiorentino(2012)definegovernanceasthesetofprocessesorlawswhichmanagetherelationshipbetweenstakeholdersandthegoals.Intheproposedconceptualbusinessmodelthegoaloftheorganisationisrepresentedinthemission.Thesetofprocessesorlawstomanagetherelationshipwithstakeholderscanbeincludedundertherelationshipcomponent.Therefore,governanceaccordingtoMicheliniandFiorentinosdefinitionisrepresentedintwobuildingblocksoftheconceptualmodel.Intermsofculture,doubtsariseastowhetheritneedstobeexplicitlymentionedinabusinessmodel,andwhetherthebusinessmodelcanvasisreallytherighttooltoshowanorganisationsculture.Asculturehasnotbeenmentionedasacomponentbyanyofthe14studies,itcanbeconcludedthatitdoesnotappeartobeakeyforinsightintoanorganisationsbusinessmodel.Thereforethiscomponentwillnotbetakenintoaccountintheconceptualmodel.Thelaststeplookedatthebusinessmodelcomponentstudiestocheckthatcomponentsconsideredessentialforthebusinessmodelcanvashadbeencovered.Thosecomponentsmentionedtwiceormorebythefocusgroupstudieswerereviewed.Thisdeliveredtwoadditionalcomponents,competitorsandfinancialaspects.BothChesbrough(2010)andDemiletal.(2010)proposetheinclusionofcompetitorsasacomponent.Thedefinitionofabusinessmodelusedinthisresearchtherationaleofhowanorganizationcreates,delivers,andcapturesvalue,implythatthebusinessmodelcanvasdoesnotneedtoincludetheorganisationscompetitors.AsOsterwalderandPigneur(2010)state,anoverviewofanorganisationscompetitorswouldnormallybeprovidedintheirbusinessplan.ThefinancialaspectscomponentisnotrequiredasNGOsare,ingeneral,anonprofitwiththeirprinciplefocusonsocialratherthaneconomicvalue.Inaddition,theconceptualmodelcontainsacostandrevenuebuildingblock.BasedontheaboveandShafteretal.s(2005)criteriathatthebusinessmodelhastobeeasilyunderstood,communicatedandremembered,theconceptualmodelisshowninfigure5.Figure5:ConceptualbusinessmodelcanvasforNGOs

KeyPartners

KeyActivities

ValuePropositiono Missiono Programmes/Projectso Brand

KeyResources

Relationships

Channels

CustomerSegmentso Recipientso Donorso Others

Costs Revenue


Toexploreitsappropriateness,theaboveconceptualbusinessmodelcanvaswillbetestedonseveralNGOs.InOsterwalderetal.(2005)businessmodelsareclassifiedasthose:a)tobeusedatanabstractleveltomodelthedifferentelementsandtheirrelationships,b)toanalyseexistingbusinessmodels,andc)touseinaprescriptivemanner,tomodeltheworldasitshouldbe(figure6).

Figure6:Osterwalderetal.(2005)BusinessmodelconcepthierarchyFollowingtestingofthebusinessmodelcanvas,wecanconcludewhethertheconceptualbusinessmodelcanvascanprovidearepresentationofNGOsbusinessmodels,aseachorganizationsownspecificbusinessmodelislinkedtoamoregenericorsectorialbusinessmodel(DemilandLacocq,2010).DemilandLacocq(2010)statethatanorganizationsbusinessmodeliscontinuouslyevolvingandispermanentlyinastateoftransitorydisequilibrium.Hence,isadescriptionorsnapshotataspecificmomentintime(Osterwalderetal.2005).Inaddition,Asparaetal.(2011),OsterwalderandPigneur(2010)andRappa(2010)highlightthatanorganizationthatrunsmultiplebusinessesormultibusinessunitswillhavemultiplebusinessmodels.Therefore,theresearchcasestudiescomparedsimilarNGOsorsimilaroperatingentities.


3MethodologyInthepreviouschapteraconceptualbusinessmodelcanvasforNGOswasdeveloped,basedonaliteraturereviewofbusinessmodels,itsframeworkandcomponents.Thischapterwilloutlinethemethodologyofthisresearch.

3.1SourcesofinformationAccordingtoVerschurenandDooreward(1998),EisenhardtandGraebner(2007)andYin(2009),solidresearchrequiresmultiplesourcesofinformation.Thesearepresentedintable2.

SourcesofinformationLiterature Academicpeerreviewedarticles

BooksDocuments(Greyliterature) AnnualreportsofNGOsMedia NGOwebsites

(WeborNewspaper)articlesWebblogs

Individuals Organisationsemployees ExpertswithintheNGOsectorbutnotworkinginoneofthecasestudyorganisations.

Table2:Overviewwiththedifferentsourcesofinformationusedfortheresearch

3.2ResearchstrategyThisresearchisofanexploratorynaturegiventhelackofearlierconcretestudiesonNGObusinessmodelsofNGOs.ThegoalofanexploratoryresearchistogenerateordiscovernewideasandtheoriesaccordingtoLynnUniversity(2014).Twomainresearchstrategieswereused,thefirststagewas,aliteraturereview.ThishasthreemaincharacteristicsaccordingtoVerschurenandDoorewaard(1998):i)itmakesuseofexistingmaterial,ii)thereisnocontactwiththeresearchobject,andiii)itmakesuseofthematerialfromanotherperspectivethanforwhichitwasproduced.Thiswasmainlyusedinthepreviouschapterfordefinitionalcomparisonsandexplorationofusagesofbusinessmodels,businessmodelframeworksandbusinessmodelcomponents.AconceptualmodeloftheNGObusinessmodelcanvaswasdevelopedbaseduponthisreview.Thesecondresearchstrategywastheuseofthecasestudyresearchmethodologytotesttheconceptualmodel.Inidentifyingasuitableresearchmethodforthisstudy,Yins(2009)threeconditionsidentificationframeworkwasused(table3).Theseconditionslookat,theformofresearchquestion,whethertheresearchrequirescontrolofthebehaviouralelements,andlastly,whethertheresearchfocusesoncontemporaryelements.Allmethodsapplicabletotheconditionsonthisresearcharehighlightedinyellow.Thesecondconditioniswhethertheresearchneedstomanipulatebehaviouralelementsdirectly,preciselyorsystematically;thisisnotrequiredfortheresearch.Utilisingthisframework,thecasestudyresearchmethodistheonlyonethatmeetsalltheconditions.Method Formofresearchquestion Requirescontrolofbehavioural

elements?Focusesoncontemporaryelements?

Experiment How,why? Yes YesSurvey Who,what,where,howmany,

howmuch?No Yes

Archivalanalysis Who,what,where,howmany,howmuch?

No Yes/No


History How,why? No NoCasestudy How,why? No YesTable3:Yins(2009)threeconditionsfordifferentresearchmethodsVerschurenandDoorewaard(1998)state,casestudyresearchmethodologycanbeutilisedforresearchwiththefollowingcharacteristics:Symptoms Inthisresearch?

1) Asmallamountofresearchobjects. Yes2) Alabourintensiveapproach. Yes3) Moredepththanwidth. Yes4) Aselective/strategicsample. Yes5) Qualitativedataandresearchmethod. Yes6) Anopenobservationonlocation. Yes

Table4:OverviewofVerschurenandDooreward(1998)casestudycharacteristicsappearinginthisresearchYin(2009)definescasestudiesintwoparts,firstlythroughthescopeofacasestudy,andsecondly,throughthetechnicalcharacteristicsoftheenquiry.Scopeofcasestudy Inthisresearch?Investigatesacontemporaryphenomenonindepthandwithinitsreallifecontext. YesTheboundariesbetweenphenomenonandcontextarenotclearlyevident. YesTechnicalcharacteristics Inthisresearch?Copeswiththetechnicallydistinctivesituationinwhichtherewillbemanymorevariablesofinterestthandatapoints.

Yes

Reliesonmultiplesourcesofevidence,withdataneedingtoconvergeinatriangulatingfashion. YesBenefitsfromthepriordevelopmentoftheoreticalpropositionstoguidedatacollectionandanalysis.

Yes

Table5:OverviewYins(2009)casestudycharacteristicsappearinginthisresearchYin(2009)remarksthatforacasestudyresearch,thegoaloftheresearcheristoexpandandgeneralizetheories(analyticgeneralization).Thisisthecaseforthisresearchasitaimstoexpandthetheoryandknowledgeofahybridbusinessmodel.EisenhardtandGraebner(2007)claimthatcasestudyresearchmakessensewhenitcanbedemonstratedthattheexistingliteraturedoesnotaddresstheresearchquestion,ordoesitinadequately.Therefore,thequalitativecasestudyresearchmethodisdeemedthemostsuitableresearchmethodforthisstudy.Bycombiningbothresearchstrategies,literaturereviewandcasestudy,resultsinacombinationofempiricalandnonempiricalresearchmethods,usingthequalitativeapproachinbothinstances.Thecasestudyhasanumberofadvantagesforthissecondstageoftheresearchprocess,asnotedbyVerschurenandDoorewaard(1998).First,itprovidesaholisticreviewoftheorganisations.Secondly,theresultsobtainedfromthecasestudywillbeacceptedearlierbythefieldastheconceptualmodelhasbeenfieldtested.Thelatterpointisimportantasoneoftheobjectivesofthisresearchisthatitcanbeusedbypractitionersandacademics.3.3UnitofanalysisTheseconddecisionpoint,followingthechoiceofresearchmethod,istheunitofanalysis.Astheconceptualbusinessmodelisdevelopedattheglobalorganisationleveltheunitofanalysisistheorganisation,theNGO.Organisationshavemultiplebusinessmodels,Asparaetal.(2011),OsterwalderandPigneur(2010)andRappa(2010).ToenablecomparisonofthecasestudyresultsforvalidationoftheconceptualNGObusinessmodel,thecasestudyreviewwillonlyfocusonthecurrentbusinessmodelsattheInternationalSecretariatorHeadOfficelevelofNGOs.Lambell,Ramia,NylandandMichelotti(2008)highlightthatthelargestandmostimportantNGOsforanalysisareinthefieldsofinternationaldevelopmentandpovertyrelief(suchasCare),thenatural


environment(suchasWWF),andmedicalemergencies(suchasMdicinsSansFrontires).ThecasestudieswillbeNGOsfromthesefieldswithamixerofsmallerandlargerones.3.4QualityofthecasestudydesignYin(2009,40)statesthatforresearchtobeconsideredwelldesigned,fourcriteriahavetobemet,ofthesethreearerelevantforthiscasestudyresearch:1) Constructvalidity:identifyingcorrectoperationalmeasuresfortheconceptsbeingstudied.Yinsuggestsuseofseveraltacticscanbeapplied;a)multiplesourcesofevidence,b)chainofevidenceand,c)reviewofthedraftcasestudyreportbykeyinformants.Thisstudyhasutilisesmultiplesourcesofevidence(table2insection3.1).Datafromthemultiplesourcesofinformationwerecollectedtocorroborateandtriangulatethesamefactorphenomenontoensurethevalidityofthestudy.Thedraftreporthasbeenreviewedbyaprofessorspecializedinbusinessmodels,withtheindividualdraftcasestudyreportswerereviewedbytheinterviewees.2) Internalvalidity:.seekingtoestablishacausalrelationship,wherebycertainconditionsare

believedtoleadtootherconditions,asdistinguishedfromspuriousrelationships.Thisisonlyrelevantforexplanatoryorcausalcasestudies.ThisresearchaimstofillaknowledgegapinthefieldofNGObusinessmodels,andassuchisanexploratorystudy(Yin2009).3) Externalvalidity:definingthedomaintowhichastudysfindingscanbegeneralized.Casestudiesrelyonanalyticalgeneralization,inthisstudytheresearcherisstrivingtogeneralizeaparticularsetofresultstothebroaderbusinessmodeltheory.Toincreasetheexternalvalidityofthisresearchthemulticasestudyapproachwaschosenbasedonreplicationlogic.4) Reliability:demonstratingthattheoperationsofastudysuchasthedatacollection

procedurescanberepeatedwiththesameresults.Thischapterprovidesanoverviewofthemethodologyusedforthisresearch.Yin(2009)highlightstwospecificmeanstoaddresstheweaknessconcerningreliabilityofcasestudies:a)theuseofacasestudyprotocol,andb)thedevelopmentofacasestudydatabase.Bothsystemshavebeenusedforthisresearch.TheformerwasdevelopedusingthemethodrecommendedbyEmans(2002).Thisconsistedoftheinterviewsummaryandtheorganisationsbusinessmodel(basedontheinterview)beingsenttotheintervieweesforverificationandcomments.Acasestudydatabasewasdevelopedfordatacollectionanddocumentation.AccordingtoYin(2009),thedocumentationinthecasestudydatabaseshouldconsistoftwoseparatecollectionsthedatabaseandthecasestudyreports.Materialsinclude:annualreports,workingdocumentwithideasandfindings,interviewnotes,summaryoftheinterviews(bothdraftandapprovedform)andthecasestudyreportfromthefirsttothefinalversion.3.5CasestudymethodTheconceptualbusinessmodelwillbetestedonfiveNGOs.AsYin(2009)states,forsuchmultiplecasestudyresearch,eachcasemustbecarefullyselectedtobeabletopredictsimilarresults;thisistheliteralreplicationmethod.Afewcases(23)aredeemedtobesufficientwhenthetheoryisstraightforward.Itisimportanttostatetheconditionsunderwhichaparticularphenomenonislikelytobefound.Thishasbeentakenintoaccountwiththecasestudyselectioncriteria.AsdefinedbyYin(2009),seefigure7,theinitialstepindesigningacasestudyresearchconsistsoftheorydevelopment(literaturereview,chapter2),thisisfollowedbycaseselectionanddevelopmentofdatacollectionprocesses.Thecaseselectionisdescribedinthischapter.Eachindividualcasestudyconsistsofawholestudyinwhichconvergentevidenceissoughtregarding


thefactsandconclusionsforthecase;eachcasesconclusionsarethenconsideredtobetheinformationrequiringreplicationbyotherindividualcases.Boththeindividualcasestudiesandthemultiplecasestudyanalysisresultsarethefocusofchapter4.Figure7:casestudymethod

3.6CasestudyselectioncriteriaWhenthepurposeofthestudyistodeveloptheory,theoretical(notrandomorstratified)samplingisappropriate(EisenhardtandGraebner,2007).Eisenhardt(1989)mentionsthatthegoaloftheoreticalsamplingistochoosecaseswhicharelikelytoreplicateorextendtheemergenttheory.ApointsupportedbyYin(2009).Theimportanttheoreticalsamplingapproachofpolartypesisconsideredlesssuitableforthisstudyduetotheresearchobjectiveanditsquestions.However,thechosencasestudyNGOsarefromdifferentfields(e.g.nature,education,health,povertyreduction),sothattheresearchcantestwhethertheNGObusinessmodelcanvasisapplicabletoNGOsindifferentfields.ThreecriteriawereusedtodeterminewhethertheNGOsfittedtheresearchproject.InbrieftheNGOcasestudiesneededtobe:1) InternationalNGO(INGO),asdefinedinsection2.5ANGOthathaspartnersorbranches

overseastowhichtheyprovidefunds,servicesorinformation,isconsideredaninternationalNGOBaguley(2009,4).

2) TheofficeshouldbeanInternationalSecretariatorHeadOfficewithintheNGO(section3.3).3) TheNGOshouldfitinquadrantIorIIofCollins(2005)economicenginematrix(section2.5).Inadditiontotheabovecriteria,theresearchertookthefollowingadditionalconsiderationsintoaccount:

NGOisknowntotheresearcher. Officeorintervieweelocatedclosetotheresearchertoallowforavisit.

3.7DatacollectionThedatacollectionplanchangedaftertheliteraturereview.InitiallyitwasplannedthatfiveInternationalNGOswouldbeinterviewedascasestudies.Duringthedeterminationoftheresearchstageofthecasestudyitwasdecidedtoexpandtheinterviewstoincludetwoadditionalcasestudygroups.Thisleadtointerviewsbeingheldinthreestages.Figure1(section1.5)and7(section3.5)showtheadjustedresearchdesignincludingthethreecasestudygroups.Ascanbeseeninbothfigures,itwasonlywhenonewholecasestudygroupwascompleted(includingreceivingfeedbackfromtheintervieweesregardingthenotesoftheinterview)thattheresearcherstartedtheinterviewswiththeothercasestudygroup.Thiswassothattheresearchercouldincorporatethe

Developtheory

Selectcases

Designdatacollectionprotocol

Conduct1st

casestudygroup:

OexpertNG s

Conduct2nd

casestudygroup:Foundations

Conduct3rd

casestudygroup:

INGOs

Writeindividualcasereport



Drawcrosscaseconclusions

Modifytheory

Developpolicyimplications

Writecrosscasereport

DefineandDesign Prepare,CollectandAnalyse AnalyseandConclude


outcomeofthepreviouscasestudygroupintotheinterviewpreparationsforthenextcasestudygroup.Thismeantthattheconceptualmodelandtherelateddefinitionscouldbeupdatedbasedontheresultsofthepreviouscasestudyinterviews.Thereasonsthattheinterviewphasewasexpandedwere:

a) SubjectofNGObusinessmodelcanvasisrelativelyunknownwithintheNGOcommunity;b) Providemorepossibilitiesfortestingthebusinessmodelcanvasanditsdefinitions;c) Testwhethertheinterviewquestionswereclear;d) Helptheresearcherintheevolutionoftheconceptualbusinessmodelcanvasandits

definitions,and;e) Increasetheresearchersunderstandingregardingtheuseandpracticalitiesofthebusiness

modelcanvasforNGOs.Themainobjectiveofthisresearch.Thecasestudyinterviewstagetookplaceinthreephases.First,theconceptualbusinessmodelcanvasanditsdefinitions,basedontheliteraturereview,weretestedontheNGOexperts(annex5).TheyprovidedinsightsonavarietyofdifferentNGOsandcommentedontheusabilityandpracticalityoftheNGObusinessmodelcanvas.Responsesledtochangesinthekeycomponentswithrelateddefinitionsoftheconceptualmodel.ItbecameclearthattheconceptualbusinessmodelcanvaswouldbesuitablemostlyforFoundations,butneededfurthermodifiedtosuitINGOs.Thisledtothedevelopmentoftwodifferentconceptualmodels,oneforFoundations(annex6)andtheotherforINGOs(annex7).BoththesemodelsweretestedontheirrespectivetargetgroupswithinputsfromtheFoundationsinterviewsbeingincorporatedintotheINGOinterviews.TheresultsforFoundationsarepresentedinsection4.2,andthoseforINGOsinsection4.3.Table6providesasummaryoftheinvitationssentandthenumberofinterviewsconducted. Casestudystage Numberinvitedorexpressed

interesttobeinterviewedInterviewsconducted Casestudies

1 NGOexperts 5 4 42 Foundations 3 2 23 INGOs 9 7 5Table6:Interviewrequestsversusinterviewsconductedpercasestudystage.Asstatedpreviously(table2,section3.1)severalmeansofdatacollectionwereusedtoensuredatatriangulation.RegardingthedatacollectionoftheFoundationandINGOcasestudies,first,backgroundresearchwasconductedtoreviewwhetherthepotentialcasestudiesmetthecasestudyselectioncriteria.Thiswasdonebyreviewingtheirwebsite,annualreportsandaskingpeoplewhowereknowledgeableabouttheorganisations.Onceinterviewswereconfirmedwiththecasestudyorganisations,documentaryresearchwasconductedintothebackgroundandbusinessmodeloftheseorganisations,todevelopaninitialconceptualbusinessmodelcanvasoftheNGO.Thiswasconductedaspartoftheinterviewpreparation,sothattheresearcherwouldhaveabetterunderstandingofthebusinessmodeloftheorganisation.Andsecondly,sothattheresearchercouldcomparethebusinessmodelcanvasoftheorganisationbasedontheinterviewwiththepreparationbusinessmodelcanvas.3.8InterviewInanefforttoreduceinformationbiastheresearcherhasfollowedEisenhardtandGraebner(2007)byusinghighlyknowledgeableinformantswhoviewthefocalphenomena(NGO)fromdiverseperspectives.Thesewerewithstaffmembersatmanager,directororseniormanagementlevelwithintheorganisations.Theypossessthemostcomprehensiveknowledgeofthecharacteristicsoftheorganizations,itsstrategy,itsperformanceandarefamiliarwithalltheaspectsoftheorganisationsoperations.(Weerawardena,McDonald&SullivanMort,2009)


Datacollectionprocesswasaniterativeandexploratoryprocessthattookplacebetweentheliteraturereview(chapter2)andtheoutcomeoftheinterviewswithboththeNGOexpertsandthecasestudies.Thisensuredthatthemodelanditsdefinitionskeptbeingfurtherrefined.Asmentionedpreviously(section3.4)aninterviewprotocolwasdesignedbasedonEmans(2002)toensurethatalltherequiredandrelevantdatawascollectedduringtheinterviewprocessandtoincreasethereliabilityoftheresearch.Theinterviewprotocolispresentedinannex5(NGOexperts),6(Foundations)and7(INGOs).TheinterviewswiththeNGOexpertsusedseveralquestions(3,4,9and10)thatOsterwalderusedinhisdissertationinterviews(2004).Question9wasslightlyadjustedtoincludecommunicationstodonorsoastotaketheNGOperspectiveintoaccount;Seelos(2003)(section2.2)(annex5).Yin(2009)notes,basedonBecker(1998)thattheinterviewerneedstoasktheconversationalquestionsinanunbiasedmannerthatservestheneedsoftheinquiry.Thiswasaddressedusinghowquestionsinsteadofwhy,inthebeliefthatawhyquestioncreatesdefensivenessonthepartoftheinterviewee.Therefore,noneofthequestionsintheinterviewstartwithwhy.Tobeabletoanswerthesubresearchquestionsduringtheinterviewswiththedifferentcasestudygroups,theinterviewquestionsweredesignedtoobtainthefollowinginformation: Aimoftheinterviewsweretotest: RelatedquestionsNGO

expertinterview(annex5)i ThecurrentuseofthebusinessmodelcanvastoolbyNGOs; Question:1ii ThedraftNGObusinessmodelcanvasconceptualmodel; Questions:310iii Thebuildingblocksoftheconceptualmodelanditsdefinitions; Questions:210iv TheusabilityandfunctionsofthebusinessmodelcanvasforNGOs; Question:89Table7:AimoftheinterviewandtheNGOexpertinterviewquestions(annex5)Asmentionedearlier,theinterviewquestionsenabledtheconstructionofthebusinessmodelcanvasoftheorganisationandatthesametimeallowedtherelateddefinitionstobechecked.Figure8and9showtheconceptualbusinessmodelcanvasforFoundationsandNGOsrespectively.Specificinterviewquestionsforeachcanbefoundinannex6and7.Vision:Question2

Figure8:FoundationsconceptualmodelinrelationtotheFoundationsinterviewquestionsannex6

KeyPartnersQuestion8

KeyActivities

Question7

KeyResourcesQuestion9

ValueProposition Mission MainProgrammes BrandQuestion3

Relationships

Question6

ProgrammedeliverymethodsQuestion5

Costs

Question11Revenue/income/fundingstreams

Question10

BeneficiariesQuestion4


Vision:Question2

Figure9:INGOsConceptualbusinessmodelcanvasinrelationstotheINGOinterviewquestionsannex7Alltheintervieweesreceived,priortotheinterview,anemailwiththepurposeoftheresearch,theinterviewquestions,keydefinitionsandanexamplebusinessmodelcanvas(annex5,6and7).Thereasonsforthiswere:

Asseniormembersoftheirorganisationsorseniorconsultantswithlimitedtime,theywereonlywillingtoconducttheinterviewswhenfullyprepared;

DuetothenoveltyofthebusinessmodelcanvasconceptwithintheNGOsectormanywereunfamiliarwiththeconceptandtheterminology,andhence,wantedtoreflectandpreparepriortotheinterview;

Someoftheintervieweesneededpriorapprovalfromtheirsupervisorsregardingtheconfidentialityoftheinterviewsanditscontent.

OsterwalderandPigneur(2010)suggestedthatindiscussingtheorganisationsbusinessmodelcanvasitisbesttoprintoutthebusinessmodelcanvasinlargeformattofacilitatediscussionofthebusinessmodelelementssothatresultscanbesketchedstraightontothecanvas.Theybelievethisincreasestheproducti