Modeling the Design of Value in Service-oriented Business Models

Many firms redesign their business models to be service-oriented in light of the increasingly central role that services play in their business models. Two fundamental questions should be addressed in designing service-oriented business models: how is value created for and with the customers by the service provider? and, how is the value captured by the service provider?. The first question deals with “value creation” while the second addresses “value capture” in the “service value equation”. A service-oriented business model that addresses these two questions can sustain the viability and competitiveness of the firm as a service provider. The extant research mainly focuses on the service design from the value creation perspective. Thereby, there has been little discussion about service providers’ value capture and its trade off with value created for and with service customers. In this paper, adapting a holistic perspective, we introduce a modeling framework that can assist in understanding, analysis and design of value (i.e. value creation and capture and their interplay) in service-oriented business models. Our modeling framework is grounded in insights and conceptualizations of the extant theories, constructs and frameworks on value creation and capture in business and service systems. We illustrate the applicability of our framework by conducting a descriptive case study of the value creation and capture in Amazon service system in the period between 1997 and