SME Platforms as Business Models: A User-Centric Activity-System Approach

Abstract

The dramatic rise of social media platforms for individuals has attracted a lot of attention in the academic and business literature. Web 2.0 and social media technology has also been used to develop platforms for entrepreneurs and Small and Medium sized Enterprises (SMEs), which offer relevant information content and networking opportunities. Although there has been considerable growth and use in SME platforms there is a dearth of research into their strategy and operations. We take Zott and Amit’s activity-system approach, to analyse a theoretical sample of four leading UK SME platforms and develop causal maps of their business models. The theoretical contribution is to propose a general framework that features the dynamic nature of business models by describing and explaining the complex interactions and influences between the business model elements of business strategy, value proposition, end-user and Web 2.0. The paper also makes an empirical contribution by testing the activity-system approach and demonstrating its utility and validity in a new organisational context. Results show that user acquisition and retention strategies (part of the business strategy) enable both the platform´s value proposition and the revenue model, where partnerships and Web 2.0 technology play a key role in most cases. This has important implications for Marketing managers and for strategy theorists.