Supporting start-up business model design through system dynamics modelling

Abstract

Purpose The purpose of this paper is to explore how system dynamics (SD) modelling can provide a methodological support to business model (BM) design with the intent to better communicate business strategy and manage performance. Design/methodology/approach After a literature review of the field and an analysis of the strengths and limitations of conventional BM frameworks, the paper illustrates and discusses an approach that combines such a framework with SD modelling. A single-case study design was selected to explore the implications and limitations of using this combined approach to business modelling. Findings The methodological support provided by SD to BM design may effectively improve business strategy communication and performance management through both the adoption of a systemic and flexible perspective able to identify and analyse the main cause-and-effect relationships between the key-elements of the business strategy, and the use of a simulation technique that contributes in understanding how a firm operates, and its prospective performance over time. Originality/value Growing interest for BMs appears in the recent strategic management literature with research highlighting strengths and shortcomings. However, few attempts have been produced to overcome such limitations, while the adoption of SD is relatively new in supporting BM design.