Chapter 5: A Practice-Based View of Business Modeling: Cognition and Knowledge in Action

In this chapter, we situate the strategic management of business models within the strategy-as-practice view to create a more-nuanced view of how managers manage business models. We introduce the notion of business modeling as the practice of managing business models and posit that managers are actively involved in actions guided by their cognition and knowledge structures that shape their practice of business modeling. More specifically, this chapter builds on practice theory, activity theory and socio-cognitive view and develops an argument for why the practice of business modeling is essential to understand how business models work. This practice involves various actions that span organizational boundaries and cut across levels of analysis. Our view is premised on the assumption that practice of business modeling represents a form of dyadic reciprocal causation in which business model of the firm guides managerial actions, which in turn lead to adjustments in the business model through learning practices. Theoretical and practical implications of this view will be discussed and several directions for research will be presented.