Business Model Innovation and Replication

Productivity gains play a crucial role in value creation and distribution in firms. This chapter connects the strategy framework of value creation and value capture with the tools from the productivity literature in order to understand better how returns are distributed between different stakeholders in the business and how this distribution might evolve over time. The authors distinguish between business model innovation and replication as two genuine sources of value creation. The historical analysis of Southwest Airlines in the US airline industry illustrates the insights that can be gained using a formal model to measure productivity gains at the firm level.