Toward a theory of business models and business modeling in public entrepreneurship

Purpose: The purpose of this chapter is to introduce the concept of public business models and develop a theory for the process of developing and managing public business models. Methodology: This research synthesizes insights from various fields into a set of theoretical ideas that lay out what public business models are, to what extent they differ from commercial/industrial business models, and how they are developed and managed by public entrepreneurs. Findings: Developing and managing a business model is an entrepreneurial task that has been missing from the public entrepreneurship literature. Public entrepreneurs perform these tasks using public and private resources, leveraging public institutional systems, and developing capabilities that differ in several dimensions from private entrepreneurs due to the nature of public goods and existence of quasi-markets where public business models are developed and used. Research limitations/implications: This chapter opens new avenues for research in public entrepreneurship by suggesting that (1) public business models form the foundation of public entrepreneurship, (2) public business models differ from commercial business models not in their functionality but rather in their scope and design, and (3) public business models co-evolve with public institutions to maintain their legitimacy and value creation potential. Practical implications: This chapter equips public entrepreneurs with new insights into enterprising behaviors and the dynamism of value creation and capture in public ventures. Originality/value: The current study represents the first attempt to directly incorporate the notion of business models into the public entrepreneurship literature.