2. the creation and appropriation of (social) value

Question 1

describe the entrepreneur as a market maker

Answer 1

• one of the main outcomes of the entrepreneurial synthesis of information is the identification of a making opportunity
  → an opportunity to bring together suppliers of inputs and consumers of outputs through the establishment of a new market
• entrepreneur often has to create an insitution to make markets between himself and other transactors → extends the ranges of issues about which the entrepreneut has to make judgements
• the entrepreneur is modelled as a monopolist

Question 2

how to calculate created value

Answer 2

created value = B - O
= perceived customer value/willingness to pay for the product - opportunity costs of resource owners

Question 3

what is the role of the business model?

Answer 3

• reflects management’s hypothesis about what customers want, how they want it, and how the enterprise can organize to best meet those needs, get paid for doing so, and make a profit
• are purposefully used as frameworks to generate detailed causal theories that clearly articulate relationships and unknowns about opportunities and business that require testing

Question 4

how is the business model as an equilibrium concept of the market-making entrepreneur

Answer 4

B - O [creation] = (C-O) + (P-C) + (B-P) [capture]

Question 5

what does the business model describe?

Answer 5

describes how a firm creates, delivers, and captures value

Question 6

show the business model as a theoretical model

Answer 6

Profit: Π = E – C = p x d(p) – c(x)
Π = E – C = p x d(p) – c(f-1(y))
Π = E – C = p x d(p) – c(f-1(d(p)))

Question 7

how multiple stakeholders affect the business model?

Answer 7

• multiple suppliers: different suppliers may provide different resources, and imply different (types of) payments
• multiple customers: different customers may receive goods or services, and imply different revenue streams

Question 8

what is target group (beneficiary) orientation?

Answer 8

• with donations increasing the amount of goods supplied for beneficiaries, donors have an incentive to decrease their individual donations → free-riding problem
• if individual donations can be secured at a positive level then the amount of goods supplied for beneficiaries can be scaled with the number of donors