Indirect and direct business models and their effects on performance in IT companies

Abstract: This thesis studies financial performance data for Swedish publically traded information technology companies over five years beginning 2008 to 2012. This thesis examines performance for two types of business models: so called direct business models and indirect business models. The performance data is used to determine if there are any differences in financial performance. The analysis shows that companies using direct business models have a significantly lower financial performance than companies using indirect business models. Furthermore, the analysis shows that the difference can be explained by the type of right sold. Selling asset ownership rights or selling matching rights have a significant negative impact on performance while selling usage rights have a positive impact on performance. This thesis offers support to the notion that more and more information technology companies adopt indirect business models.