Business Models and Value Creation : A Case Study of New York City Economic Development Corporation

Abstract: Since its establishment as an emerging area of research in strategic management over a decade ago, business model research has had little consensus towards adopting a single definition or common language for this rapidly growing management concept.  However, strong agreement as to the relevance of value creation within organizations underlies existing business model literature. Moreover, applications of business model frameworks outside the private sector have been limited. Recent literature has identified business model innovation and design as a critical tool in effective implementation of organizational strategy, and empirical research in business models from new and alternative perspectives may reveal linkages between strategic management issues and effectiveness in creating value in public and citizen sector organizations.  Nevertheless, existing academic literature has not yet explored applications of traditional business model frameworks within a public sector context, nor has the need for empirical research linking the business model concept with public sector management been addressed. The main purpose of this thesis is to contribute to the understanding of how business models can be defined, redefined, and applied in city economic development agencies for application as a strategic public management tool. An analysis of how the business model of a prominent city economic development agency has been employed and how value is created within this model will be undertaken.  This empirical study also aims to determine conceptual linkages between business model applications in city economic development and to contribute a theoretical foundation towards development of future research.   Given the multi-faceted applications of the business model concept, the authors have conducted exploratory research targeting the application of current business model concepts and frameworks to a city economic development agency representing an influential global center of finance and commerce, the City of New York. The significance of conducting empirical studies on city economic development agencies is due to the influence in which these organizations have on industrial cluster growth, national economic competitiveness, and citywide and regional transformation. In considering this context, The New York City Economic Development Corporation is the primary economic growth engine for the City of New York, and strives to create and deliver value to citizens, businesses, and other stakeholders of New York City.   Findings from this study suggest that economic development professionals have not adequately clarified the term ‘business model’ for promoting common language between strategists, project managers, consultants, and executives to support strategic business model design within city economic development agencies.  The authors conclude that equally relevant to framing and applying theoretical foundations grounded in the business model concept, is the identification of value-creating activities within economic development agencies and development of citizen-focused value propositions.  This empirical study aims to define, clarify and explore the former, while calling upon a need for future research of the latter.