The evolution of alternative business models and the legitimization of universal credit card industry: Exploring the contested terrain where history and strategy meet

Huseyin Leblebici

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

Purpose - This paper focuses on a unique historical case study of industry evolution in order to develop a road map where historical and strategic research could develop a common ground for trans-disciplinary inquiry. Design/methodology/approach - The industry I explore is the Universal Credit Card Industry since its inception with the Diners Club in 1949 until its maturity in late 1990s. My empirical objective here is to develop a historically detailed and theoretically rich case study in which evolutionary processes are discovered as a result of the historical narrative. Findings - The historical account of the industry demonstrates how the evolution of alternative business models as organizing forms has led to the establishment of interorganizational platforms with unique ecosystems. These alternative business models, through various experimentations, have ultimately produced two critical interorganizational organizations, one based on an open-loop system represented by Visa and MasterCard, and the other based on a closed-loop system represented by Diners Club and the American Express. The historical account also shows that in a given industry competition is not only among specific firms in the industry but also among the business models and the platforms created by these models. Originality/value - I conclude that historical analyses reveal the nature of competition not only among firms but also among alternative business models where traditional strategy research rarely covers.

Original languageEnglish (US)
Title of host publicationHistory and Strategy
EditorsSteven Kahl, Brian Silverman, Michael Cusumano
Pages117-151
Number of pages35
DOIs
StatePublished - 2012

Publication series

NameAdvances in Strategic Management
Volume29
ISSN (Print)0742-3322

Keywords

  • Business models
  • Credit card industry
  • Historical case study

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management

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