Network-Based Business Models, the Institutional Environment, and the Diffusion of Digital Innovations: Case Studies of Telemedicine Networks in Germany

Abstract

Previous research has emphasized the importance of matching innovations with a\xa0suitable business model. The design of business models for digital innovations such as telemedicine is a\xa0major challenge in health care systems. In this regulated context, the institutional environment plays a\xa0critical role for the sustainability of business models. In this paper, I propose an extended business model framework for network-based digital innovations. My study examines how the institutional environment and network-based organizational benefits affect the total value creation of telemedicine networks. I\xa0show how both perspectives acting in concert are able to account for the total value created in network-based business models in health care and contribute to the diffusion of digital innovations. My findings suggest that institutional bodies present important key partners in business models in regulated contexts, especially during the early stages of development and diffusion. Second, preexisting network structures, upon which network-based digital innovations can build, may accelerate the diffusion. Third, my study demonstrates the importance of value co-creation and appropriation that encompass all stakeholders in a\xa0network. Finally, I\xa0describe four key drivers for total value: (1)\xa0improvements in quality of and access to care, (2)\xa0reimbursement regulation, (3)\xa0network-based organizational benefits such as efficiency gains, learning, or knowledge transfer, and (4)\xa0legitimacy gains resulting from institutional isomorphism.