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Ever since the Internet boom of the mid-1990s, firms have been experimenting with newways of doing business and achieving their goals, which has led to a branching of thescholarly literature on business models. Three interpretations of the meaning and

function of “business models” have emerged from the management literature: (1) busi-ness models as attributes of real firms, (2) business models as cognitive/linguistic

schemas, and (3) business models as formal conceptual representations of how a busi-ness functions. Relatedly, a provocative debate about the relationship between business

models and strategy has fascinated many scholars. We offer a critical review of this nowvast business model literature with the goal of organizing the literature and achievinggreater understanding of the larger picture in this increasingly important research area.In addition to complementing and extending prior reviews, we also aim at a second andmore important contribution: We aim at identifying the reasons behind the apparentlack of agreement in the interpretation of business models, and the relationship between

business models and strategy. Whether strategy scholars consider business model re-search a new field may be due to the fact that the business model perspective may be

challenging the assumptions of traditional theories of value creation and capture byfocusing on value creation on the demand side and supply side, rather than focusing onvalue creation on the supply side only as these theories have done. We conclude bydiscussing how the business model perspective can contribute to research in differentfields, offering future research directions.

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