Measuring successful business models in Ethiopian technology business: A PLS-SEM approach

Abstract

The development of successful business models is crucial for sustaining innovative technology firms; however, measuring business model success remains challenging due to varying economic dynamics. This study addresses this gap by developing and testing a framework to assess the success of Ethiopian technology business models. Through a comprehensive literature review, key business model dimensions were identified. Surveys conducted among 20 technology startups in Addis Ababa gathered data on reflective items measuring 17 subconstructs across four dimensions: value creation, value proposition, value capture, and value accounting. Structural equation modelling using Smart PLS was employed to evaluate the measurement model and test the hypotheses regarding the relationships between these dimensions. The analysis confirmed a measurement model consisting of 56 reflective items and established appropriate relationships among the dimensions, elucidating how value propositions, creation, and capture influence accounting practices. Key contributions include the development of a structured framework to assess business model success, identifying critical dimensions such as value creation, value proposition, value capture, and value accounting. The study provides essential insights for practitioners and policymakers, offering a foundation for enhancing the success of technology businesses in Ethiopia.