Accounting for Business Models: Increasing the Visibility of Stakeholders

Colin Haslam, Nick Tsitsianis, Tord Andersson, Pauline Gleadle

Keywords

business model, stakeholder theory, value creation, value capture, conceptual framework and accounting disclosure


Abstract

Purpose: This paper conceptualises a firm’s business model employing stakeholder theory as a central organising element to help inform the purpose and objective(s) of business model financial reporting and disclosure.

Framework: Firms interact with a complex network of primary and secondary stakeholders to secure the value proposition of a firm’s business model. This value proposition is itself a complex amalgam of value creating, value capturing and value manipulating arrangements with stakeholders. From a financial accounting perspective the purpose of the value proposition for a firm’s business model is to sustain liquidity and solvency as a going concern.

Findings: This article argues that stakeholder relations impact upon the financial viability of a firm’s business model value proposition. However current financial reporting by function of expenses and the central organising objectives of the accounting conceptual framework conceal firm-stakeholder relations and their impact on reported financials.

Practical implications: The practical implication of our paper is that ‘Business Model’ financial reporting would require a reorientation in the accounting conceptual framework that defines the objectives and purpose of financial reporting. This reorientation would involve reporting about stakeholder relations and their impact on a firms finan­cials not simply reporting financial information to ‘investors’.

Social Implications: Business model financial reporting has the potential to be stakeholder inclusive because the numbers and narratives reported by firms in their annual financial statements will increase the visibility of stake­holder relations and how these are being managed.

What is original/value of paper: This paper’s original perspective is that it argues that a firm’s business model is structured out of stakeholder relations. It presents the firm’s value proposition as the product of value creating, cap­turing and manipulating firm-stakeholder relationships. The originality of this paper is that it calls into question the nature of the accounting conceptual framework. Business model financial reporting will involve reporting about ma­terial stakeholder relationships and how these impact upon the viability of a firm’s business model value proposition.


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