臺大管理論叢 NTU Management Review VOL.29 NO.1

Exploring Dual Business Model Choice of Brand and OEM Businesses 52 1. Introduction We explore a commonly observed yet little researched issue regarding strategically operating both own-brand and original equipment manufacturing (OEM, hereafter) business models for innovative products in different markets. By undertaking this kind of dual business model (BM, hereafter), less-endowed product suppliers can penetrate accessible markets using own-brand BMs while strategically leveraging OEM buyers’ market power via providing highly efficient, customized design and manufacturing services, which allow them to explore opportunities in non-accessible markets (Alcacer and Oxley, 2014; Shih, 2004). Strategic use of dual BMs is critical for suppliers to grow due to the economic gains operations reaped from pooling production scales, and the potential for learning from the market scope expansion that occurs during interfirm collaboration (Lee and Chen, 2000). In addition, OEM buyers that use strategic outsourcing can focus on their competence areas while flexibly overcoming the threat of fast-changing technologies, hence enhancing their competitive advantage (Eisenhardt and Schoonhoven, 1996). Despite the potential for win-win collaboration, dual BMs also impose challenges on focal product suppliers. Internally, suppliers must ensure that distinct BMs can be well- managed within one organization, despite each BM requiring tailored resources and incompatible activities (Markides and Charitou, 2004; Porter, 1980). Externally, there are tensions between OEM buyers and product suppliers, as they may become competitors (Luo, 2004). For example, Acer, one of the major personal computer brands in Taiwan, was forced by buyer’s concerns to spin off its contract manufacturing service unit from its integrated organization in 2000 (Shih, 2004). Hence, the sustainability of dual BMs is a critical issue for product suppliers, especially those in emerging markets. Motivated by this knowledge gap, we use the perspective of BM design (Zott, Amit, and Massa, 2011) to discuss why and how a supplier chooses a dual BM ? Specifically, we establish two central questions to begin our exploration: (1) What are the driving factors underlying the supplier’s choice of a dual BM? (2) What synergies motivate the supplier to undertake a dual BM and what is their order of importance? From a BM perspective, we view branding and OEM businesses as different types of BM designs in a spectrum of choices. Suppliers must define appropriate BMs for focal products so they know how to create value by clarifying the BMs’ associated building blocks and the relationship among them on an operational level (Osterwalder and Pigneur, 2010), deliver value by configuring and organizing resources and competence (Demil and Lecocq, 2010) on an