8.1 Introduction

Numerous newly launched e-business ventures have in the space of a few years experienced hyper-growth cycles and then subsequently, in many cases, either collapsed or had to face radical restructuring to survive. The investment bank Morgan Stanley (Phillips, 2001) has estimated that about 70 per cent of all technology venture capital raised in the USA in the last 25 years has been invested in dot-coms in 1999 and 2000 alone. This huge influx of financing, accompanied by a migration of energetic and talented professionals and managers into high technology industries in the 1990s, led to an almost unprecedented burst of innovation and entrepreneurship. However, in late 2000 and the early months of 2001 it became apparent that such rapid growth was unsustainable. A downturn in technology spending and the consequent poor earnings of high technology companies resulted in a huge stock market correction, most markedly in the Nasdaq.

History compels both practitioners and scholars of management to analyse the roots of these failures and disappointments. Although the term has rarely been defined, much attention has been focused on the notion of a business model as a success factor. In this regard, an example of anguish and corporate soul-searching is presented by Paul Allaire, CEO of Xerox Corp, who told analysts that his company's stock price collapse was because we have an unsustainable business model (Colvin, 2001).

The present business environment is highly chaotic and ambiguous. It is difficult to construct detailed,...