This paper defines four basic business models based on what asset rights are sold (Creators, Distributors, Landlords and Brokers) and four variations of each based on what type of assets are involved (Financial, Physical, Intangible, and Human). Using this framework, we classified the business models of all 10,970 publicly traded firms in the US economy from 1998 through 2002. Some of these classifications were done manually, based on the firms' descriptions of sources of revenue in their financial reports; the rest were done automatically by a rule-based system using the same data. Based on this analysis, we first document important stylized facts about the distribution of business models in the U.S. economy. Then we analyze the firms' financial performance in three categories: market value, profitability, and operating efficiency. We find that no model outperforms others on all dimensions. Surprisingly, however, we find that some models do, indeed, have better financial performance than others. For instance, Physical Creators (which we call Manufacturers) and Physical Landlords have greater cash flow on assets, and Intellectual Landlords have poorer q's, than Physical Distributors (Wholesaler/Retailers). These findings are robust to a large number of robustness checks and alternative interpretations. We conclude with some hypotheses to explain our findings.
