Abstract
A business model (BM) is a framework that shows how a company creates, delivers, and captures value for all stakeholders. A company’s BM must be explained in a structured and engaging format. The story of a company’s BM can be presented in various ways using a selection of quantitative data, graphical representations, and descriptive narratives. Previous studies have examined business model disclosure (BMD) in corporate annual reports using several methods, including content analysis, which is the most common method. However, comparing results over multiple regulatory or economic periods is challenging.This study seeks to contribute to the BMD literature by demonstrating findings from a sector of the capital market in the Kingdom of Saudi Arabia (KSA), namely the capital goods industry, which has not been explored in prior research. The lack of regulatory requirements for BMD in KSA has led to fragmented disclosures in annual reports. This study enhances the comprehension of BMD practices in emerging markets by addressing an existing gap caused by the fact that most previous research concentrates on developed countries with established disclosure frameworks.
The purpose of this research is first, to investigate BM disclosures by listed companies operating within the capital goods industry in KSA; second, to explore the viewpoints of internal and external stakeholders about BM in the capital goods industry, and finally, to identify the salient stakeholder groups based on the opinions of stakeholders. The first research method used was content analysis to explore the level and volume of BMD. The data were collected from the annual reports, published from 2017 to 2022, of eleven companies operating within the capital goods industry listed on the Saudi Stock Exchange (Tadawul). Then, semi-structured interviews were used as the second research method to explore the viewpoints of three different stakeholder groups: (i) preparers, (ii) users and (iii) regulators (31 interviewees) regarding BMD practices in the Saudi capital goods industry and to identify the salient stakeholder groups based on their opinions. The study’s findings were interpreted through the lens of stakeholder theory.
The content analysis reveals that the level of BMD within Saudi capital goods companies is moderate, characterised by partial disclosures that lack completeness. For example, only several companies disclose information on value propositions and customer interface. Additionally, the volume of BMD, as measured by text units increased over the period of the research; however, the analysis demonstrates that BM disclosures in the capital goods industry are generally scattered throughout many parts of the annual reports. The results underscore the need for improved regulatory guidance and structured frameworks to improve the consistency of BMD in the Saudi capital goods industry, thereby ensuring stakeholders can access a clear and integrated representation of the companies' BM.
Nevertheless, the interviewees reveal that many preparers and users claim that disclosures on value propositions and customer interface are presented in the company’s strategies. This perspective does not align with the literature since BM and company strategies are different. All regulators confirmed this. The findings indicate that the absence of clear guidelines from Saudi regulators results in ambiguity, leading preparers and users to seek regulatory guidance regarding BM reporting. Regulators recognised the importance of incorporating a BM section in annual reports, highlighting its potential to enhance transparency and facilitate better communication with stakeholders. The findings emphasise an urgent need for regulatory authorities to assist listed companies in reporting BM. By establishing specific requirements, regulators could improve companies' ability to communicate their BM story to stakeholders. The proposed integration of BM pillars and building blocks into a dedicated section is an ambitious goal aimed at enhancing coherence and accessibility, minimising stakeholder misunderstanding, and adhering to international standards.
| Date of Award | 2025 |
|---|---|
| Original language | English |
| Awarding Institution |
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| Sponsors | Kingdom of Saudi Arabia & King Faisal University |
| Supervisor | Alison Fordyce (Supervisor) & Vicky Lambert (Supervisor) |