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We explore the theoretical foundations of value creation in e‐business by examining how 59 American and European e‐businesses that have recently become publicly traded corporations create value. We observe that in e‐business new value can be created by the ways in which transactions are enabled. Grounded in the rich data obtained from case study analyses and in the received theory in entrepreneurship and strategic management, we develop a model of the sources of value creation. The model suggests that the value creation potential of e‐businesses hinges on four interdependent dimensions, namely: efficiency, complementarities, lock‐in, and novelty. Our findings suggest that no single entrepreneurship or strategic management theory can fully explain the value creation potential of e‐business. Rather, an integration of the received theoretical perspectives on value creation is needed. To enable such …