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The purpose of this study is to explore how luxury companies can use knowledge embedded in tradition to set up effective business models.

Given the limited coverage in previous literature regarding the manner in which tradition can be leveraged by companies to create and capture value, this paper adopts a qualitative approach, i.e. the exploratory analysis of a single case study, namely, that of the high-end Italian hotel Borgo Egnazia.

Within a focus on luxury firms, this paper conceptualizes the tradition-driven business model highlighting activities aimed at creating and capturing value by using knowledge embedded in tradition. Combining value creation and value capture with tacit and codified knowledge, the authors are able to highlight the components of a business model that uses tradition as its main distinctive resource.

To the best of the authors’ knowledge, this is the first study to explore how companies use tradition to create and capture value.