Value Creation Versus Value Capture: Towards a Coherent Definition of Value in Strategy

Value Creation Versus Value Capture: Towards a Coherent Definition of Value in Strategy Resource‐based theory has tended to focus on the development and protection of valuable resources. What determines a valuable resource has received less attention. This paper addresses three related issues concerning value and valuable resources: what is value? how is it created? and who captures it? We have tried here to integrate different strands of the literature to address these questions. First, we argue that a distinction needs to be made between use value, which is subjectively assessed by customers, and exchange value, which is only realized at the point of sale. Second, we argue that the source of new use values is the labour performed by organizational members, and that firm profits can be attributed to this labour. Profit differences between competing firms derive from labour performing heterogeneously across firms. Finally, we argue that value capture is determined by the perceived power relationships between buyers and sellers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png British Journal of Management Wiley

Value Creation Versus Value Capture: Towards a Coherent Definition of Value in Strategy

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Publisher
Wiley
Copyright
British Academy of Management 2000
ISSN
1045-3172
eISSN
1467-8551
DOI
10.1111/1467-8551.00147
Publisher site
See Article on Publisher Site

Abstract

Resource‐based theory has tended to focus on the development and protection of valuable resources. What determines a valuable resource has received less attention. This paper addresses three related issues concerning value and valuable resources: what is value? how is it created? and who captures it? We have tried here to integrate different strands of the literature to address these questions. First, we argue that a distinction needs to be made between use value, which is subjectively assessed by customers, and exchange value, which is only realized at the point of sale. Second, we argue that the source of new use values is the labour performed by organizational members, and that firm profits can be attributed to this labour. Profit differences between competing firms derive from labour performing heterogeneously across firms. Finally, we argue that value capture is determined by the perceived power relationships between buyers and sellers.

Journal

British Journal of ManagementWiley

Published: Mar 1, 2000

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