Value creation Flashcards
(26 cards)
Why is it hard to agree on what value creation is? (3)
- multidisciplinary nature of management
- value creation refers to both the content and process of value creation
- value creation is often confused with value capture
2 types of value creation
1) Use value: quality of a new job task, product or service as perceived by users in relation to their needs (subjective and individualistic)
2) exchange value: monetary amount realized at a certain point of time for the exchange of the new job, task, product or service.
Necessary economic conditions for value creation to endure (2)
- monetary amount exchanged must exceed the producer’s costs
- needs to be a perceived difference in value of the new product compared to an alternative
What is the nature of value creation process?
subjective and context specific. It depends on the target user’s subjective evaluation of the novelty appropriateness of the new task, product, service under consideration
3 requirements of value creation process
1) users must possess specialized knowledge of the new product and alternatives so appropriate comparison can be made
2) users must understand the need in its specific context
3) Evaluation needs to be done in the social and cultural context in which it is introduced
2 conceptualizations
- single universal conceptualization
- a contingency perspective: different source and targets of value creation linked to different levels of analysis
Levels of analysis in value creation: contingency perspective: individual
Develop novel and appropriate tasks, services, jobs, products and processes, or other contributions perceived to be valuable by a target user.
- creative acts
Knowledge creation
Search
Ability
Intelligence
Training
Intrinsic motivation
value creation: contingency perspective: organisational
firms develop/invent new ways of doing things using new methods, new technologies and or new forms of raw materials
- innovation
Invention
R&d
Knowledge creation
Structure and societal conditions: consider stakeholders
- incentives, selection and training
Society as a source of value creation
programs and incentives for Eship and innovations intended to encourage existing organisations and new entrepreneurial ventures to innovate ad expand their value to society and its members
- innovation and new firm creation
Competition
Capital investment
Incentives
Laws and regulation
In the process of value capture, who captures value?
- competition
- isolating mechanisms
Created value may have to be shared and there may be value slippage
Value capture individual level
If the process of value creation by the original source cannot be easily imitated, the source can retain more of the value.
Which 3 factors make it hard to imitate the created value?
1) network position: a strong network is built over time and depends on trust, reputation and mutual benefit. These cannot be easily imitated
2) unique experience: they are often deeply embedded in a company’s operations and identity, copying them requires more than just resources, it requires the right people and culture.
3) tacit knowledge: it’s the unwritten, intuitive expertise learned through experience and hard to transfer or document.
Value capture by organisational level
using resources with attributes that make imitation difficult through the sources own use of creative destruction before competitors can use the innovation, and through methods of resource management
Value capture by organisational level factors which make imitation difficult (2)
1) rare, inimitable, non-substitutabe resources
2) intangible resources: non-physical assets that are often harder to imitate than tangible (factories, equipment) ones.
value capture at societal level
capture value through isolating mechanisms (barriers that prevent others from imitating like specialized education system which takes years to develop) and specific resource advantages (unique factors that drive innovation)
Factors that make imitation on societal level difficult (4)
1) factor conditions: a nation’s ability to leverage its resources (labor, skilled workforce)
2) demand conditions: a nation’s domestic demand for high quality, innovative products pushes firms to improve before expanding globally
3) supporting industry and infrastructure: the presence of strong related industries, suppliers, and infrastructure that enhance productivity
4) firm strategy and rivalry: how domestic companies are structured and compete shapes their global success.
What is social entrepreneurship?
social entrepreneurship is the process of identifying, evaluating and exploiting opportunities to create social value that can occur within or across the non-profit, private for-profit and public sector
what is social value creation core building blocks?
resources
How does embeddedness influence SVC?
context (social, cultural, economic, geographic, institutional) profoundly shapes how SVC is designed and implemented
Why is innovation important in SVC?
it helps mobilize resources, build relationships, and achieve the mission effectively
What role does time play in SVC?
It’s a fundamental aspect of- SVC initiatives must evolve and adapt over time.
What are key implications for designing SVC?
context-aware, collaborative, adaptive
Process of SVC
- social entrepreneurship as catalyst: they initiate, recognise needs, and leverage their resource to bring SVC
- rational and collaborative: success is dependent on networks and relationships
- resourcing: social bricklayer (resourcefulness/improvisation) is key to overcoming scarcity
- alignment of resources: success involves linking resources to organizational strategic orientation
What is crucial for SVC implementation?
partnerships, resourcefulness, and strategic alignment are crucial for enactment.
