Cliff Bowman

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.

What are Dynamic Capabilities and are They a Useful Construct in Strategic Management

The dynamic capability perspective extends the resource-based view argument by addressing how valuable, rare, difficult to imitate and imperfectly substitutable resources can be created and how the current stock of valuable resources can be refreshed in changing environments. The concept of dynamic capabilities emerged in the 1990s, and the field has advanced considerably since. This paper presents a review as well as a synthesis of the extant literature. This synthesis first highlights, that dynamic capabilities are shaped by enabling and inhibiting variables within and outside the firm, including the perceptions and motivations of managers; secondly, it identifies processes that create dynamic capabilities; and thirdly, it explains that dynamic capabilities do not automatically lead to performance improvements. Finally, the paper addresses some areas of confusion and contradiction that hamper the development of the literature.

Tacit Knowledge: Some Suggestions for Operationalization

With the emergence of the resource-based view of the firm and of the concept of core competencies, intangible resources, and tacit knowledge in particular have been argued to occupy a central place in the development of sustainable competitive advantage. This is because tacit knowledge is argued to be difficult to imitate, to substitute, to transfer and it is rare. However, there is little empirical research to support this theoretical proposition. Tacit knowledge has so far resisted operationalization. This paper sets out to define the term tacit knowledge and proposes to redefine it, within the context of the resource-based view of the firm, as tacit skills. A methodology (based on causal mapping, self-Q and storytelling) for empirically researching the subject is outlined.

Using Single Respondents in Strategy Research

A survey of empirical papers has revealed a number of studies that have used single respondents, usually the CEO or a top management team member, to make inferences about certain strategic dimensions of their business. In this note, we highlight some of the problems in using this approach. We base our comments on a study of 76 businesses where multiple respondents were accessed. We conclude that, because of often wide variations in responses between members of the same top team (measured by Cronbach alpha), the use of single respondents in this type of strategy research is probably unreliable.

Implementing strategy through projects

Abstract Senior managers spend a great deal of time and effort formulating and promoting their chosen strategy, but all too often find that very little changes within the organization. The strategy does not have the impact expected: somehow the original objectives are dissipated as the strategy moves into implementation and the initial momentum is lost before the expected benefits are realized. This failure to implement strategy is often a result of senior management trying to use the organizations existing systems and structures, its ‘tatus quo’, to change the ‘status quo’. This article sets out the underlying causes of poor performance in implementing strategies, and outlines how an organization, by adopting a project and programme oriented approach with its associated management framework, can ensure much greater success.

Whose Human Capital? The Challenge of Value Capture When Capital is Embedded

Current approaches that position human capital as central to value generation in knowledge-based industries obscure the importance of the relational nature of knowledge production. That is, separable and embodied forms of capital are interdependent in value creation and capture processes. We identify a relational form of capital, embedded capital, which we argue is the critical resource in knowledge-based industries such as professional services firms, because it allows us to include agency and interdependency in the value capture process. These dimensions have previously been overlooked by the resource-based view of the firm. Examples of embedded capital include brand value, processes and procedures. The deployment of embedded capital is also not clearly controlled by either the firm or individual employees. A model is developed to illustrate the links between each form of capital, and the processes of value capture. This conceptual identification of the embedded form of capital is therefore of importance to future value creation and capture debates.

How value is created, captured and destroyed

Purpose – The purpose of this paper is to address value and the value‐creation process. It argues that the firm operating in line with investor interests, acts as both a customer and a supplier of value and considers the internal activities that reflect these motivations.Design/methodology/approach – A series of propositions are developed regarding the creation, capture and destruction of value.Findings – It is argued that two types of value‐creating activities can be identified. In addition there are activities directed at the maintenance of the firm, and the maintenance of its capital stock, and there are activities that destroy value. Value capture is determined by bargaining relationships between stakeholders and their representatives. The paper concludes with some comments regarding value appropriation.Originality/value – The paper addresses the critical issue of “value” in the resource‐based view (RBV) and specifically begins to develop the RBV away from its neo‐classical roots.

Marketing Mix Standardization in Multinational Corporations: A Review of the Evidence

This paper reports the findings of a systematic review of literature on marketing mix standardization in multinational corporations. The objective is to extract and synthesize best evidence regarding marketing mix standardization practices in multinational corporations and to identify evidence regarding the performance impact of marketing mix standardization. Beyond relevance to an academic audience, this review could be useful for management practitioners in multinationals seeking to integrate operations across borders. In this context, the paper seeks to make a contribution to evidence based policy and practice.

Inter-team coordination activities as a source of customer satisfaction

This article reports the results of a micro-level study into firm resources. It involved a comparative qualitative study of the activities contributing to service delivery in two similar but differentially performing divisions, one perceived by customers to be a high quality provider, the other a lower quality provider. The results indicate that there were differences in the incidence of inter-team coordination activities and that effective inter-team coordination was a critical factor in delivering increased customer satisfaction. This suggests that these activities, by causing staff to interact across internal boundaries, may constitute a resource advantage. We propose that these activities are critical for both the coordination of service delivery activities and knowledge exchange, and that contextual factors may have an impact on these activities. The study makes a contribution to the resource-based view and strategy as practice literatures and illustrates how a practice-orientated approach can inform the resource-based view.

Readings in strategic management

Introduction - Preface - PART 1 STRATEGIC MANAGEMENT PROCESSES - Of Strategies Deliberate and Emergent H. Mintzberg & J.H. Waters - Managing Strategic Change? J.B. Quinn - Rethinking Incrementalism G. Johnson - Paralysis by Analysis: Is Your Planning System Becoming too Rational? R.T. Lenz & M.A. Lyles - Strategic Planning for the World Wildlife Fund G.J. Medley - Corporate Strategy and the Small Firm S. Birley - PART 2 STRATEGY FORMULATION/INTRODUCTION - Does Strategic Planning Improve Company Performance? G. Greenley - Business Policy Formulation: Understanding the Process R. McLellan & G.Kelly - Whatever Happened to Environmental Analysis? J.Engledow & R.T. Lenz - How Competitive Forces Shape Strategy M.E. Porter - Portfolio Planning: Uses and Limits P. Haspeslagh - Defining Corporate Strengths and Weaknesses H. Stevenson - The Risky Business of Diversification R. Biggadike - Assessing Opportunities for Diversification: an analytical approach M. Younger - An Introduction to Divestment: The Conceptual Issues J. Coyne & M. Wright - End Game Strategies for Declining Industries K.R. Harrigan & M.E. Porter - From Competitive Advantage to Corporate Strategy M.E. Porter - The Use of Corporate Planning Models: Past, Present and Future J.K. Shim & R. McGlade - Business Ethics: Two Introductory Questions T. Sorell - Strategy and Ethics: Pilkington PLC T. Sorell - PART 3 MANAGING STRATEGIC CHANGE/INTRODUCTION - Choosing Strategies for Change J.P. Kotter & L.A. Schlesinger - Strategy Implementation Versus Middle Management Self Interest W.D. Guth & I.C. MacMillian - The Structuring of Organisations H. Mintzberg - Configurations of Strategy and Structure: Towards a Synthesis D. Miller - Evolution and Revolution as Organisations Grow L.E. Greiner - Successfully Implementing Strategic Decisions L.D. Alexander - Strategic Control: An Overview of the Issues D. Asch - The Nature and use of Formal Central Systems for Management Control and Strategy Implementation R.L. Daft & N.B. MacIntosh