Value Creation and Appropriation in Firms: Conceptual Review and a Method for Measurement
37 Pages Posted: 20 Jan 2014
Date Written: June 10, 2013
Abstract
The notion of value creation by firms is central to strategy. Despite its importance, value creation has been defined in many different ways, often with a narrow focus on shareholders, which can lead to confusion about the notion. In this paper, we clarify some commonly used concepts of value creation. We then discuss one particular concept: economic gain, or the change in economic value created from one period to the next. We elaborate on how such value is created by the firm and distributed among a set of stakeholders, including shareholders, managers, employees, suppliers and customers. We conclude by introducing a method for quantifying this gain and its distribution among stakeholders of the firm.
Keywords: Value creation; Value appropriation; Stakeholders; VCA model
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