IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v50y2004i10p1319-1333.html
   My bibliography  Save this article

How Do Value Creation and Competition Determine Whether a Firm Appropriates Value?

Author

Listed:
  • Glenn MacDonald

    (Olin School of Business, Washington University in St. Louis, St. Louis, Missouri 63130)

  • Michael D. Ryall

    (Simon Graduate School of Business, University of Rochester, Rochester, New York 14627)

Abstract

How does competition among economic actors determine the value that each is able to appropriate? We provide a formal, general framework within which this question can be posed and answered, and then provide several results. Chief among them is a condition that is both required for, and guarantees, value appropriation. We apply our methodology to (i) assess the familiar notion that uniqueness, inimitability, and competition imply value appropriation, and (ii) determine the value appropriation possibilities for an innovator whose unique discovery is of use to several others who can compete for the right to use it.

Suggested Citation

  • Glenn MacDonald & Michael D. Ryall, 2004. "How Do Value Creation and Competition Determine Whether a Firm Appropriates Value?," Management Science, INFORMS, vol. 50(10), pages 1319-1333, October.
    • Handle: RePEc:inm:ormnsc:v:50:y:2004:i:10:p:1319-1333
    DOI: 10.1287/mnsc.1030.0152
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.1030.0152
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.1030.0152?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Makowski, Louis & Ostroy, Joseph M, 1995. "Appropriation and Efficiency: A Revision of the First Theorem of Welfare Economics," American Economic Review, American Economic Association, vol. 85(4), pages 808-827, September.
    2. Adam M. Brandenburger & Harborne W. Stuart, 1996. "Value‐based Business Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 5(1), pages 5-24, March.
    3. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, April.
    4. Steven A. Lippman & Richard P. Rumelt, 2003. "A bargaining perspective on resource advantage," Strategic Management Journal, Wiley Blackwell, vol. 24(11), pages 1069-1086, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adam Brandenburger & Harborne Stuart, 2007. "Biform Games," Management Science, INFORMS, vol. 53(4), pages 537-549, April.
    2. Adegbesan, Tunji, 2007. "Strategic factor markets: Bargaining, scarcity, and resource complementarity," IESE Research Papers D/666, IESE Business School.
    3. Rodolphe Durand & Robert M. Grant & Tammy L. Madsen & Joshua Gans & Michael D. Ryall, 2017. "Value capture theory: A strategic management review," Strategic Management Journal, Wiley Blackwell, vol. 38(1), pages 17-41, January.
    4. Olivier Chatain, 2014. "How do strategic factor markets respond to rivalry in the product market?," Strategic Management Journal, Wiley Blackwell, vol. 35(13), pages 1952-1971, December.
    5. Giovanni Gavetti, 2012. "PERSPECTIVE—Toward a Behavioral Theory of Strategy," Organization Science, INFORMS, vol. 23(1), pages 267-285, February.
    6. Stuart, Harborne Jr., 2004. "Efficient spatial competition," Games and Economic Behavior, Elsevier, vol. 49(2), pages 345-362, November.
    7. Olivier Chatain & Denisa Mindruta, 2017. "Estimating Value Creation from Revealed Preferences: Application to Value-based Strategies," Strategic Management Journal, Wiley Blackwell, vol. 38(10), pages 1964-1985, October.
    8. Winter, Sidney G., 2006. "The logic of appropriability: From Schumpeter to Arrow to Teece," Research Policy, Elsevier, vol. 35(8), pages 1100-1106, October.
    9. Gonçalo Pacheco-de-Almeida & Peter Zemsky, 2007. "The Timing of Resource Development and Sustainable Competitive Advantage," Management Science, INFORMS, vol. 53(4), pages 651-666, April.
    10. Olivier Chatain & Peter Zemsky, 2007. "The Horizontal Scope of the Firm: Organizational Tradeoffs vs. Buyer-Supplier Relationships," Management Science, INFORMS, vol. 53(4), pages 550-565, April.
    11. Roberto Garcia-Castro & Ruth V. Aguilera, 2015. "Incremental value creation and appropriation in a world with multiple stakeholders," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 137-147, January.
    12. Vihang Patel, 2005. "Coalition Strategies and Reduction of GHG Emissions," Game Theory and Information 0501002, University Library of Munich, Germany.
    13. Kirsten Foss & Nicolai J. Foss, "undated". "Creating, Capturing and Protecting Value: A Property Rights-based View of Competitive Strategy," IVS/CBS Working Papers 2002-03, Department of Industrial Economics and Strategy, Copenhagen Business School.
    14. Christoph Grimpe & Katrin Hussinger, 2014. "Resource complementarity and value capture in firm acquisitions: The role of intellectual property rights," Strategic Management Journal, Wiley Blackwell, vol. 35(12), pages 1762-1780, December.
    15. Tarziján, Jorge, 2013. "The emergence of world-class companies in Chile: Analysis of cases and a framework to assess integration decisions," Journal of Business Research, Elsevier, vol. 66(10), pages 1728-1735.
    16. Renata P. Brito & Priscila L. S. Miguel, 2017. "Power, Governance, and Value in Collaboration: Differences between Buyer and Supplier Perspectives," Journal of Supply Chain Management, Institute for Supply Management, vol. 53(2), pages 61-87, April.
    17. Marvin B. Lieberman & Roberto Garcia‐Castro & Natarajan Balasubramanian, 2017. "Measuring value creation and appropriation in firms: The VCA model," Strategic Management Journal, Wiley Blackwell, vol. 38(6), pages 1193-1211, June.
    18. Maryam Ghorbankhani & Federica Rossi, 2023. "Intrinsic and strategic complementarity of research and knowledge transfer activities as determinants of knowledge transfer management: evidence from public research organisations," The Journal of Technology Transfer, Springer, vol. 48(4), pages 1386-1412, August.
    19. Glenn MacDonald & Michael Ryall, 2018. "Do new entrants sustain, destroy, or create guaranteed profitability?," Strategic Management Journal, Wiley Blackwell, vol. 39(6), pages 1630-1649, June.
    20. Daniel W. Elfenbein & Todd Zenger, 2017. "Creating and Capturing Value in Repeated Exchange Relationships: The Second Paradox of Embeddedness," Organization Science, INFORMS, vol. 28(5), pages 894-914, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:50:y:2004:i:10:p:1319-1333. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.