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Value Creation in a 'Non-Producing' Enterprise

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  • Omoregie, Uyiosa

Abstract

A widely-held proposition is that an enterprise does not create value until it commences production of goods or services for external customers for monetary profit. Another related proposition is that employees in a ‘non-producing’ enterprise, if remunerated, are paid 100 percent above the value of their labour – because the enterprise is not creating value. Counter arguments to these two propositions are presented. The purpose of a firm or business enterprise is discussed and the nature of ‘value’ is elaborated with a critique of the dominant marginal productivity theory of value.

Suggested Citation

  • Omoregie, Uyiosa, 2019. "Value Creation in a 'Non-Producing' Enterprise," SocArXiv h2mv3, Center for Open Science.
    • Handle: RePEc:osf:socarx:h2mv3
    DOI: 10.31219/osf.io/h2mv3
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    References listed on IDEAS

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    5. John Bates Clark, 1901. "Wages and Interest as Determined by Marginal Productivity," Journal of Political Economy, University of Chicago Press, vol. 10(1), pages 105-105.
    6. Milton Friedman, 2007. "The Social Responsibility of Business Is to Increase Its Profits," Springer Books, in: Walther Ch Zimmerli & Markus Holzinger & Klaus Richter (ed.), Corporate Ethics and Corporate Governance, pages 173-178, Springer.
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