Investment in resources to create value: but value for whom?
DOI:
https://doi.org/10.21754/iecos.v24i1.1720Keywords:
value creation versus value delivery, shareholders and stakeholders, net cash flow, multiple measures of valueAbstract
Value creation has long been a topic of great interest in management in general, and in strategic decision making in particular. Although many management approaches have described and explained what value "creation" means, some of them have focused on improving operations and therefore in value "delivery": how to align resources and activities to convert raw materials on finished products. Other approaches have focus on the “creation” of value for a particular type of stakeholders. This paper emphasizes the question of value creation as potential value, which revolves around the company's strategy; and also emphasizes the need to have a systematic and holistic approach that considers the different stakeholders of the company. If management doesn't understand the meaning of value, it could create something that is irrelevant to stakeholders. It will be shown that, in a competitive environment, to create value for investors in the long term, management must first create value for other stakeholders: customers, suppliers, employees and society.
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References
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Woiceshyn, J. & Falkenberg, L. (2008). Value creation in Knowledge-based firms: aligning problem and resources. Academy of Mangement Perspective, 22(2), 85-99. https://doi.org/10.5465/amp.2008.32739761
Brown, S. P., & Lam, S. K. (2008). A meta-analysis of relationships linking employee satisfaction to customer response. Journal of Retailing, 84(3), 243-255.
https://doi.org/10.1016/j.jretai.2008.06.001
Byers, S. S., Groth, J. C., & Wiley, M. K. (1997). Managing Operating Assets to Create Value. Management Decision, 35(2), 133-142.
https://doi.org/10.1108/00251749710160296
Copeland, T, Koller, T. & Murrin, J. (1996). Valuation, Measuring and Management the value of companies. John Wiley.
Crouhy, M, Galai, D. & Mark, R. (2001). Risk Management. McGraw Hill.
Crouhy, M, Galai, D. & Mark, R. (2006). The Essentials of Risk Management. McGraw Hill. https://lemdoeundaloem.files.wordpress.com/2013/08/1-the-essentials-of-risk-management-2005.pdf
Freeman, R. E. (1984). Strategic Management: A stakeholder approach. Pitman.
Heskett, J. L., Jones, T. O., Loveman, G. W., Sasser, W. E., & Schlesinger, L. A. (1994). Putting the service-profit chain to work. Harvard Business Review, 72(2), 164-170.
Howard, R.A. (1966). Decision Analysis: Applied Decision Theory. Proceedings of the Fourth International Conference in Operational Research. Reprinted in Howard, R.A., & Matheson, J. E. (1984).
Howard, R. A., & Matheson, J. E. (2005). Influence Diagrams. Decision Analysis, 2(3), 127-143. https://doi.org/10.1287/deca.1050.0020
Howard, R. A., & Matheson, J. E. (2005). Influence Diagrams Retrospective. Decision Analysis, 2(3), 144-147. https://doi.org/10.1287/deca.1050.0050
Jensen, M. (2001). Value maximization, stakeholder theory, and the corporate objective function. European Financial Management, 7(3), 297-317.
https://doi.org/10.1111/1468-036X.00158
Jones, T. O. & Sasser, W.E. (1995). Why satisfied customers defect. Harvard Business Review, 73 (6), 88. http://www.van-haaften.nl/images/documents/pdf/Why%20satisfied%20customers%20defect.pdf
Kang, S. C., Morris, S.S., & Snell, S.A. (2007). Relational archetypes, organizational learning, and value creation : Extending the human resource architecture. Academy of Management Review, 32(1), 236-256.
https://doi.org/10.5465/amr.2007.23464060
Koller, T., Goedhart, M., & Wessels, D. (2010). Valuation: Measuring and Managing the Value of Companies (5° ed.). John Wiley & Sons.
Koller, T., Dobbs, R., & Huyett, B. (2011). Value : The four Cornerstones of Corporate Finance. McKinsey & Company Inc.
Lee, S. H. ; Peng, M. W., & Barney, J. B. (2007). Bankruptcy law and entrepreneurship development: A real options perspective. Academy of Management Review, 32(1), 257-272. https://doi.org/10.5465/amr.2007.23464070
Lepak, D. P., Smith, K. G., & Taylor, M. S. (2007). Value creation and value capture : A multilevel Perspective. Academy of Management Review, 32(1), 180-194.
https://doi.org/10.5465/amr.2007.23464011
March, J. & Simon, H. (1958) Organizations. Wiley.
Matheson, D., & Matheson, J. (1998). The smart organization: Creating value through strategic R & D. Harvard Business School Press.
Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. The Academy of Management Review, 22(4), 853-886. https://doi.org/10.5465/amr.1997.9711022105
Mortensen, Mark, & Edmondson, Amy C. (2023). Rethink Your Employee Value Proposition. Harvard Business Review.
https://hbr.org/2023/01/rethink-your-employee-value-proposition
Neal, Larry, & Spetzler, C. (2015). An Organization-Wide Approach to Good Decision Making. Harvard Business Review, 27.
https://hbr.org/2015/05/an-organization-wide-approach-to-good-decision-making#:~:text=With%20an%20organization%2Dwide%20approach,the%20judgment%20of%20their%20superiors.
Oakley, Denis (2021) Value creation and value capture.
https://www.denis-oakley.com/value-creation-and-value-capture/
ONU- Global Compact (2004). Who Cares Wins. https://www.unepfi.org /fileadmin/events/2004/stocks/who_cares_wins_global_compact_2004.pdf
Porter, M. (1985). The competitive advantage: Creating and sustaining superior performance. Free Press.
Porter, M. (1990). The competitive advantage of Nations. Free Press.
Porter, M. (1996). What is strategy?. Harvard Business Review, 74, 61-78. https://www.uniba.it/it/docenti/somma-ernesto/whatisstrategy_porter_96.pdf
Post, J., Preston, L., & Sachs, S. (2002). Redefining the corporation: Stakeholder management and organizational wealth. CA: Stanford University Press.
Rappaport, A. (2006) La creación de Valor para el Accionista: una guía para inversores y directivos. Ediciones Deusto.
Reichheld, F. F., & Sasser, W. E. (1990). Zero defections: Quality comes to services. Harvard Business Review, 68(5), 105-111. https://hbr.org/1990/09/zero-defections-quality-comes-to-services
Salinas Ortiz, J. A. (2009). Análisis de decisiones estratégicas en entornos inciertos, cambiantes y complejos. Cengage Learning.
Salinas Ortiz, J. A (2009). La Toma de Decisiones en Entornos de Crisis. En G. Alarco (Ed.), Crisis: análisis y perspectivas de la crisis económica mundial desde el Perú (pp. 353-384). Norma.
Salinas Ortiz, J. A. (1994). Calidad Decisional: reingeniería del proceso de toma de decisiones estratégicas. Encuentro Semana de la Calidad 1994, Sociedad Nacional de Industrias.
Salinas Ortiz, J. A. (2002). Análisis de Rentabilidad de Planes de Salud de las Entidades Prestadoras de Salud. Reporte de un trabajo de consultoría hecho para la Superintendencia de Entidades Prestadoras de Salud.
https://cdn.www.gob.pe/uploads/document/file/389615/Estudio__An%C3%A1lisis_de_rentabilidad_de_planes_de_salud_de_las_entidades_prestadoras_de_salud20191016-26158-1hj4x8z.pdf?v=1571207281
Shoemaker, Paul J.H. (2002). Profiting from uncertainty, strategies for succeeding no matter what the future brings. The Free Press.
Sirmon, D. G., Hitt, M. A., & Ireland, R. D. (2007). Managing firm resources in dynamic envionments to create value: Looking inside the black box. Academy of Management Review, 48(1), 346-357. https://doi.org/10.5465/amr.2007.23466005
Stewart, G. III (1991). The Quest for Value, The EVA Management Guide. Harper Business.
Spetzler, C., Winter, H. & Meyer, J. (2016). Decision Quality, Value Creation from Better Business Decisions. Wiley. https://doi.org/10.1002/9781119176657
Strategic Decisions Group, SDG. (2002). Strategic Enterprise Risk Management, avoid the wrong risks. An SDG Executive eBriefing.
Woiceshyn, J. & Falkenberg, L. (2008). Value creation in Knowledge-based firms: aligning problem and resources. Academy of Mangement Perspective, 22(2), 85-99. https://doi.org/10.5465/amp.2008.32739761
Published
2023-08-11
How to Cite
Salinas Ortiz, J. (2023). Investment in resources to create value: but value for whom?. Revista IECOS, 24(1), 6–30. https://doi.org/10.21754/iecos.v24i1.1720
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