Reconceptualizing Value Creation with Limited Resources
AbstractIn traditional economics and finance the notion of value creation is virtually synonymous with the net present value of cash flows. Such a characterization implies that all of the uses of resource inputs, such as raw material and energy, are known and that their value is priced into commodities markets. It also fails to allow for the opportunity cost associated with the depletion of resources which, with advancing technology, might reasonably have future uses far greater in value than can be achieved at present with current technology. Stated differently, in traditional valuation analysis the option value associated with scarce resources—when new technology or knowledge can be applied to them—is not addressed. In the present work, we define technology leverage as representative of this effect. We then address the problem of sustainability of organizations by stating four propositions and examining their implications for government policy and for firm governance.
ALLEN, P. M. (2001). A Complex Systems Approach to Learning in Adaptive Networks. International Journal of Innovation Management, 5, 149-180.
BARNEY J. B. (1986). Strategic Factor Markets: Expectations, luck and business strategy. Management Science, 32(10), 1231-1241
BARNEY, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17( 1), 99-120.
CYERT, R.,& March J. (1963). A Behavioral Theory of the Firm. Englewood Cliffs, NJ: Prentice-Hall.
DEBREU, G. (1959). Theory of Value: An Axiomatic analysis of economic equilibrium. New Haven:Yale University Press.
MAKADOK, R. (2001).Toward a synthesis of the resource-based and dynamic-capability views of rent creation. Strategic Management Journal, 22, 387-401.
MAKADOK R. (2002). Research Notes and Commentary: A rational-expectations revisión of Makadok's resource/capability synthesis. Strategic Management Journal, 23(11), 1051.
PENROSE, E.T. (1959). The Theory of the Growth of the Firm. New York:Wiley.
PETERAF, M.A. (1993).The Cornerstones of Competitive Advantage: A Resource-Based View. Strategic Management Journal, 14(3), 179-191.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).