Theory of the Firm for Strategic Management: Economic Value Analysis

Cover......Page 1
Half-title......Page 3
Title......Page 7
Copyright......Page 8
Contents......Page 9
Figures......Page 13
Tables......Page 14
Preface......Page 15
Part I Theories of the firm......Page 17
The emergence of strategic management......Page 19
The scope of the field......Page 23
The multidisciplinary basis of business strategy......Page 24
The firm as a production unit......Page 27
The firm as a decision-making process......Page 29
The firm as a contracting solution......Page 32
The firm as a collection of resources......Page 33
The theory of the firm for strategic management......Page 35
A value approach to the analysis of firm strategy......Page 37
Structure of the book......Page 38
Coase and the nature of the firm......Page 43
Williamson and transaction costs economics......Page 47
Property rights and incomplete contracts......Page 51
Agency theory......Page 55
Limitations of the contracting view as a theory of the firm......Page 57
The role of opportunism, hold up, and trust in the emergence of firms......Page 58
Comprehensiveness of the contracting view......Page 61
Usefulness for strategic management and its practice......Page 65
Contributions of the contracting view to a theory of the firm for strategy......Page 67
Example of an in-house cafeteria......Page 69
The resource-based view of the firm......Page 72
Firm growth......Page 73
Competence building......Page 75
Firm heterogeneity and differences in performance......Page 76
Does it provide tautological explanations about performance?......Page 80
Is it a useful theory?......Page 82
Does it explain why firms exist?......Page 84
The firm in strategic management......Page 86
A value-based model of firm strategy......Page 87
The effect of firm boundaries on the value created by internal resources......Page 92
Internal effects......Page 93
External effects......Page 95
Why do different firm strategies exist?......Page 96
What is economic value?......Page 101
Value in economics......Page 102
Value in marketing......Page 104
Value in finance......Page 106
Value in strategy......Page 107
Sources of customer value creation......Page 108
Value creation through enhancing customer benefits......Page 111
Greater utility in existing product or service features......Page 112
Different combinations of product or service features......Page 113
New products and services......Page 114
Reducing monetary costs (price)......Page 115
Reducing nonmonetary costs......Page 116
Information costs......Page 117
Usability......Page 118
Technology costs......Page 119
The influence of externalities......Page 120
Innovation, entrepreneurs, and new value creation......Page 122
The role of entrepreneurs in value creation......Page 124
Williamson’s example of mines and houses......Page 125
Where do profits come from?......Page 130
Profits as a residual income in neoclassical economics......Page 131
Profits as implicit compensation to factors of production......Page 133
Profits as retribution to the entrepreneur......Page 134
Contextual conditions for profits......Page 136
Uncertainty......Page 137
Innovation......Page 138
Specificity......Page 140
Profit generation through resource combinations......Page 143
The sustainability of profits through barriers to competition......Page 145
Barriers with perfect replicability......Page 147
Barriers with limited substitutability......Page 148
Profit sustainability of a new restaurant......Page 150
Part II Firm strategies......Page 155
Elements of business-level strategy......Page 157
Managing resources to create value for customers......Page 159
Value created by products......Page 161
Value created by professional services......Page 163
Value created by networks......Page 164
Market positioning......Page 168
Segmentation......Page 169
Differentiation......Page 172
Competitive dynamics......Page 176
The interaction among the different elements of strategy......Page 180
The influence of the industry and the top managers on business strategy......Page 181
Value analysis at the business level......Page 184
Why do schools exist, but not firms for long-term secretarial services?......Page 185
Value creation at the corporate level......Page 190
The benefits of diversification......Page 193
Implications for resource management......Page 194
Implications for customer relationships......Page 196
Corporate-level costs......Page 197
Business-level costs......Page 198
The effect of diversification on performance......Page 200
Vertical integration......Page 202
Mergers and acquisitions......Page 205
Strategic alliances and cooperation......Page 208
The integration of channel and content in Vivendi......Page 211
The theory of the multinational......Page 214
A value approach to the MNE......Page 219
International presence......Page 223
Global strategy......Page 225
The internationalization of retailers Wal-Mart and Ikea......Page 229
Markets and social value......Page 232
Market imperfections......Page 233
Monopoly......Page 234
Externalities......Page 237
Other market imperfections......Page 239
Wealth distribution......Page 241
Corporate social responsibility......Page 242
Value creation and CSR......Page 247
A dual standard for business and CSR activities......Page 252
Ethics and social strategy......Page 253
CSR in The Body Shop......Page 258
What is a firm?......Page 262
Why do firms exist?......Page 264
What determines firms’ boundaries?......Page 265
What causes performance differences across firms?......Page 266
The strategic definition of firm boundaries......Page 268
Focus on the customer’s perspective......Page 271
Sources of differentiation......Page 273
Industry change and replacement......Page 275
Towards a value theory of the firm in strategic management......Page 276
Areas for future research......Page 277
Limitations of value analysis......Page 280
1 Introduction......Page 283
3 The nature of the firm in strategy......Page 284
6 Business strategy......Page 285
8 International strategy......Page 286
9 Strategy and social value......Page 287
References......Page 288
Index......Page 309