Value creation and value capture with frictions

Citation

Chatain, O. (2012), "Value creation and value capture with frictions", Strategic Direction, Vol. 28 No. 3. https://doi.org/10.1108/sd.2012.05628caa.004

Value creation and value capture with frictions

Article Type: Abstracts From: Strategic Direction, Volume 28, Issue 3

Chatain O. and Zemsky P.Strategic Management Journal, November 2011, Vol. 32 Issue: 11, Start page: 1206, No. of pages: 26

We use a formal value-based model to study how frictions – incomplete linkages in the industry value chain that keep some parties from meeting and transacting – affect value creation and value capture. Frictions arise from search and switching costs and moderate the intensity of industry rivalry and the efficiency of the market. We find that firms with a competitive advantage prefer industries with less, but not zero, frictions. We show that rivalry interacts nontrivially with other competitive forces to affect industry attractiveness. Firm heterogeneity emerges naturally when we introduce resource development. Heterogeneity falls with frictions, but the sustainability of competitive advantage increases. Overall, we show that introducing frictions makes value-based models very effective at integrating analyses at the industry, firm, and resource levels.Article type: Research paperISSN: 0143-2095Reference: 40AS175

Keywords: Biform games, Industry analysis, Rivalry, Sustainable competitive advantage, Value-based strategy