Abstract
Porter stated in his value chain concept that business support activities are contributing to the value creation process of a business organization. In the “classical view” business support activities are considered as indirect productive and not having a clear and direct contribution to the business organization value chain. The information age has enabled and leveraged business support activities to become decisive contributors to the value creation process of any business. Can this value contribution be somehow determined or quantified? Management accounting is a classical business support activity that contributes to the business organization value chain. Through usage of value management and value driven performance indicators, the value contribution can be determined and quantified. The present paper is highlighting one possible alternative to determine the value contribution by using indicators like economic value added and economic profit. The value-based approach is putting indirect productive business activities into a new position, the one of a clear and important business value creator that cannot be ignored in the 21st century, a century driven by data, a nd information and knowledge that can sustain a decisive sustainable competitive advantage.
Highlights
An individual or other organization, when acting in their role as shareholder, is the trigger of a business idea being operationalized through the set up and establishment of a legal business entity
The value contribution of intangible assets like data, information and knowledge is highlighted by using value based performance indicators
Management accounting is the typical knowledge driven, value creating business activity that is handling the intangible side of business organizations in the information age by acquisition, processing and sharing of insights of business performance and evolution
Summary
An individual or other organization, when acting in their role as shareholder, is the trigger of a business idea being operationalized through the set up and establishment of a legal business entity. From the moment when a business idea is operationalized, and a legal business organization is established it is expected to create value for its shareholders, shareholders being the source of equity. Besides the primary activities of a business organization can the support activities be considered a value contributor? According to Porter’s value chain concept support activities have a clear contribution to the margin achievement of any business organization. The business organizations knowledge pools, are grouped under the generic term of “firm infrastructure” (in Porter’s value chain concept) like financial accounting, management accounting, general management, strategic planning, control systems, etc. Management accounting is part of “firm infrastructure” and is a contributor to the margin achievement of the business organization. The purpose of this paper is to illustrate the created value of management accounting and to measure is by using value based performance evaluation
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