Deconstructing corporate value creation: evidence from Indian Information Technology enabled Service (ITeS) companies

Abstract

PurposeTo explore building blocks of corporate value creation that can be effectively assembled by practicing managers to deconstruct corporate value creation into distinctive models (customer value creation and shareholder value creation) and stages (resource assembly and capability leverage) in the Indian Information Technology enabled Service (ITeS) industry for exploring efficiency differentials between large Indian ITeS companies.Design/methodology/approachData envelopment analysis (DEA) technique has been used to uncover efficiency differentials in large Indian ITeS companies that represent 90% of all the ITeS companies listed in the Indian stock market and 13.9% of all companies listed in the Indian stock market, across industries.FindingsThis paper documents a nuanced understanding of interrelationships among activities that influence corporate value creation and comprehensively highlight those dominant activities that contribute to corporate value creation in an ITeS industry setting. The study demonstrates as to how companies can become more efficient in such crucial value creating components that result in superior corporate value. The explicating methodology proposed in this study can be handy for managers and can be extrapolated to other industry and national settings as well.Practical implicationsDeconstructing corporate value creation into granular models, customer value creation and shareholder value creation and further into two stages, being assembling resources to create capabilities and leveraging such capabilities to deliver value, this study provides hands-on value for managers in ITeS companies to create value.Originality/valueFusing the value creation and appropriation (VCA) framework, the resource-based view (RBV) and its extensions, this paper builds a robust theoretical model specification that is empirically tested.