Value capture and value creation in high-velocity networked environments

Abstract

The core function of any profitable firm is capturing a share of the value that customer perceives in the firm's offering. Value capture is traditionally considered to relate to a competitive advantage at the firm level, but not the firm network level. However, the ever increasing role of information and knowledge in today's economy is profoundly changing how firms can create competitive advantages. Among these changes, we highlight reducing transaction costs in various areas of the economy, which drives the economy to organize more toward rapidly evolving networks or smaller firms. There is also an opposite trend for some internet firms to become larger due to economies of scale and due to network externalities. In this position paper, we examine the issue of value capture by firms that are increasingly small and operate in rapidly changing and evolving networks. We conclude by outlining future research on firm-level capabilities that are required to enable value capture in new forms of dynamic networks.