Value Capture Research Articles

In Search of Sustainability Gains from the Complementarity Between Value Creation, Value Proposition and Value Capture Elements of Circular Business Models

In Search of Sustainability Gains from the Complementarity Between Value Creation, Value Proposition and Value Capture Elements of Circular Business Models

An empirical research agenda for value capture theory

Value capture theory, or the application of cooperative game theory to theory and pedagogy in strategic management, has been growing in influence, but its potential for empirical research is underexploited. I briefly review value capture theory and then offer thoughts on how it may motivate and inform empirical research that both tests specific elements of value capture theory and uses insights and econometric models based on value capture theory to deepen our understanding of many topics of interest to strategy scholars and practitioners.

Product network and origin of common equity factor risks

This paper extends the multisector asset pricing model based on production networks, achieving direct pricing of a firm’s equity assets at a more microscopic level within the product network. An Equilibrium-Aligned PageRank (EA-PR) centrality algorithm is proposed, and it is theoretically proven that EA-PR centrality can reflect the relative value of products and further derive the value of firms. A new equity asset pricing factor is constructed based on the EA-PR centrality of firms. The key findings can be summarized as follows: Firstly, the EA-PR centrality of firms shows a significant positive linear predictability for equity returns, and the returns associated with the EA-PR centrality factor cannot be fully explained by the Fama–French 6 (FF6) factors. Secondly, the EA-PR centrality factor demonstrates significant explanatory power for the FF6 factors and, to some extent, exhibits predictive ability for future returns of the FF6 factors. Thirdly, the product network model can effectively reflect the market competitiveness and growth potential of firms, and firms with high EA-PR centrality have stronger value capture capabilities, improving gross profit margin, cash flow, and investment growth in the future. Finally, this study empirically demonstrates the consistency between the product network model and the pricing theory of the q5 model, which incorporates the expected growth factor.

The non-linear impact of urban rail transit on commercial property prices: Based on a spatial heterogeneity perspective

Urban rail transit (URT) can boost population and business agglomeration, and increase premiums for surrounding properties. Commercial properties with an operational nature typically gain higher premiums and have the potential to capture value. However, the relationship between URT and commercial property price (CPP) has not been fully explored. Therefore, this paper takes Shanghai as an example, based on URT travel data, property sales information, and other multi-source geographic data, comprehensively analyses the intrinsic mechanism of URTs affecting CPPs. The results confirm that URTs have a significant positive effect on CPPs, but the degree of impact varies in the presence of spatial heterogeneity and submarket effects. On the urban scale, the effect increases and then decreases as one moves away from the CBD; at the station area scale, URTs have a non-linear step-decreasing effect on CPPs. Furthermore, the premium that URTs can generate is limited and subject to multiple constraints in terms of location, built environment, residents' travel habits and expectations. The findings can provide a reference for formulating value capture policy, planning URT routes, and enhancing urban economic vitality.

Value capture in IoT-driven business models: considerations about smart resources and isolating mechanisms in networked environments

PurposeThis conceptual paper aims to contribute to a better understanding of value creation and value capture with smart resources in the Internet of Things (IoT)-driven business models against the backdrop of an increasingly networked and connectivity-based environment. More specifically, the authors screen strategic management theories and adapt them to the specificities of new types of smart resources by focusing on a conceptual analysis of isolating mechanisms that enable value creation and value capture based upon different types of smart resources.Design/methodology/approachBy adapting the state of the art of the contemporary resource-based discussion (resource-based view, dynamic capabilities view, relational view, resource-based view for a networked environment) to the context of IoT-driven business models, the paper typifies valuable intra- and inter-organisational resource types. In the next step, a discursive discussion on the evolution of isolating mechanisms, which are assumed to enable the translation of value creation into value appropriation, adapts the resource-based view for a networked environment to the context of IoT-driven business models.FindingsThe authors find that connectivity shapes both opportunities and challenges for firms, e.g. focal firms, in such business models, but it is notably social techniques that help to generate connectivity and transform inter-organisational ties into effective isolating mechanisms.Originality/valueThis paper lays a foundation for a theoretically underpinned understanding of how IoT can be exploited through designing economically sustainable business models. In this paper, research propositions are established as a point of departure for future research that applies strategic management theories to better understand business models that work with the digitisation and connectivity of resources on different levels.

Double‐edged stars: Michelin stars, reactivity, and restaurant exits in New York City

AbstractResearch SummaryThis article develops a theoretical framework to explicate how third parties, who are not transactionally involved in a given exchange relationship, can promote or impede the creation and capture of value by influencing market actor beliefs and behaviors. I investigate these issues empirically through an abductive mixed‐method case study of the Michelin Guide's entry into New York City. An examination of two decades of the openings and closings of New York City's elite restaurants indicates that receiving a Michelin star corresponded to an increased likelihood of restaurant exit. Michelin stars appear to have fostered disruptions at recipients' upstream and downstream interfaces, which inhibited their ability to capture value. This ultimately underscores how value network reactivity to third‐party evaluations may lead to unintended consequences for firms.Managerial SummaryThis article explains how third‐party evaluators' reviews, ratings, and rankings can promote or impede the creation and capture of value. This occurs because third‐party evaluations engender reactions by those being evaluated, as well as reactions by other market actors such as competitors and exchange partners. I study these issues within the context of the Michelin Guide's entry into New York City, and my findings indicate that restaurants that received a Michelin star were more likely to close in subsequent years. Evidence suggests that intensified bargaining problems with landlords, suppliers, and employees, along with heightened consumer expectations, created new challenges for these Michelin‐starred restaurants, which ultimately made it more difficult for them to stay in business.

Policy development of road plus property developer on toll road with SOE assignment schemes

The Trans Sumatra Toll Road (TSTR) is a mega toll road project with an assignment State-Owned Enterprise (SOE) scheme in Indonesia. In its development, TSTR has several limitations, including funding, low investment feasibility and the un-optimum implementation of land value capture (LVC). This has the impact of delaying the completion of project development, decreasing the performance of toll road developer companies and even causing bankruptcy. LVC is an alternative funding scheme proven successful in other countries such as Hongkong, England and Vietnam. Several transportation projects based on transit-oriented development have successfully achieved profits using the LVC method. With a low project feasibility, the implementation of the Road Plus Property Developer (RPPD) business model is expected to be a solution to improve investment performance in the TSTR project. RPPD is defined as an assignment scheme toll road business model based on LVC implementation. This research aims to develop policies for implementing the RPPD business model on toll road SOE-assigned schemes. The data was collected by in-depth interviews with experts in two stages. The data analysis method used is Soft System Methodology (SSM). This research produces two recommended actions: ratification of the Presidential Regulation regarding the implementation of LVC and institutional transformation of regionally owned business entities in the property sector. It is hoped that implementing the RPPD policy will become a priority in completing the TSTR project.

Shared Gains but not Shared Losses: Value Capture by Stakeholders of US Airlines Over Four Decades

Shared Gains but not Shared Losses: Value Capture by Stakeholders of US Airlines Over Four Decades

The Nexus of Value Creation and Value Capture: Unravelling Tensions in Digital Platform Dynamics

The Nexus of Value Creation and Value Capture: Unravelling Tensions in Digital Platform Dynamics

Loss and Gain: Impact of Ecosystem Strategy on Value Capture and Value Expectation

Loss and Gain: Impact of Ecosystem Strategy on Value Capture and Value Expectation

Artificial Intelligence-based Business Model Innovation and the Creation and Capture of Firm Value

Artificial Intelligence-based Business Model Innovation and the Creation and Capture of Firm Value

Employment restrictions on resource transferability and value appropriation from employees

AbstractResearch SummaryWe examine the joint adoption of four employment restrictions that limit firm resource outflows—nondisclosure (NDA), non‐solicitation, non‐recruitment, and noncompete agreements—and their associations with value appropriation from employees. Using novel individual‐ and firm‐level survey data, we find that when firms adopt restrictions, they tend to adopt either all four restrictions or only an NDA. Adoption of all four restrictions is more likely when workers have access to valuable resources, noncompetes are more enforceable, and states adopt the inevitable disclosure doctrine. Employees with all four restrictions earn 5.4% less than employees with only NDAs, and this effect is driven by workers with low bargaining power. Analyses of earnings and a single restriction (e.g., only noncompetes) yield opposite results from those considering joint adoption, likely because of selection.Managerial SummaryValuable firm resources are often embedded in employees. We study whether and when firms adopt four employment restrictions that could protect such resources—agreements not to disclose information, not to solicit clients or coworkers, and not to join or start a competitor—and examine the extent to which they are associated with value capture from employees. Using novel firm and worker‐level surveys, we find that firms mostly adopt either all four restrictions together, only an NDA, or use no restrictions. Workers are more likely to have all four restrictions when they have access to valuable resources, when noncompetes are more enforceable, and when states adopt the inevitable disclosure doctrine. Finally, all four restrictions are associated with 5.4% lower earnings on average relative to workers with only an NDA, driven by workers with low‐bargaining power.

A comparison of new transport projects in Sydney, Australia: Decomposition of the impact on residential property prices

Public transport projects are expensive, long-lived and their funding is often a challenge. As a result, relevant authorities around the world are concerned in understanding the economic impacts induced by these new public transport projects and, in particular, whether any increases in land value which may follow an investment (referred to as land value uplift) can be ‘captured’ as a potential source of funding. Land value uplift can occur at different stages of a project and might not be only due to the improved accessibility of the project. This study focusses on understanding the complexity of land value uplift on residential properties resulting from three public transport projects in Sydney, Australia (two light rail projects and one heavy rail), as a way of providing insights to create evidence-based value capture policies. Multilevel models are presented comparing the affected or ‘catchment’ areas of the projects with what is referred to as a ‘control area’ where the investment has not had an impact. The total residential land value uplift is analysed prior and post implementation – and decomposed into what can be attributed to improved accessibility, property characteristics, neighbourhood characteristics, time series, and unobserved uplift. The results show that the anticipated value uplift before the projects’ implementation is significantly higher for the heavy rail project (between 12 and 15 per cent after its construction process started for properties located within 800 m from the station) than for the light rail project (5.7 per cent only for properties located within 400 m from the station), but it is close to zero for the project that represents the anticipated uplift for a light rail extension project after its announcement. However, there is a significant value uplift for the light rail extension project after its implementation (around 6 per cent) which is mainly due to the accessibility improvements. The distance to stations also showed to be significant in the light rail and heavy rail projects, with properties closer to the stations having a higher anticipated value uplift.

Innovation ecosystems beyond construction projects – a case study of Swedish cross laminated timber building networks

ABSTRACT While innovation ecosystems have been proven effective for driving innovation in high-tech industries, their application in construction with cross laminated timber (CLT) products have received limited attention, with most studies adopting a broad perspective on ecosystems, encompassing the entire supply network around individual building projects. This study explores niche innovation ecosystems within the context of construction with CLT products. Data from 15 CLT-based building projects in mid Sweden were collected through observations and interviews and analysed using a method combining existing theory on innovation ecosystem structure with social network analysis. Innovation ecosystem structure was identified within five of the projects, encompassing two unique ecosystems. These ecosystems feature interorganisational links and actor-level expected value capture in two dimensions: value creation within the standard contractual framework of the projects and the innovation ecosystem superimposed on these projects. The novel method bridges the gap between innovation ecosystem research and CLT practices. The findings reveal that niche innovation ecosystems interact with CLT-based building projects through collaborative efforts across multiple projects and partners. These ecosystems feature alignment links that indicate both intra – and inter-project interdependencies, potentially driving innovation in construction. Role extensions within these ecosystems highlight the complexity and adaptability required in the construction industry.

International entrepreneurship in innovative SMEs: Examining the connection between CEOs’ dynamic managerial capabilities, business model innovation and export performance

International entrepreneurship scholars aim to understand how small and medium-sized enterprises (SMEs) achieve long-term competitive advantage and international success. This paper examines how business model innovation (BMI) helps entrepreneurial and innovative SMEs in improving export performance suggesting that changes in value creation, value delivery, and value capture are required to target international customers effectively. Additionally, drawing on the dynamic managerial capabilities literature, we look at the role of CEOs’ managerial capabilities on BMI. A quantitative study using partial least squares structural equation model (PLS-SEM) was conducted on 189 innovative Spanish SMEs operating in business-to-business (B2B) international markets. Our findings provide new insights into the underexplored relationship between BMI and export performance generating new evidence regarding the mechanisms through which innovative SMEs may improve export performance. We also highlight the positive relevance of CEOs’ managerial social capital (external connectivity) and managerial cognition (empowering leadership) to foster BMI. Finally, managerial implications and future research directions are proposed.

Access-based cost-benefit analysis

Current methods of cost-benefit analysis (CBA) for transport investments rely on travel-time savings for potential users. This approach presents a consistent and significant historical trend of forecast inaccuracy, and thus has been questioned and criticized. Access, or the ease of reaching valued destinations, can be used as an alternative. Access features a strong correlation with land value which can be measured through hedonic analysis, and subsequently, access gains offered by a transport initiative can be monetised via property uplift. We test this hypothesis and evaluate Sydney's South West Metro Link (SWML).We first develop linear and semi-log ordinary least square hedonic pricing models for house sales in the Sydney region. The models are set up with structural and neighbourhood attributes in addition to access measures, and result in a statistically significant fit.Next, we model changes to job access induced by the SWML. Benefits are then quantified by land value uplift and are estimated at $1.87 Billion in 2031 and between $1.53–$3.08 Billion in 2061, which reflect base and transit-oriented development (TOD) scenarios. The project is thus feasible should certain land use and economic conditions be met, including TOD to occur about station localities by 2061 and if project costs are minimal. Although limitations are noted, access-based CBA exhibits significant promise as an alternative approach to appraisal and has direct application in value capture strategy.

Dependency in the Digital Age? The Experience of Mercado Libre in Latin America

ABSTRACTThis article uses Mercado Libre, the leading digital platform company in Latin America, as an illustrative case to analyse the effect of regional platforms on development, by considering their interplay with both global leaders and local actors. Building on dependency theory, the article identifies the company's structural dependence on algorithms and computing power provided by the largest information technology (Big Tech) companies in the United States. Nonetheless, it also finds that Mercado Libre is at the frontier in applied data analysis solutions tailored for its businesses. Together with a privileged access to personalized and cross‐fertilized market and financial datasets, the company's internal and purchassed technologies are the source of asymmetric relationships with its platforms’ users. The article conceptualizes Mercado Libre's place in digital capitalism as extractivist with local actors and, just like local elites when dependency theory was first formulated, it is complicit with global powers. But, unlike those elite firms, it is not technologically laggard, and its value capture is underpinned by its technological advantage. Thus, this article conceptualizes (digital) dependency as multiple layers of economic power in which leading firms from the peripheries occupy intermediate and interconnecting positions. It shows that, while these regional leaders operate at the technological frontier, economic power relations based on technological asymmetries remain crucial for studying underdevelopment.

Business Model Innovation and Corporate Competitive Advantages in the Digital Economy Era

In the digital economy era, enterprises face unprecedented challenges and opportunities driven by the rapid advancement of digital technologies. To thrive in this dynamic environment, enterprises must continuously innovate their business models to create and capture value in new ways. This paper explores the relationship between business model innovation and corporate competitive advantage in the context of digital transformation. Drawing on the resource-based view, dynamic capabilities framework, and other theoretical perspectives, this paper examines the characteristics, mechanisms, and strategies of business model innovation in the digital age. Through a comprehensive literature review and analysis of representative cases, we identify three key trends shaping business model innovation: digitalization, platformization, and intelligentization. We argue that enterprises need to leverage these trends to design customer-centric value propositions, build digital capabilities, construct open and collaborative value networks, and foster an agile and innovative organizational culture. Our findings highlight the importance of value creation, value capture, and value network effects in driving competitive advantage through business model innovation. We propose a framework that integrates these mechanisms with the core components of business models, providing a holistic and systemic view of business model innovation in the digital economy. We also discuss the implications of our research for theory and practice, emphasizing the need for further studies on the dynamics and outcomes of business model innovation in different contexts and industries. This paper contributes to the growing literature on business model innovation and competitive strategy in the digital age. By bridging the gaps between different theoretical perspectives and providing actionable insights for practitioners, we aim to advance the understanding and application of business model innovation as a key driver of corporate competitive advantage. Our research suggests that enterprises that can effectively align their business models with the evolving digital landscape will be better positioned to create and sustain superior performance in the face of increasing complexity and uncertainty.

‘Digital provide’ or product consumption diffusion cycle? The diffusion impact and potential of digital technology in the Global South

ABSTRACT The global digital divide is sometime presented as the primary obstacle to developmental convergence between world regions. On the other hand mobile phone and internet technology are at times seen as transformative innovations that are dissolving this development divide. Through secondary data (such as on usage from Internet World Stats) and case exemplars, of mobile money and the gig economy, this paper argues that this is not the case; primarily because new information and communication technologies are used mostly for communication and consumption, rather than production, and if they are value capture is often low. Consequently the ‘digital divide’, and its partial dissolution, are perhaps better characterized as phases of an ‘ICT product consumption diffusion cycle’, facilitated by technological embedding and convergence. The paper provides background and substantiates this argument and then explores the potential for a deep digital transformation (DDT) in the Global South.

Enriching Carbon: Surplus Value Creation and Capture on the Voluntary Carbon Markets

AbstractThis article examines the creation and capture of surplus value in the voluntary carbon markets to show the importance of narratives and networks in justifying price. Rather than a push towards commensurability in carbon markets, it points to the emergence of profitable business models based on the enrichment of credits. Enrichment focuses not on processes of standardisation associated with commodity production, but on the creation of difference, uniqueness, and provenance. Drawing on ethnographic fieldwork and the marketing of a REDD+ project in San Martín, Peru, the article argues that the creation of surplus value in the voluntary market lies chiefly in the ability of vendors to create, manage, and sell narratives. A focus on the enrichment of carbon‐as‐an‐asset thus shows that narratives and networks go beyond performativity but are central to value construction, privileging certain actors and forms of labour and highlighting emerging forms of exploitation in green markets.