Value creation in a virtual world
During the past two decades, increasingly powerful and capable information technologies have made information more accessible and valuable so that it has become the prime resource for business; ahead of the traditional resources of land, labour and capital. Improved information acquisition, usage and distribution has also driven and enabled globalisation. The emergence of the virtual enterprise (VE) is one consequence of changed market conditions and advanced information communications technology (ICT). VE s are characterised by various configurations of networks of collaborating partnerships and intensive ICT linkages. As ICT has become more pervasive, businesses have become increasingly reliant on it for their effective operation so now the question for business strategists is how to create value and sustainable competitive advantage in a virtual world? This thesis offers an answer to that question.
This thesis uses rational arguments drawn from a wide variety of research from both the business and ICT disciplines to examine the theoretical foundations of value creation. It explores the development of corporate strategy and value driven sources of competitive advantage from the viewpoints of industrial organisation (IO), the resource based view (RBV) of the firm, innovation, transaction cost economics, network theory and value and supply chains. However, these established strategy theories, whose origins often predate the internet, do not adequately accommodate the expanded roles that information and digital technologies play in creating value in an increasingly digital environment. Alternately, Information Systems research, which is rich in information technology, struggles to accommodate the notion of value as legitimate information systems goal. Virtual organisation (VO) is a new strategic paradigm that is centred on the use of information and ICT to create value. VO is presented as a meta-management strategy that has application in all value oriented organisations. Within the concept of VO, the business model is an ICT based construct that bridges and integrates enterprise strategic and operational concerns.
The Virtual Value Creation (VVC) framework is an innovative and novel business model that draws on the concept of virtual organisation. The VVC’s objective is to provide enterprises with a framework to determine their present and potential capability to use available information to create economic value. It owes its inspiration to Porter and Drucker, both of whom emphasised value creation as the legitimate focus for enterprise activity and the source of sustainable competitive advantage. The VVC framework integrates existing and emerging theories to describe the strategic processes and conditions necessary for the exploitation of information in a commercial setting.
The VVC framework presently represents a novel and valuable tool that enterprises can use to assess their present and potential use of information to create value in a virtual age.
Kieth R. Hales. "Value creation in a virtual world" 2005
Available at: http://works.bepress.com/kieth_hales/1