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Author: | Chatain, O. |
Title: | Value creation, competition, and performance in buyer-supplier relationships |
Journal: | Strategic Management Journal
2011 : JAN, VOL. 32:1, p. 76-102 |
Index terms: | buying supply competition strategy value added service law companies United Kingdom |
Freeterms: | value creation scope economies |
Language: | eng |
Abstract: | It is argued by the value-based approach to strategy that a firm's ability to capture value depends on the extent of its added value (herein as: a-v). Based on a longitudinal dataset of United Kingdom (U.K.) law firm performance, capabilities, and client relationships, this paper empirically tests the link btw. a-v. and value capture. In this setting, competitors relevant for defining a firm's a-v. are those sharing a client with the firm. Furthermore, within a client relationship, value creation, and thus a-v., can be decomposed in two parts: i. product-line capability and ii. client-specific scope economies. It is found that a-v., measured at the level of each buyer-supplier relationship (herein as: r-ship.), is a driver of r-ship. stability and supplier profitability. This suggests that suppliers with similar capabilities might enjoy different economic returns depending on the composition of their relevant competitor set etc. |
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