Creating, Capturing and Protecting Value A Property Rights-based View of CompetitiveStrategy
AbstractThis paper develops a property rights-based view of strategy (the “PRV”). A property right (or economic right) is an individual’s net valuation, in expected terms, of the ability to directly consume the services of an asset (including, e.g., a monopoly position) or consume it indirectly through exchange. Resources expended on exchanging, protecting and capturing such rights are transaction costs; thus, we directly link property rights, transaction costs, and economic value. We assume that all relevant exchange is costly and that all agents maximize their property rights. This implies that economizing with transaction costs may be a distinct source of value, and potentially of sustained competitive advantage. Moreover, strategizing may be understood as revolving around influencing impediments (i.e., transaction costs) to value creation. Expectations and contracting also become crucial parts of processes of creating, protecting and capturing value. We use these insights to derive a number of refutable propositions, and argue that key insights from both industrial organization economics and the resource-based view are consistent with the PRV.
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Bibliographic InfoPaper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 02-02.
Date of creation: 2002
Date of revision:
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Web page: http://www.druid.dk/
Property rights; transaction costs; industrial organization;
Other versions of this item:
- Kirsten Foss & Nicolai J. Foss, . "Creating, Capturing and Protecting Value: A Property Rights-based View of Competitive Strategy," IVS/CBS Working Papers 2002-03, Department of Industrial Economics and Strategy, Copenhagen Business School.
- D4 - Microeconomics - - Market Structure and Pricing
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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