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Who Captures Value in Digital Services?

Author

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  • Kalm, Matias
  • Seppälä, Timo
  • Ali-Yrkkö, Jyrki

Abstract

In this study, we explore who creates and captures value in digital services by analyzing four such services. Our results show that there are notable variations in both value creation and value capture between the services. Similar variations are also observed in the geographical distribution of value added. The study also highlights variations in economies of scale in digital services. In some services, there are almost no variable costs, and hence, the economies of scale are very high. In other services, the economies of scale are significantly smaller. The difference in economies of scale between services partially arises because a physical product is delivered in conjunction with the digital service for some services.

Suggested Citation

  • Kalm, Matias & Seppälä, Timo & Ali-Yrkkö, Jyrki, 2014. "Who Captures Value in Digital Services?," ETLA Brief 27, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:briefs:27
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    References listed on IDEAS

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    1. Ali-Yrkkö, Jyrki & Rouvinen, Petri, 2013. "Implications of Value Creation and Capture in Global Value Chains – Lessons from 39 Grassroots Cases," ETLA Reports 16, The Research Institute of the Finnish Economy.
    2. Jose Manuel Campa & Linda S. Goldberg, 1997. "The evolving external orientation of manufacturing: a profile of four countries," Economic Policy Review, Federal Reserve Bank of New York, vol. 3(Jul), pages 53-81.
    3. Dan Breznitz & Martin Kenney & Petri Rouvinen & John Zysman & Pekka Ylä-Anttila, 2011. "Value Capture and Policy Design in a Digital Economy," Journal of Industry, Competition and Trade, Springer, vol. 11(3), pages 203-207, September.
    4. Jason Dedrick & Kenneth L. Kraemer & Greg Linden, 2010. "Who profits from innovation in global value chains? A study of the iPod and notebook PCs," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(1), pages 81-116, February.
    5. Seppälä, Timo & Kenney, Martin, 2013. "Where is the Value Created and Captured in Manufacturing Firms? Case Precision Machinery Product," ETLA Brief 9, The Research Institute of the Finnish Economy.
    6. Jyrki Ali-Yrkkö & Petri Rouvinen & Timo Seppälä & Pekka Ylä-Anttila, 2011. "Who Captures Value in Global Supply Chains? Case Nokia N95 Smartphone," Journal of Industry, Competition and Trade, Springer, vol. 11(3), pages 263-278, September.
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    Cited by:

    1. Jyrki Ali-Yrkkö & Petri Rouvinen, 2015. "Slicing Up Global Value Chains: a Micro View," Journal of Industry, Competition and Trade, Springer, vol. 15(1), pages 69-85, March.
    2. Hiekkanen, Kari & Seppälä, Timo & Ylhäinen, Ilkka, 2021. "Energy and Electricity Consumption of the Information Economy Sector in Finland," ETLA Reports 107, The Research Institute of the Finnish Economy.

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