Value Creation, Value Appropriation, Industry Competitiveness: A Cross Country Analysis

Research Interest
This dissertation investigates the factors that affect the decision of resources allocations between value creation and value appropriation strategies at the industry level. To be specific, it sought to understand the factors in determining the extent to which an industry emphasizes one over the other. More importantly, this dissertation offers an understanding on how such strategic emphasis affects the industry performance under different situations. This can allow us to understand more about the global competitiveness of industry sectors by integrating both value related strategies. Although the trade-off strategic implications have been briefly investigated, research has not offered sufficient insights at the industry level which involves more complicated collaborative and competitive relationships between firms. As such, it can provide another perspective to explain why certain industries in some particular countries perform better than others. Analysis of a comprehensive panel dataset of 9,169 observations covering 19 industries in 47 countries over 29 years from 1987 to 2015 suggests that the industry concentration ratio would affect the industry strategic emphasis between value creation and value appropriation strategies after theorizing conditions that would motivate firms in a particular industry to put more strategic emphasis at any end. In particular, it is found that the perceived cost and perceived need to conduct innovative activities would affect how much strategic emphasis the firms in an industry put on value creation strategies. In turn, this study also identifies value creation strategies are better-off when the actual transaction cost of conducting collaborative value creation strategies is lower while value appropriation strategies derives better outcome when the relative bargaining power of the industry is high and the cost of building capabilities for conducting collaborative value-extracting activities is low. In particular, the cultural value in terms of the acceptance of market and political power abuse observed in the origin of firms, the distribution of firms in terms of value chain position and the industry’s relative bargaining power are found to moderate the relationship between an industry’s choice of strategic emphasis between these two value-based strategies and its industry performance. This study not only advances the value creation-appropriation strategy to the industry level, but also highlights the need to incorporate more high level industry and country variables to develop an even more comprehensive understanding in this area.