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Estimating Value Creation From Revealed Preferences: Application To Value-Based Strategy, Olivier Chatain

Olivier Chatain

Value creation and value capture are fundamental concepts for understanding performance heterogeneity. Yet, in real world situations, strategy researchers are rarely able to link differences in value creation to differences in value capture and firm performance. The main hurdle is the difficulty in empirically evaluating value creation. In this paper, I advance a framework based on the logic of revealed preferences to estimate the extent of value creation in inter-firm transactions. These estimates can be directly leveraged in biform games to analyze the impact of strategic decisions on value capture. I present a detailed example of the application of this …