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Received 31 October 1994
Final revision received 15 June 1998
Key words: value; co-production; interaction; exchange
This paper surveys the history of an alternative view of value creation to that associated with industrial production. It argues that technical breakthroughs and social innovations in actual value creation render the alternative-a value co-production framework-ever more pertinent. The paper examines some of the implications of adopting this framework to describe and understand business opportunity, management, and organizational practices. In the process, it reviews the research opportunities a value co-production framework opens up. Copyright (C) 1999 John Wiley & Sons, Ltd.
BACKGROUND AND INTRODUCTION
Technological innovations allowing work practices such as distributed processing or concurrent engineering render value creation more synchronous, less sequential (Warnecke, Huuser, and Kaun 1997), and more interactive (Normann and Ramirez, 1993a, 1994). More actions, and more actors, can intervene in value creation per unit of time and space than ever before (Davis, 1987).
Value co-produced by two or more actors, with and for each other, with and for yet other actors, invites us to rethink organizational structures and managerial arrangements for value creation inherited from the industrial era. But it also invites us to rethink value creation itself.
While assembly actually represented less than 10 percent of industrial labor (Hirschhorn, 1984: 9), something about assembly lines galvanized how value creation occurred in industry, and captured the imagination of management thinking. Twenty years ago, car assembly lines, which had first appeared in the dictionary in 1930 (Hirschhorn, 1984: 9), were argued to be the 'keystone to prevailing 20th century concepts of human management' (Emery, 1976). It is thus hardly surprising that industrial value production was conceptualized in terms of the value chain. With the chain concept, value creation is not only sequential, but also implies that value is 'added.' The taxation system developed at that time reflects this.
In industrial value creation, customers were seen as destroying the value which producers had created for them. Accounting systems emerging at that time thus 'wrote down' the value of what was acquired to zero over a shorter or longer 'depreciation' period. The end user in this scheme equals the 'final' customer. For producers, industrial value was 'realized' in the transaction which joined and separated them...