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Value creation by individuals and firms plays a central role in the evolution of populations by enabling adaptive efficiency. Once created, value may become embedded in resources which require deployment for value to be appropriated. Value appropriation is a two-step process through which a firm first competes against other firms to create and protect appropriation streams (i.e., inter-organizational value appropriation), then managers, employees, shareholders and other stakeholders compete to capture the value that has been retained within the firm (i.e., intra-organizational value appropriation). I argue that the inter- and intra-organizational value appropriation processes are driven by common elements, including not only bargaining power and isolating mechanisms but also relation-based power and opportunity-based action. I advocate an integrative approach due to the interplay between value creation and value appropriation processes.
INTRODUCTION
The dual processes of value creation and value appropriation represent crucial elements of competitive strategy for both firms and individuals. Accordingly, the value creation/value appropriation framework has become commonly deployed in both research and teaching in a diverse set of fields including strategy (Bowman & Ambrosini, 2000; Blyler & Coff, 2003; Chacar & Coff, 2000; Chatain, 2010; Coff, 1999; Coff, 2010; Moran & Ghoshal, 1999; Teece, 2000), entrepreneurship (Barney & Alvarez, 2002; Hitt, Ireland, Sirmon & Trahms, 2011), economics (Chatain & Zemsky, 2011; Van Reenen, 1996), and marketing (Mizik & Jacobson, 2003; Johansson et al, 2012; Wagner, Eggert & Lindemann, 2010). These scholars have alternatively argued that (a) value creation is more important, less understood, and more difficult to manage than appropriation (e.g., Moran & Ghoshal, 1996, 1999), (b) that value appropriation is poorly understood and is the more relevant process since only appropriation impacts firm profitability (e.g., Barney, 2001; Coff, 1999; Makadok & Coff, 2002), or (c) that firms must achieve some sort of healthy balance between the two (e.g., Bowman & Ambrosini, 2000; Mizik & Jacobson, 2003). In spite of the increasingly common use of the value creation and value appropriation framework in research and pedagogy in strategy, entrepreneurship and related fields, the lack of a common and integrated understanding of these dual processes impedes both research and pedagogy. In order to help fill this gap, I present an integrative theoretical framework of the value creation and value appropriation processes, which addresses...