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Value Configurations
Abstract
Understanding how firms differ is a central challenge for both theory and practice of management. For a long time, Porter’s (1985) value chain was the only value configuration known to managers. Stabell and Fjeldstad (1998) identified two alternative value configurations. First, a value shop schedules activities and applies resources in a fashion that is dimensioned and appropriate to the needs of client problems, while a value chain performs a fixed set of activities that enables it to produce a standard product in large numbers. Examples of value shops are professional service firms, as found in medicine, law, architecture and engineering. Next, a value network links clients or customers who are or wish to be interdependent. Examples of value networks are logistic companies, telephone companies, retail banks and insurance companies. In this chapter, we apply the contingent approach to systems outsourcing by making the outsourcing decision dependent on the value configuration of the enterprise. We present the three different value configurations – the value chain, the value shop, and the value network. Next, the three different value configurations are compared according to key characteristics, e.g. use of information systems. Then, we take a look at interfirm relations to be able to identify areas for outsourcing, and value configuration as a determinant and predictor for the extent of outsourcing. Finally, we discuss levels of strategy and we introduce the Y-model for IS/IT strategy work.
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