Value Configuration

The offering of a firm that creates value. This value can be in the form of new technology, new products or services, market applications, production efficiency, or process improvement. It can also incorporate new distribution channel partners, network affiliates, software revisions, and technology platforms. According to the resource-based view of the firm, a value configuration should be valuable, rare, inimitable, and non-substitutable.

Value configuration theory builds on, extends and transforms Porter’s value chain framework (1985) for the analysis and development of competitive advantage. The theory was initially motivated by problems in applying the value chain activity template to firms selling services. The theory is now also linked not only to firm-level analysis of competitive advantage, but also to the analysis of industries and competitive strategies. Value configuration theory rests on the same ideas that motivated the value chain framework (Porter, 1985). The basic premise is that competitive advantage cannot be understood by looking at the firm as a whole. Competitive advantage stems from the many discrete activities that a firm performs in generating and delivering value to its customers. Activity category templates are used to analyze activities and develop means to reposition the firm. However, while Porter’s initial formulation assumed that the value chain activity template was applicable in all industries and all firms, value configuration theory proposes that the value chain is a good representation of one of three basic value creation technologies.

See Also

Business Model Innovation
Balanced Scorecard
Value Chain
Value Chain Analysis
Value Shop
Value Configuration Analysis (VCA)