Value Creation and Value Capture at Manufacturing Firms: Importance of Non-functional Value

Kentaro Nobeoka and 健太郎 延岡

No 10-01, IIR Working Paper from Institute of Innovation Research, Hitotsubashi University

Abstract: Most large Japanese manufacturers are good at creating value utilizing their engineering capabilities but poor at capturing value in terms of creating profit and added value. This paper discusses conditions to capture value, after explaining a distinction between value creation and value capture. In order to capture value, manufacturers have to (1) link manufacturing excellence with uniqueness and differentiation from competitors, and (2) create customer value, enticing customers to pay premiums for the differentiation, and to do these two things simultaneously. In the second half of this paper, we particularly focus on customer value and discuss the importance of the non-functional value. Non-functional value has become a critical factor for manufacturers to capture value by creating customer value.

Pages: 38 pages
Date: 2010-04
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Persistent link: https://EconPapers.repec.org/RePEc:hit:iirwps:10-01

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