Value Capture in the Face of Known and Unknown Unknowns

Kevin A. Bryan (), Michael Ryall and Burkhard Schipper
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Kevin A. Bryan: Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada

Strategy Science, 2022, vol. 7, issue 3, 157-189

Abstract: A large theoretical literature on value capture uses cooperative games under complete information to study how and why firms earn supernormal profits. However, firms often have different information, beliefs, or creative foresight. We extend value capture theory to incomplete information (“known unknowns”) or unawareness (“unknown unknowns”) and illustrate some conceptual issues with that extension. Using the case study of Cirque du Soleil, we show how an entrepreneurial firm can profit even when it does not contribute materially to value creation. In a case study of Apple iTunes, we show how value capture depends quantitatively on the beliefs of other firms.

Keywords: unawareness; incomplete information; cooperative games; coarse core; mental models; blue ocean; entrepreneurial subjectivism; business strategy; innovation (search for similar items in EconPapers)
Date: 2022
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http://dx.doi.org/10.1287/stsc.2021.0126 (application/pdf)

Related works:
Working Paper: Value-Capture in the Face of Known and Unknown Unknowns (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orstsc:v:7:y:2022:i:3:p:157-189

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