Value creation – What is value creation, and who creates the values?
A research-based academic series on value creation
Value creation is one of the most widely used concepts in economics, politics, and social debate. Yet there is no universally accepted definition of what value creation actually is.
For many, value creation is primarily associated with private business, economic growth and corporate profits. Others place greater emphasis on innovation, knowledge development, productivity, institutions or the public sector. Within the field of economics, there are different theories and perspectives, and the term is often used with different content depending on the professional standpoint taken as a basis.
Contents
Part I – The Foundation for Value Creation
Part II – The world's leading researchers on value creation
Part III – The invisible capital's synthesis
This course series therefore has one overarching goal:
To examine how some of the world's most renowned economists and social scientists understand value creation.
The series is not based on one economic school or one political direction. On the contrary, different professional perspectives are presented through original books, scholarly works and key research publications. The goal is to give the reader a broader and more research-based basis for understanding how value is created in modern societies.
Why a separate subject series on value creation?
Value creation is often mentioned as if its meaning is self-evident.
In practice, the term is used for everything from corporate profits and productivity to innovation, research, entrepreneurship, the public sector and economic growth.
This breadth makes the concept both important and demanding.
If we are to understand how societies develop prosperity over time, it is not sufficient to ask where the values end up .
We must also understand:
How do new values arise?
Who helps create them?
What role do knowledge, research and innovation play?
How do the public and private sectors work together?
Why are institutions, trust and expertise crucial for long-term value creation?
These are questions that have preoccupied economists for hundreds of years, and which are still central to modern economic research.
How is the subject series structured?
The series consists of one main article and a number of in-depth articles.
The main article provides a comprehensive introduction to the concept of value creation and shows how the understanding has developed throughout economic history.
This is followed by separate professional articles about key researchers who have had a major impact on the modern understanding of value creation.
Each researcher is presented through an independent article with the same academic structure. The reader is given an introduction to the researcher's background, historical context, key books, understanding of value creation, views on the public and private sectors, the academic debate surrounding the work, and the lessons the research provides.
This structure makes it possible to compare the researchers' perspectives and at the same time delve into each individual.
The researchers in this series
The subject series is based on works from, among other things:
Joseph E. Stiglitz – human capital, knowledge, institutions and long-term productivity.
Philippe Aghion – innovation, competition and productivity growth.
Douglass North – institutions, rule of law, trust and economic development.
Michael Porter – competitiveness, value chains and productivity.
Kalle Moene – the Nordic model, competence, collaboration and value creation.
More researchers will be added as the subject series develops.
The method of invisible capital
All articles are based on the same professional principles.
Where possible, the researchers' own books and original publications are used as primary sources. These are supplemented with scientific articles, publications from the OECD, Norwegian public reports, Statistics Norway and other renowned research environments.
The goal is not to defend one particular theory or one political position.
The goal is to present the research in the way the researchers themselves build their reasoning, show where they agree and where they disagree, and provide the reader with a solid academic foundation for understanding value creation as an economic and societal phenomenon.
A broader understanding of value creation
Through this subject series, the reader will encounter different perspectives on how values are created, developed and maintained over time.
Some researchers place the greatest emphasis on markets and competition.
Others highlight innovation, research and entrepreneurship.
Others again show the importance of institutions, trust, education and human capital.
Together, these perspectives provide a far richer picture than an understanding where value creation is limited to one sector or a single explanatory model.
It is this whole The invisible capital want to explore.
This subject series is part of a larger universe of knowledge
The subject series on value creation is part of the knowledge projects The Invisible Capital and Value-creating people . These projects explore how people, knowledge, innovation, technology, institutions and collaboration contribute to creating value – in both the private and public sectors.
Value creation is the common thread that ties the entire universe of knowledge together. Therefore, this series builds on topics that have already been covered in previous professional articles on, among other things, artificial intelligence, digitalization, innovation, e-commerce, customer experiences, the public sector, health, education, and social development.
The goal is to show how these topics are interconnected. Artificial intelligence, digitalization and innovation are not ends in themselves – they are means to create value. Similarly, investments in education, research, health, trust and institutions are fundamental prerequisites for long-term value creation and sustainable social development.
This series therefore serves as the theoretical foundation for much of the content of The Invisible Capital . At the same time, the previous articles provide practical examples of how the theories of value creation are expressed in working life, business and society.
➜ Chapter 1 - What is Value Creation?
Academic background and further reading
This series also builds on my own professional journey through the Web Design study , the eMarketing study , Innovation and Commercialization and professional seminars in San Francisco and Oxford . Here you will find the background, professional environments and experiences that have followed the development from the early years of the web to today's digitalization.
Recommended literature
Value creation is about much more than economic growth and money. It is about people, knowledge, innovation, productivity, institutions, trust and the interaction between the public and private sectors.
Here we have collected books from some of the world's leading economists and thinkers who explain in various ways how value is created, who contributes to creating it, and what prerequisites make long-term value creation possible.
The books complement each other and provide different perspectives on the same fundamental question:
What really makes people, businesses and societies create greater value over time?
Recommended books from our library
Creating a Learning Society: A New Approach to Growth, Development, and Social Progress
Author: Joseph E. Stiglitz and Bruce C. Greenwald
Short review:
Creating a Learning Society examines how knowledge, learning, and technological development contribute to economic growth and long-term value creation. Joseph E. Stiglitz and Bruce C. Greenwald challenge the notion that economic development is primarily about accumulating more physical capital. They argue that society's ability to create, disseminate, and apply knowledge is crucial for productivity growth and increased living standards. A key point is that learning does not only occur in schools and universities. It also occurs in businesses, through work, production, innovation, and interaction between people and organizations. Knowledge can also spread from one business and one part of the economy to others.
The book thus provides an important perspective on why human capital, competence, innovation and learning must be understood as central parts of a society's ability to create value over time.
Why we recommend the book
We recommend Creating a Learning Society because it expands the understanding of what lies behind economic value creation.
Machines, technology and financial capital are important, but they do not create productivity growth alone. Behind the development are people who learn, develop knowledge, improve work processes, share experiences and find new solutions.
This makes the book particularly relevant to Invisible Capital and our perspective on value creation: A significant part of society's value-creating capacity is found in the knowledge, competence, and learning ability of the people who participate in the economy.
Stiglitz and Greenwald thus provide an academic foundation for one of the most important relationships in modern value creation:
The Value of Everything: Making and Taking in the Global Economy
Author: Mariana Mazzucato
Short review
In The Value of Everything Mariana Mazzucato asks a fundamental question: What exactly is value – and who creates it? Mazzucato returns to the historical discussions of value in economics and shows how the understanding of value creation has changed. She challenges the notion that high income, high prices or high profits necessarily mean that correspondingly high values have been created. One of the book's most important contributions is the distinction between value creation and value extraction . Mazzucato examines the financial sector, the pharmaceutical industry, innovation and the public sector, among others, and argues that we must become better at distinguishing between activities that actually create new values, and activities that primarily extract values that have already been created.
The book also challenges the traditional notion that the private sector creates value while the public sector mainly consumes or redistributes it. Innovation and economic development often arise through a complex interaction between public investment, research, businesses, capital and people.
Author: Philippe Aghion, Céline Antonin and Simon Bunel
Short review
The Power of Creative Destruction is about one of the most important drivers of long-term economic growth: innovation.
Philippe Aghion, Céline Antonin and Simon Bunel build on Joseph Schumpeter's classic idea of "creative destruction" – the process by which new technologies, businesses, products and ideas challenge and replace existing solutions.
But the book is not just about the disappearance of the old. The authors examine why some economies manage to create continuous innovation and productivity growth, while others stagnate. Competition, entrepreneurship, research, education, institutions and public policy thus become important parts of the explanation.
Creative destruction also comes at a cost. New technologies and businesses create opportunities and jobs, but can also make existing skills, tasks and business models less relevant. The challenge is therefore to create societies that both promote innovation and enable people to participate in the transition.
Why we recommend the book
We recommend The Power of Creative Destruction because it shows why innovation is a fundamental driver of value creation .
Value creation is not just about producing more of what we already produce. It also occurs when people develop new ideas, technology, and ways of working that enable us to solve tasks better than before.
This makes the book particularly relevant to The Invisible Capital. Behind innovation are people with knowledge, expertise, creativity and experience. But Aghion's perspective also shows that human capital must be part of a larger system where competition, institutions, research, investment and policy create the conditions for new ideas to actually turn into economic and social development.
The book thus provides an important context in our understanding of value creation:
Knowledge → new ideas → innovation → productivity growth → long-term value creation.
Author: Michael E. Porter
Short review
Competitive Advantage is one of Michael E. Porter's most influential works on how businesses create value and develop lasting competitive advantages.
One of the book's most important contributions is the value chain . Porter shows that a business should not be viewed as a single, unified activity, but as a series of interconnected activities – from development and production to logistics, marketing, sales and service. It is through these activities, and the interaction between them, that the business creates value for customers.
Porter also shows how competitive advantage can arise through, among other things, lower costs or differentiation. But behind these results lies the organization of the company's activities, expertise, technology, work processes and the way in which resources are used.
The value chain thus makes it possible to examine where in the business the values are actually created – and how different activities together contribute to the end result.
Why we recommend the book
We recommend Competitive Advantage because Porter gives us a perspective that fits very well into our broader understanding of value creation.
When we talk about a business “creating value,” it may sound as if the business does this as a single entity. Porter opens up the business and shows that value creation occurs through many activities that are interrelated .
And this is where people become particularly interesting.
Behind research, product development, purchasing, production, logistics, marketing, sales, customer service, technology and management are people with knowledge, experience, expertise and the ability to collaborate . The value chain is therefore also a useful way to highlight the human effort behind the company's financial results.
For Invisible Capital, Porter thus gives us another important part of the value creation picture:
People and resources → activities → interaction → customer value → competitiveness → value creation
Institutions, Institutional Change and Economic Performance
Author: Philippe Aghion, Céline Antonin and Simon Bunel
Short review
Institutions, Institutional Change and Economic Performance is one of Douglass C. North's most important works on why some societies are more successful than others in creating economic development over time.
North shifts attention from traditional factors of production such as capital and labor to the institutions that shape how people, businesses, and governments act and cooperate. Institutions are society's formal and informal rules of the game – including laws, regulations, norms, traditions, and established ways of organizing interaction.
These rules of the game affect the incentives that people and organizations face. They also affect investments, knowledge development, cooperation, transaction costs, and which economic activities emerge.
North also shows that institutions develop over time. History therefore matters: Today's economic opportunities are influenced by institutional choices and development paths that can stretch far back in time.
Why we recommend the book
We recommend Institutions, Institutional Change and Economic Performance because it explains a crucial aspect of value creation that easily becomes invisible:
Value creation needs good rules of the game.
People may have knowledge. Businesses may have capital. Entrepreneurs may have great ideas. A society may have natural resources and advanced technology. But outcomes are also influenced by the institutions that determine how people can collaborate, invest, compete, make deals, and develop businesses.
This makes North particularly interesting for our understanding of trust as part of invisible capital. Trust is not the same as institutions, but stable rules of the game, credible agreements, and well-functioning institutions can reduce uncertainty and make economic interaction easier.
North thus gives us another important part of the value creation picture:
Institutions → predictability and incentives → cooperation and investment → productive activity → long-term value creation.
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