Value creation and value appropriation in public and nonprofit organizations

Sandro Cabral, Joseph T. Mahoney, Anita M. McGahan, Matthew Potoski

Research output: Contribution to journalArticlepeer-review

Abstract

Research Summary: In recent years, strategy scholarship expanded its scope beyond the realm of private firms. Despite notable advances, the field still lacks theoretical and empirical frameworks for fully understanding how public and nonprofit organizations interact with private firms to create and appropriate value. By recognizing the inherent complexity of interactions between organizations with different purposes and the existing challenges for designing effective governance arrangements, we assess how recent scholarship addresses some dilemmas related to both private and public value creation. Based on the extant literature and on some novel aspects raised by the articles in this issue, we also propose a framework to advance strategy research in the field. We emphasize the importance of stakeholder management capabilities among public, private, and nonprofit organizations in pursuit of enhanced public value and continuous support from appreciative stakeholders. Managerial Summary: Despite abundant examples of governance arrangements involving public, private, and nonprofit organizations (e.g., public-private partnerships and alliances involving NGOs, firms, multilateral organizations, public contracting, and so on), the strategic management field has only recently given attention to value creation and value appropriation beyond the scope of private organizations. Here we connect strategic management and public management to identify relevant dimensions that shape value-creating strategies and underpinning outcomes in public-private-nonprofit interactions. We highlight that public value arises from private interests and that the dynamic of value creation and value appropriation in activities involving the public interest can be influenced by not only resource endowments and organizational capabilities but also by the way organizations address and manage stakeholder expectations.

Original languageEnglish (US)
Pages (from-to)465-475
Number of pages11
JournalStrategic Management Journal
Volume40
Issue number4
DOIs
StatePublished - Apr 2019

Keywords

  • nonprofit organizations
  • public organizations
  • value appropriation
  • value creation

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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