Value Drivers: Scientific Knowledge Advances and Research Avenues.
| Autor | Figari, Anelise Krauspenhar Pinto |
| Cargo | Research Article |
INTRODUCTION
Changes in the institutional environment, such as globalization, technological development (Young & O'Byrne, 2003), high competitiveness, and economic crises (Russo & Parisi, 2017), cause a culture of wealth creation for investors, which has contributed to organizational continuity (Assaf Neto, 2014; Russo & Parisi, 2017). Value-based management (VBM) has been a prominent model in the academic literature on shareholder wealth creation (Figari et al., 2021) that maximizes company value to shareholders, increasing the economic value to the investor (Kumar, 2015; Russo & Parisi, 2017).
MacDiarmid et al. (2017) emphasize the importance of identifying value drivers, as they contribute to financial strategies definition for shareholder value creation. Value drivers are understood as "... any factor that enhances the total created value by the business model" (Visnjic et al., 2017, p. 171). Thus, identifying value drivers is crucial for maintaining organizational competitive advantages (Marr, 2005).
Microsoft Academic search engine shows an increased interest in this topic in the academic literature in the last decade, both in publications and citations (Microsoft Academic, 2021). Although these publications explore and recommend several performance measures, such as revenues, earnings, EBITDA, and equity, there is no conclusion about the best value drivers (Yooyanyong et al., 2020).
Furthermore, the value drivers discussion in business valuation literature is fragmented, making it difficult to identify a unified approach for its classification and investigation (Kazlauskiene & Christauskas, 2008; Tiwari & Kumar, 2015).
The growing academic interest in the topic, its discussion fragmentation, and the searching for the main indicators become interesting to perform an academic literature review of value drivers. Therefore, this investigation aims at identifying the bibliometric characteristics of articles published in the qualified international literature on the topic of value drivers.
Bibliometric approach is a quantitative strategy conducted in several areas, including management. It is considered useful to assess the state of the art, the most influential studies, main areas of interest, and main trends in a given research topic (Lafont et al., 2020). This unprecedented integrative review can contribute by synthesizing the discussions on the topic, offering the main contributions of these articles, as well as a future research agenda.
Similar bibliometric studies are identified in the literature, as Lafont et al. (2020), which comprise the bibliometric approach to value creation in listed companies, and Saha et al. (2020) and Shah et al. (2021), who performed bibliometric analysis on value co-creation. However, this investigation fills a theoretical gap as it differs from these three investigations regarding the focus on value drivers and differs from Lafont et al. (2020) regarding the scope, not limited to the capital market.
THEORETICAL FRAMEWORK
The theme 'value' has attracted researchers and economists, being considered the best organizational performance indicator (Kumar, 2015). 'Value' has different meanings in the management field. In accounting, its traditional approach has been criticized for not including 'value' in its performance metrics (Angonese et al., 2011). In finance, the term corresponds to an organization's value, which consists of the core value--based on the present value of expected cash flows--and shareholder value--company's value minus its obligations to third parties (Kumar, 2015).
Organizations create value through capital investments that ensure a greater rate of return than capital cost. A value creation model must translate a link between strategy and shareholder value. It is necessary to know the sources of creation or destruction to maximize it (Kumar, 2015). Creating organizational value goes beyond covering the explicit costs identified in sales, and the value of the opportunity cost of the invested capital must be incorporated (Assaf, 2014).
Several indicators presented in the literature aim at measuring economic value creation, such as Economic Value Added (EVA[R]) and Shareholder Value Added (SVA). Chari (2009) highlights that EVA is the most popular indicator to measure value creation to shareholders in organizations, as it is based on the net result and because it is considered simple, while SVA is based on the company's cash flow and it is considered more suitable for performance evaluation as it is free from accounting distortions.
Value creation discussion demands the establishment of a relationship between organizations and the operational environments. Environmental changes lead to a growing culture of wealth creation for shareholders due to "... globalization and deregulation of capital markets, the end of capital and exchange controls, advances in information technology and more liquid securities markets ..." (Young & O'Byrne, 2003, p. 6).
VBM aims at maximizing organization's shareholder value, increasing the economic value added to the investor (Kumar, 2015; Russo & Parisi, 2017). VBM can be used to assess and guide business operations performance, making essential to know how and to what extent value creation occurs, as well as understanding what its drivers are and how they should be operated to maximize economic value (Copeland et al., 2002).
According to Assaf (2014), VBM intends to create shareholder wealth, which occurs when the return rate is greater than the opportunity cost of equity, and when the value for each organization is conditioned to the capacity and intrinsic potential of providing above-average returns. Thus, organizations no longer use a conventional model of evaluating management through metrics focused on profit and profitability but instead use management focused on shareholder wealth (Araujo & Assaf, 2003).
Young and O'Byrne (2003) report an increasing pressure on managers to provide results that create shareholder value. To the authors, the fundamental VBM idea that shareholder value creation should be the focus of management initially suffered widespread resistance in the sense that this approach did not consider other stakeholders. However, subsequent research has shown that shareholder value creation, as the holder of the organization's residual value, only occurs when value is created for other stakeholders (Young & O'Byrne, 2003).
Copeland et al. (2002) affirm that "the central question is not whether companies have special programs called value-based management; in contrast, the value results from a set of interconnected activities that most companies already have." (p. 96). They add that two dimensions must be developed to maximize organizational value: the value mindset and the value measures dimensions. Furthermore, Assaf (2014) states that VBM must provide variables that determine business value creation, which corresponds to the value drivers.
Value drivers arise from the approach called "shareholder value analysis method," developed in the seminal study of Alfred Rappaport in the 1980s (Kazlauskiene & Christauskas, 2008, 24). Rappaport's study and subsequent research depart from a finance field stream started by Ball and Brown (1968), who showed that financial statements are relevant decision-making instruments as they impact stock prices, which culminated in many empirical studies analyzing the relationship between economic-financial variables (an accounting information proxy) and stock prices (a capital markets proxy).
Value drivers' definition is an important step in business assessment, as variables thus have a significant influence on a company's value (Kumar, 2015; Rappaport, 2001). An accurate value drivers' choice benefits the company by helping managers understand how value is created and how it can be maximized, guiding the resource allocation and aligning all employees' efforts to a common priority (Copeland et al., 2002).
Several value drivers' classifications can be found in academic literature: macro drivers versus micro value drivers (Rappaport, 2001), financial drivers versus non-financial drivers (Young & O'Byrne, 2003), differentiating capabilities drivers versus financial strategy drivers (Assaf, 2014). By analyzing the academic literature, Figari et al. (2021) identified qualitative and quantitative empirical research on value drivers, mostly quantitative research applied to public non-financial companies that aim at identifying value drivers and analyzing their relationship with business value.
No previous bibliometric reviews that dealt with value drivers were found. Similar studies have recently been published by addressing value creation (Lafont et al., 2020) and value co-creation (Saha et al., 2020; Shah et al., 2021), indicating a growing academic interest in this field.
Lafont et al. (2020) analyzed the value creation field in listed companies, using the Web of Science database and covering the 1900-2018 period. A total of 213 articles were identified. Results showed that value creation research is incipient. However, there was an increase in the annual citations count from 2015, which denotes an interest growing in the subject. China has the most productive and influential authors, and there is a growing interest from institutions based in the USA, UK, and Romania.
Saha et al. (2020) examine the academic literature evolution on value co-creation based on 458 articles published by 156 journals between 2004 and July 2018. Results indicated three significant areas that emerge as prominent themes in the value co-creation literature: customer service, branding, and service marketing through the adoption of service logic. This research also revealed the USA as the most influential nation by the absolute citation count. As a future research agenda, the authors direct value co-creation analysis beyond business and management disciplines, indicating periodic bibliometric analysis...
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