From Value Chain to Value Cycle: The Role of Risk Management and ICT

19 Pages Posted: 15 Feb 2011

See all articles by Carolyn J. Cordery

Carolyn J. Cordery

Victoria University of Wellington - School of Accounting and Commercial Law; Aston University

Margaret Woods

Aston Business School

Paul M. Collier

Monash University - Department of Accounting

Date Written: August 14, 2010

Abstract

This paper reviews the origins and development of the value chain (Porter,1985) and its development into value shops and value networks. We argue that these “value models” pay insufficient attention to the increasing role of information and communications technology (ICT) or to the emergence of new understandings of risk and risk management.

The role of ICT has moved from being merely a support activity to being integral to primary business value adding activities. As ICT has become more embedded in primary and secondary activities, risk management has become more important to the organization’s value adding activities.

Risk management has become a primary business tool, aimed at achieving organizational objectives given a predetermined organizational risk appetite and an acceptance of the risk/return trade-off. In turn this has led to risk management driving performance metrics and internal controls.

Both ICT and risk management play a role not only in primary value adding activities but also in supporting the primary functions, both of which can be sources of competitive advantage.

We argue that ICT and risk management are cyclical in nature and we apply life cycle theory to consider value chains, ICT and risk management as interdependent. We develop the idea of a value cycle to reflect a shift in thinking from the value chain as a linear process into a cyclic one based on continual evolution and learning. This takes account of organizational developments – especially those relating to ICT and risk management – that have taken place since Porter’s original value chain model was developed.

Keywords: Risk Management, ICT, Value Chain, Value Shop, Value Cycle

Suggested Citation

Cordery, Carolyn J. and Woods, Margaret and Collier, Paul M., From Value Chain to Value Cycle: The Role of Risk Management and ICT (August 14, 2010). Available at SSRN: https://ssrn.com/abstract=1761661 or http://dx.doi.org/10.2139/ssrn.1761661

Carolyn J. Cordery (Contact Author)

Victoria University of Wellington - School of Accounting and Commercial Law ( email )

Faculty of Commerce and Administration
PO Box 600
Wellington
New Zealand

Aston University ( email )

Aston Business School
Aston Triangle
Birmingham, B4 7ET
United Kingdom

Margaret Woods

Aston Business School ( email )

Aston Business School
Aston Triangle
Birmingham, B4 7ET
United Kingdom

Paul M. Collier

Monash University - Department of Accounting ( email )

Building 11E
Clayton, Victoria 3800
Australia
+61 3 990 52399 (Phone)

HOME PAGE: http://directory.monash.edu.au/cgi-bin/staffsearch/staffsearch

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