Value-Capture in the Face of Known and Unknown Unknowns
40 Pages Posted: 24 Aug 2019
Date Written: August 16, 2019
A large theoretical literature on value capture following Brandenburger and Stuart Jr. (1996) 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.
Keywords: Value-capture theory, business strategy, cooperative games, unawareness, incomplete information, coarse core
JEL Classification: D21, D83, C71
Suggested Citation: Suggested Citation