Value Creation in a ‘Non-Producing’ Enterprise
Journal Title: Journal of Economics and Business - Year 2019, Vol 2, Issue 1
Abstract
A widely-held proposition is that an enterprise does not create value until it commences production of goods or services for external customers for monetary profit. Another related proposition is that employees in a ‘non-producing' enterprise if remunerated, are paid 100 percent above the value of their labour – because the enterprise is not creating value. Counter-arguments to these two propositions are presented. To provide justification and support for the counter-arguments, the purpose of a firm or business enterprise is discussed and the nature of ‘value' is elaborated with a critique of the dominant marginal productivity theory of value. An example of a non-producing enterprise: A liquefied natural gas (LNG) company at ‘pre-operation' stage is presented. LNG companies often lock-in customers with 20-year contracts before commencing production – this is value creation. Value, it seems, is not in the eyes of every beholder but found in the eyes of the shareholders of an enterprise who can use key performance indicators (KPIs) and enterprise risk management (ERM) to track employees' value creation throughout the life cycle of the enterprise.
Authors and Affiliations
Uyiosa Omoregie
Keywords
Related Articles
- EP ID EP547940
- DOI 10.31014/aior.1992.02.01.78
- Views 73
- Downloads 0
Implementation of Islamic Work Values in Realizing Sharia Good Corporate Governance and Its Implications in Stakeholders Oriented Values (SOV) and Financial Performance of Islamic Banking in Indonesia
This research examines the effect of Islamic work values on sharia good corporate governance (GCG), and its implications for stakeholders oriented values (SOV) and Islamic banking financial performance in Indonesia. The...
Structure, Characteristics, and Determinants of Services Export in Nigeria
The perennial problems of unfavourable commodity terms of trade, early deindustrialisation, and exchange rate volatility are forcing a rethink of development strategies in developing countries. Services are now coming up...
Role of Notary Public in Increasing the Ease of Doing Business Index through the Apostille Convention
This research aims to analyze the role of the notary in international business practices and analyze the position of the Apostille Convention in increasing the Ease of Doing Business Index in Indonesia. This is a normati...
Impact of Capital on Profitability of Banks: Evidence from Vietnamese Commercial Banks
This study aims to investigate the impact of capital on bank profitability with evidence from Vietnamese commercial banks. With a sample of 30 Vietnamese commercial banks, the findings show the positive relationship betw...
Appraisal of Capital-Intensive Investments Upon Effectiveness to Business Ecosystem
The complexity of decision-making for capital intensive investments addressed to a variety of stakeholders with different expectations and to many business and financial risks and uncertainties. There are many cases wher...