Abstract and Keywords
How do firms create and capture value in large technical systems? In this paper, I argue that the points of both value creation and value capture are the system’s bottlenecks. Bottlenecks arise first as important technical problems to be solved. Once the problem is solved, Then the solution in combination with organizational boundaries and property rights can be used to capture a stream of rents. The tools a firm can use to manage bottlenecks are, first, an understanding first of the technical architecture of the system; and, second, an understanding of the industry architecture in which the technical system is embedded. Although these tools involve disparate bodies of knowledge, they must be used in tandem to achieve maximum effect. Dynamic architectural capabilities provide managers with the ability to see a complex technical system in an abstract way and change the system’s structure to manage bottlenecks and modules in conjunction with the firm’s organizational boundaries and property rights.
Access to the complete content on Oxford Handbooks Online requires a subscription or purchase. Public users are able to search the site and view the abstracts and keywords for each book and chapter without a subscription.
If you have purchased a print title that contains an access token, please see the token for information about how to register your code.