How modes of value creation affect forms of governance and methods of decision-making – a historical perspective

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Abstract

This contribution places value creation in a context of governance and decision-making. When today we witness an increasing interest in the topic of creating value, it may be due to the fact that the dominant mode of creating value is changing. The dominant mode of value creation has changed through history, and it is argued that this has had an impact, not only on how economic activity has been governed, but also on dominant methods of decision-making. Taking a historical perspective may provide us with important insights considering what changes in governance and behaviour we should expect with new modes of creating value. The paper will rely on a conceptual framework for analysing dependencies between value creation, governance and behaviour or modes of decision-making.
Value creation through time is considered on a scale between “chance” and “hard work ”, governance is considered on a scale between “bottom-up sharing” and “top-down command” and finally decision-making is considered on a scale between “intuition” and “rational deliberation”. It is argued that prehistoric time was characterized by chance in value creation, bottom-up sharing and intuitive decision-making, whereas we saw hard work, top-down command and rational deliberation in its purest form during the second and third industrial revolutions. Due to effects as positive feedback loops, zero marginal costs and intangible aspects of value, we argue that today’s value creation has an increasing element of chance. The question posed is, whether this implies that a sustainable governance needs to rely more on sharing, and that we need to rely more on intuition in our decision-making.
That there are significant differences between prehistoric time and our modern global society is obvious – what is surprising is the similarities when it comes to value creation. Prehistoric man had to operate under great uncertainties – depending on the whims of nature, and without means of guarding himself for tomorrows catastrophes. For the industrial man much of that uncertainty had been removed. Due to the mode of value creation, dominated by big industrial conglomerates operating in a stable environment, the industrial man relied on a fixed paycheck and management relied on advanced methods for planning years into the future. Today globalization has increased complexity and the digital nature of much value created, has given rise to positive feedback effects and disruptive technologies, increasing uncertainty. To the modern man, protecting himself from future catastrophes is increasingly difficult, with financial instability and more workers on short term contracts. Long run decision-making is increasingly difficult, and even management literature calls for intuition at the cost of rational deliberation. One way for modern man to overcome the challenge is to form societies that rely on commons, moral and ethics, in the distribution of the value created – but does prehistorical governance have any relevance in the new millennium?
Original languageEnglish
Publication date2020
Publication statusPublished - 2020
EventThird global conference on creating value - online konference pga covid-19
Duration: 2 Jun 20203 Jun 2020
Conference number: 3
https://creatingvalue.co/events/third-global-conference-on-creating-value

Conference

ConferenceThird global conference on creating value
Number3
Locationonline konference pga covid-19
Period02/06/2003/06/20
Internet address

Keywords

  • business community, trade and economy

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