A “value chain” in the broader sense is the totality of the actors and their actions, which cooperatively collaborate in a well-designed way to create “value” in a systematic manner.

In the narrow sense, a “value chain” is the totality of the actors and their actions that cooperatively collaborate to create “value” in a specific sequence of different stages that build on one another, whereby a “value creation” takes place in a linear process that gradually increases the “value-added”.

A “value chain” is therefore an ordered sequence of successive actions for the targeted creation of “value”, whereby the process of “value creation” gradually increases “value” by means of cooperative interaction. The word “value chain” is used in particular to describe the relationship between the actors and their actions with regard to the creation of “value”.

The term “value chain” was coined in particular by a management concept introduced in 1985 by the US economist Michael E. Porter. In Porter’s concept, the term “value chain” was used to describe the sequence of related activities of a company to create the goods and services offered on the market. Porter distinguishes primary activities from supporting activities. The primary activities form the actual value chain in the sense of a sequence of activities or functions that build on one another. Porter included in particular inbound logistics, production, outbound logistics, marketing and sales as well as service. The supporting activities serve all primary activities. Porter names organizational infrastructure, technological infrastructure, human resources and procurement as supporting activities.
The concept of the “value chain” has been widely used in business literature and especially in management theory. The scope of the concept has been extended over time. A “value chain” is often no longer understood to mean only the activities within a single company but the entire sequence of all activities of different companies for the production of an end product.

Progressive digitalization and digital transformation are increasingly leading to the emergence of highly interconnected structures in which the value creation takes place. The formation of networks has also increased the flexibility and dynamism of cooperation to generate economic value. The term “value chain” seems less and less appropriate to describe these new structures. It is therefore partly replaced by the increasingly widespread term of “value creation network”.

The fundamental change in the “value creation logic” reveals the disruptive potential of digitization. The reconfiguration of the “value creation architecture” is a direct consequence of “digital disruption”. In particular, the change in “value creation architecture” holds “digital opportunities” for innovation from which new products and services can emerge.

In the course of digital change, individual parts of the value creation process are also changing as new technologies are used. These are referred to as “electronic value creation” and “digital value creation”.

How to Cite

The definition given above was proposed as part of the Digital Era Framework by Dr. Dr. Jörn Lengsfeld. The text was first published in: Jörn Lengsfeld: Digital Era Framework. Please refer to the original publication if you want to cite the text.