Economic Power and Distribution of Added Value (illustrated by aircraft building)

Abstract

The article studies hypotheses, which could explain uneven distribution of added value among companies functioning on one industry market and are connected by participation in the value-creating network. The object of the research is to investigate the relations between leading aircraft building companies and suppliers of key components. The goal of the article is to check the hypothesis about the dependence between the amount of economic power of the economic agent and its shares in distributing benefits and costs caused by interaction with other agents. The authors put forward their own methodology identifying counteragents' share in added value on the basis of comparing such elements of added value as profit and remuneration. It should be noted that relative not absolute indicators are taken as a principle, i. e. asset profitability and average wage of companies. This methodology was tested at five aircraft building companies being integrators of value-creating networks. On the basis of the research a conclusion can be drawn that the most widely spread explanation of added value distribution (in particular, the direct link between the market share and company profitability, domination of the value-creating network integrator over other participants of joint efficiency distribution and the impact of the share of supply on profit participation) was not corroborated. At the same time distinct advantages were revealed in added value distribution for suppliers of key components. The conclusions of the research can be used for the development of strategy for Russian companies' participation in global value-creating networks.

Organized management of decentralized economic production systems with joint implementation of development projects

“…Based on previous research [14][15][16][17], when forming the organizational support for the management of the DEPS, it is necessary to take into account the situation of an asymmetry of the development of individual systems within the DEPS. This requirement closely intersects with the concept of economic power, which is described in some detail, for example, in [18,19]. Thus, the detailed list of tools and sources of manifestation of economic power, defined in [18], was used in [19] to form a network of creation and distribution of added value between aircraft-building enterprises.…”

“…This requirement closely intersects with the concept of economic power, which is described in some detail, for example, in [18,19]. Thus, the detailed list of tools and sources of manifestation of economic power, defined in [18], was used in [19] to form a network of creation and distribution of added value between aircraft-building enterprises. It should be noted that the developments [19] are predominantly focused on the market power of an enterprise, whereas in the context of the DEPS it is necessary to examine the power in the context of decentralized decision-making.…”

“…Thus, the detailed list of tools and sources of manifestation of economic power, defined in [18], was used in [19] to form a network of creation and distribution of added value between aircraft-building enterprises. It should be noted that the developments [19] are predominantly focused on the market power of an enterprise, whereas in the context of the DEPS it is necessary to examine the power in the context of decentralized decision-making. Such a change in the orientation of the study places additional requirements on the consideration of organizational support for the management of the DEPS development and on the establishment of a stable communication process for the DEPS participants.…”