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 64
- Downloads 0
What Drives Inclusive Growth? Evidence from Georgia
Inclusive growth is the current debate in development economics because it is seen as central to sustainable economic growth and development. Georgia is one country where growth seems to have been inclusive among the eme...
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...
Do The Earnings Management, Governance, Media Exposure, and Ownership Structure Have Any Effect on ESG Disclosure?
Previous study has shown various results for the relationship between good corporate governance (GCG), and company ownership to corporate social responsibility (CSR) governance. The environmental, social and governance (...
Effect of Fiscal Policy on the Real Sector of the Nigerian Economy: A Focus on Government Capital Expenditure and Agricultural Sector Contribution to GDP
Government expenditures play key roles in the operation of all economies. It refers to expenses incurred by the government for the maintenance of itself and provision of public goods, services, and works needed to foster...
Comparative Analysis of Regional Economic Growth Before and After the Village Fund Program (Case Study of the Buffer Zone of Kerinci Seblat National Park Kerinci, Indonesia)
The availability of productive land is one of the important factors of production to encourage regional economic growth. Kerinci in Jambi Province of Indonesia is one of the regions that experienced this problem, because...