Understanding the Dynamics of the Value Chain

Abstract

The year was 1985. Michael Porter of the Harvard Business School published his business best-selling book, Competitive Advantage. It was touted at the time as “the most influential management book of the past quarter century.” In that book, Porter introduced the concept of the value chain, described as “a systematic way of examining all activities a firm performs and how they interact, (necessary) for analyzing the sources of competitive advantage.”

Looking back, the most significant and lasting contribution of Porter’s value chain was the notion of interrelationships among a firm’s many activities. It is the idea of “linkages,” as he called them, which was the real breakthrough in management thinking. The linkages could ...