Value Networks Definition

In business, a value network is a system of organizations that are connected to create and deliver a valued product or service. The concept was first proposed by C. K. Prahalad and Gary Hamel in their article ‘The Core Competence of the Corporation’ in the Harvard Business Review (May-June 1990).

A value network is not just a supply chain or value chain, but a more complex system that includes suppliers, manufacturers, distributors, retailers, and customers. Each organization in the network plays a different role and contributes different skills and resources to the overall system. The challenge for companies is to create a balance between competition and cooperation within the network so that they can create more value than any one company could on its own.

The concept of the value network has been found to be useful in understanding how firms compete in global industries. In particular, it has been used to analyze how firms from emerging economies can use their unique position in the value network to create new products and services that meet the needs of global consumers.