From values to value: Value rationality and the creation of great strategies

Abstract

This paper proposes that strategies with superior value-creation and value-capture potential-that is, great strategies-can originate in the personal values of strategists. We root our argument in Max Weber's idea of value-rational action as an innate human capacity expressed in value rationality, which refers to actions that derive their logic with reference to a value system. We build on psychological research on personal values to propose that values are complex cognitive resources, distinct from mental representations, beliefs, ideologies, identities, and emotions, that, when deployed in strategy making, affect the attributes of the strategies created. We specify how values affect the value-creation and value-capture potential of firms' strategies by theorizing four distinct functions of values in strategy making: as attentional structures, as valuation lenses, as design principles, and as identity markers. As attentional structures, values direct strategists' attention to specific issues and often unconventional solutions; as valuation lenses, they change the evaluation of relevant markets and resources; as design principles, they influence the prioritization and integration of activities; and as identity markers, they facilitate audience engagement and mobilization. Our theory offers a new basis for understanding the sources of novel strategies and pathways to superior value creation by firms.