Managing Business Value-Creating Organizations

This study aims to present a coherent framework regarding the formal logic of value production in, or through, organizations. The subject matter is developed along the following guidelines: 1. the processes for the production of value are carried out by permanent production organizations, in particular Business Value-Creating Organizations (BVCO) or for-profit business organizations (“capitalistic firm”); 2. from an internal point of view, BVOCs are operationally-closed systems that are at the same time structurally and behaviourally coupled to the environment; through (and to the extent of) their own cognitive and computational resourses they perceive disturbances such as external stimuli, process these, and act (react or pro-act) to balance the network of vital processes; 3. in BVOCs the internal cognition is carried out by the management, which produces the thought of the organization (data gathering processes, rational calculations for decision-making, strategies, programmes and controls) from which the organization’s actions derive; the production, economic and financial processes, which are instrumental for the production of value, are carried out by the effector organs that produce the action of the system; 4. in this sense, BVCOs can be conceived as “conscious cognitive systems” that link themselves to the environment through a system of processed, up-dated, and evaluated information which we can define as the representation of the external world; 5. from an external point of view BVCOs are teleonomic systems that can continue to exist only as long as their performance as systems for the production of value is appreciated by the environment, according to a coherent system of performance indicators for the production of value (productivity, quality, economic efficiency, returns, Economic Value Added and Economic Value of the Firm). 6. the culture of value is diffused, and BVCOs not only have the maximization of value as their objective but must translate this into an operative approach to management problems. This approach emphasizes the capacity of BVCOs to generate an adequate cash flow for new investment and to insure a remuneration at rates that exceed the cost of capital, in order to have available resources for organizational expansion as well.