Theory in Action: Is Your Company Ready for Value‐Based Management?

Prompted by escalating competition and increased pressure from institutional investors and boards of directors, more and more companies have begun to focus on shareholder value and the philosophy of value‐based management (VBM). VBM is based on the notion that the central objective for all publicly traded companies is to maximize shareholder value. Because it offers companies a logical and systematic way to pursue improvements in shareholder value, it has received considerable attention in the business press. In particular, stories have highlighted the strong results achieved by VBM users such as Coca Cola, AT&T, and Briggs and Stratton.