The pursuit of profit is the essence of any business.In the course of pursuing profit，value discovery，value creation，value transfer and value realization activities are always evident throughout corporate behavior.Therefore，in-depth study on the source of value，to explore and reveal the basic principles and evolution pattern of the value generation and distribution，and to provide a guide to action on strategic positioning and strategic adjustment to value-building enterprises，is an enduring subject derived from social practice in the market economy for economic theory researchers.The proposal of the concept of value chain，and subsequent continuing development of the value chain （network） system theory，opened the door to many important analytical methods adopted in enterprise organizational behavior research and strategic positioning study，and laid theoretical foundation for further study.However，there are still some limitations in the ongoing research of value chain （network）.Researchers’ attention on value chain （network） has largely been limited to areas of strategic positioning of enterprise managerial significance，and theoretical analysis on its economic significance has been inadequate.Researchers often statically and transversely conduct analysis on enterprise strategic positioning，and often slide into the inertia of thinking centered on enterprise，to think from the inside to the outside，and to construct enterprise value system.Many theories of the value chain （network） and the achievements are self-contained; research in value and value network system thus far is deficient in systematic theoretical integration from the academic community.This book attempts to elaborate the mechanism of formation and development of value and value network.From the perspective of demand，using the way of outside-in thinking，this paper re-interprets the basic meaning of market value，vertically and dynamically constructs a vertical structure analytical framework of value network system，and resolves the influencing role and contingency process of constituent elements of value network system and the resulting corporate behavior.The logical context of this research can be expanded into the following four aspects：（1）Re-interpret the meaning of market value and resolve the fundamental principles of value system generation and distribution.Using the basic concept of value as a starting point，by means of analyzing transaction gain，this paper clarifies the basic meaning of value in value system，and demonstrates this concept by borrowing “market value” to investigate basic principles of value chain generation.In addition，through observing the changing relationship between supply and demand，this paper resolves the distribution relationship of value gain among longitudinal nodes in a value system in the market value creating process.（2） Elaborate the basic meaning of network value and its formation mechanism.This paper explains organizational efficiency of value network based on the basic concepts of transaction cost and transaction gain （with emphasis on the transaction gain concept）.In addition，this paper reveals the three fundamental elements affecting market value appreciation，namely customer value，network value，and corporate value，in a complete value system which includes components of discovery，production，transfer，and realization.（3） Establish a vertical dynamic evolution analytical framework of value network system; analyze the contingency process on the influence of the three fundamental elements affecting market value creation; examine the allocation and transfer of market value between elements.（4） On the basis ofvertical structure dynamic evolution framework，borrowing from the forefront of the value chain （network） related academic work，this paper illustrates the basic meaning and composition of the three fundamental elements，namely customer value，network value and corporate value.This book illustrates key steps and core elements for enterprises to establish strategic advantage in vertical market structure.In addition，this book resolves the key steps and evolution of core elements for enterprises to establish strategic advantage under different vertical market structure，and the corresponding change in corporate strategic initiatives.Based on the above logical context，this research book is divided into six chapters.Chapter 1，Introduction，recapitulates background，issues，research perspective and scope of the study，elaborates theoretical significance and practical significance of the topic，summarizes methodology and technique adopted in the research，and provides a summary of contents.Chapter 2，Summary of theoretical framework，on the basis of theoretical literature research and consolidation，provides systematic elaboration and evaluation on value theory，Porter’s value chain theory，and the development of value chain theory，value network theory，theory of virtual value chain，value modularity theory，and value constellation theory.Chapter 3，Progress of theoretical research of this book：first，analyzes and explains the concept of market value and network value; second，examines the constituent elements of value network and their dynamic evolution process and mechanism; finally，constructs a dynamic evolution analytical framework of vertical market structure and elements of value creation.Chapter 4，Describes the three fundamental elements of value formation within the value formation system，including：value formation fundamental element 1），the concept of customer value system，its constituent elements and dynamic evolution; value formation fundamental element 2），the concept of value network，its constituent elements and dynamic evolution; and lastly，value formation fundamental element 3），the concept of corporate value system，corporate market advantage positioning，and pathways to corporate value innovation.Chapter 5，Adopting grounded theory research method and relevant local economic development case studies，employ data and examples to enrich the research themes and content.This article selects 9 representative businesses，through large amount of second-hand and first-hand data collection and analysis，to resolve the open coding and the axial coding，and recapitulates the main areas of profitability advantage of three types of business，as well further refines the core areas.At the same time，through the interpretation of a theory application case – Outline for the Benxi City Steel DeepProcessing Development Program，elaborates the utilization principles and application significance of the value network system theory.Chapter 6，Summarize research findings and progress，and present an outlook for future research direction.The central conclusion of this book：within the value network system，customer value，network value，and corporate value are fundamental elements of value construction.The relative dominance of individual element alternates with changing market environment.Company market advantage analysis and company strategic positioning should be determined in the two dimensional coordinates that is comprised of market horizontal structure and vertical structure.Customer value has become today’s foremost element determining corporate behaviors.Theoretical innovation made by this book is mainly reflected in the following three aspects：（1） Re-interpreting the concept of value in the value system.Industrial economics and value chain （network） theory and literatures have yet to provide a precise definition in the subject of economics of the word “value” in the value chain （network）.Starting from the original meaning of the “value”，this book elaborates the subjective judgment of “value” by focusing on the value theory in classical economics.In addition，this book clarifies the distinction between “value” and “exchange value” in which value is interpreted as the newly created value addition from market transaction that can be referred as “market value”.“Market value“ is defined as the sum of added values gained by traders （including consumers） in transactions.The proposal of the concept of market value provides the conceptual basis for the analysis of the value chain （network） theory in this article.At the same time，this book conducts following in-depth analysis on the concept of market value：This book analyzes the bilateral impact on “market value” from transaction incomes and costs，in addition systematically expounds the essence of market transactions，in which all trade participants expect to receive more value from the transaction than the costs they paid.A bilateral analysis is conducted on the positive effect resulted from market value appreciation due to increasing “transaction income” and reducing “transaction cost”.We stresses that all parties including consumers participating in trading activities will benefit from the transaction，and puts forward an innovative approach for enterprises to promote market value appreciation through increasing transaction income （including increasing corporate value，customer value，and network value）.This book analyzes the impact on market value distribution due to relationship between market supply and demand.This book describes the basic principles on how distribution of “added market value” among transaction participants is affected by therelationship between supply and demand.This book further shows that vertical market structure of value system determines the relationship between supply and demand among transaction participants，thereby decides the negotiating power of participants on trading prices，resulting the allocation of market value among market participants.（2）Preliminarily establishing a dynamic analysis framework for value network system based on vertical market structure.Guided by the “structure -behavior-performance” principle in industrial economics，this book resolves the generation mechanism of elements of market value formation in value network system，the dynamic effect on corporate behavior and market value distribution among members of network system due to vertical market structure，and the formation mechanism of the three basic compositional elements in market value of value system，namely customer value，network value，and corporate value.In addition，this book constructs a dynamic analytical framework of value network based on vertical market structure，and proposes a dynamic evolution pattern of network system in which main elements affecting market value evolves from value building to value transfer，and then to customer value creation.At same time，this book presents the meaning and composition of customer value，network value，and corporate value，in addition provides detailed and systematic account of the evolution of their effect，and preliminarily establishes a dynamic analysis framework for value network system based on vertical market structure.（3）Expanding the analytical dimension of the corporate market strategic advantage theory.This book points out that the vertical structure of value network system has equally important effect on the profitability of a company，and that corporate market advantage analysis and strategic positioning should be determined and completed in a two-dimension coordinate system which includes vertical market structure and horizontal market structure.This is a valuable expansion to the corporate market strategic advantage theory built upon the vertical structure of value network system.Furthermore，this research selects 9 representative businesses as observation sample.Through extensive data collection，analysis and consolidation，our research analyses，compiles and eventually categorizes business into three distinctive operational orientations comprised of “value transfer”，“value appreciation”，and “value creation”.This research also extracts the set of value elements affecting the profit advantage of various businesses.Keywords：Value Network System，Market Value Formation Mechanism，Vertical Market Structure，Components of Value，Contingency Analysis

The pursuit of profit is the essence of any business.In the course of pursuing profit，value discovery，value creation，value transfer and value realization activities are always evident throughout corporate behavior.Therefore，in-depth study on the source of value，to explore and reveal the basic principles and evolution pattern of the value generation and distribution，and to provide a guide to action on strategic positioning and strategic adjustment to value-building enterprises，is an enduring subject derived from social practice in the market economy for economic theory researchers.The proposal of the concept of value chain，and subsequent continuing development of the value chain （network） system theory，opened the door to many important analytical methods adopted in enterprise organizational behavior research and strategic positioning study，and laid theoretical foundation for further study.However，there are still some limitations in the ongoing research of value chain （network）.Researchers’ attention on value chain （network） has largely been limited to areas of strategic positioning of enterprise managerial significance，and theoretical analysis on its economic significance has been inadequate.Researchers often statically and transversely conduct analysis on enterprise strategic positioning，and often slide into the inertia of thinking centered on enterprise，to think from the inside to the outside，and to construct enterprise value system.Many theories of the value chain （network） and the achievements are self-contained; research in value and value network system thus far is deficient in systematic theoretical integration from the academic community.This book attempts to elaborate the mechanism of formation and development of value and value network.From the perspective of demand，using the way of outside-in thinking，this paper re-interprets the basic meaning of market value，vertically and dynamically constructs a vertical structure analytical framework of value network system，and resolves the influencing role and contingency process of constituent elements of value network system and the resulting corporate behavior.The logical context of this research can be expanded into the following four aspects：（1）Re-interpret the meaning of market value and resolve the fundamental principles of value system generation and distribution.Using the basic concept of value as a starting point，by means of analyzing transaction gain，this paper clarifies the basic meaning of value in value system，and demonstrates this concept by borrowing “market value” to investigate basic principles of value chain generation.In addition，through observing the changing relationship between supply and demand，this paper resolves the distribution relationship of value gain among longitudinal nodes in a value system in the market value creating process.（2） Elaborate the basic meaning of network value and its formation mechanism.This paper explains organizational efficiency of value network based on the basic concepts of transaction cost and transaction gain （with emphasis on the transaction gain concept）.In addition，this paper reveals the three fundamental elements affecting market value appreciation，namely customer value，network value，and corporate value，in a complete value system which includes components of discovery，production，transfer，and realization.（3） Establish a vertical dynamic evolution analytical framework of value network system; analyze the contingency process on the influence of the three fundamental elements affecting market value creation; examine the allocation and transfer of market value between elements.（4） On the basis ofvertical structure dynamic evolution framework，borrowing from the forefront of the value chain （network） related academic work，this paper illustrates the basic meaning and composition of the three fundamental elements，namely customer value，network value and corporate value.This book illustrates key steps and core elements for enterprises to establish strategic advantage in vertical market structure.In addition，this book resolves the key steps and evolution of core elements for enterprises to establish strategic advantage under different vertical market structure，and the corresponding change in corporate strategic initiatives.Based on the above logical context，this research book is divided into six chapters.Chapter 1，Introduction，recapitulates background，issues，research perspective and scope of the study，elaborates theoretical significance and practical significance of the topic，summarizes methodology and technique adopted in the research，and provides a summary of contents.Chapter 2，Summary of theoretical framework，on the basis of theoretical literature research and consolidation，provides systematic elaboration and evaluation on value theory，Porter’s value chain theory，and the development of value chain theory，value network theory，theory of virtual value chain，value modularity theory，and value constellation theory.Chapter 3，Progress of theoretical research of this book：first，analyzes and explains the concept of market value and network value; second，examines the constituent elements of value network and their dynamic evolution process and mechanism; finally，constructs a dynamic evolution analytical framework of vertical market structure and elements of value creation.Chapter 4，Describes the three fundamental elements of value formation within the value formation system，including：value formation fundamental element 1），the concept of customer value system，its constituent elements and dynamic evolution; value formation fundamental element 2），the concept of value network，its constituent elements and dynamic evolution; and lastly，value formation fundamental element 3），the concept of corporate value system，corporate market advantage positioning，and pathways to corporate value innovation.Chapter 5，Adopting grounded theory research method and relevant local economic development case studies，employ data and examples to enrich the research themes and content.This article selects 9 representative businesses，through large amount of second-hand and first-hand data collection and analysis，to resolve the open coding and the axial coding，and recapitulates the main areas of profitability advantage of three types of business，as well further refines the core areas.At the same time，through the interpretation of a theory application case – Outline for the Benxi City Steel DeepProcessing Development Program，elaborates the utilization principles and application significance of the value network system theory.Chapter 6，Summarize research findings and progress，and present an outlook for future research direction.The central conclusion of this book：within the value network system，customer value，network value，and corporate value are fundamental elements of value construction.The relative dominance of individual element alternates with changing market environment.Company market advantage analysis and company strategic positioning should be determined in the two dimensional coordinates that is comprised of market horizontal structure and vertical structure.Customer value has become today’s foremost element determining corporate behaviors.Theoretical innovation made by this book is mainly reflected in the following three aspects：（1） Re-interpreting the concept of value in the value system.Industrial economics and value chain （network） theory and literatures have yet to provide a precise definition in the subject of economics of the word “value” in the value chain （network）.Starting from the original meaning of the “value”，this book elaborates the subjective judgment of “value” by focusing on the value theory in classical economics.In addition，this book clarifies the distinction between “value” and “exchange value” in which value is interpreted as the newly created value addition from market transaction that can be referred as “market value”.“Market value“ is defined as the sum of added values gained by traders （including consumers） in transactions.The proposal of the concept of market value provides the conceptual basis for the analysis of the value chain （network） theory in this article.At the same time，this book conducts following in-depth analysis on the concept of market value：This book analyzes the bilateral impact on “market value” from transaction incomes and costs，in addition systematically expounds the essence of market transactions，in which all trade participants expect to receive more value from the transaction than the costs they paid.A bilateral analysis is conducted on the positive effect resulted from market value appreciation due to increasing “transaction income” and reducing “transaction cost”.We stresses that all parties including consumers participating in trading activities will benefit from the transaction，and puts forward an innovative approach for enterprises to promote market value appreciation through increasing transaction income （including increasing corporate value，customer value，and network value）.This book analyzes the impact on market value distribution due to relationship between market supply and demand.This book describes the basic principles on how distribution of “added market value” among transaction participants is affected by therelationship between supply and demand.This book further shows that vertical market structure of value system determines the relationship between supply and demand among transaction participants，thereby decides the negotiating power of participants on trading prices，resulting the allocation of market value among market participants.（2）Preliminarily establishing a dynamic analysis framework for value network system based on vertical market structure.Guided by the “structure -behavior-performance” principle in industrial economics，this book resolves the generation mechanism of elements of market value formation in value network system，the dynamic effect on corporate behavior and market value distribution among members of network system due to vertical market structure，and the formation mechanism of the three basic compositional elements in market value of value system，namely customer value，network value，and corporate value.In addition，this book constructs a dynamic analytical framework of value network based on vertical market structure，and proposes a dynamic evolution pattern of network system in which main elements affecting market value evolves from value building to value transfer，and then to customer value creation.At same time，this book presents the meaning and composition of customer value，network value，and corporate value，in addition provides detailed and systematic account of the evolution of their effect，and preliminarily establishes a dynamic analysis framework for value network system based on vertical market structure.（3）Expanding the analytical dimension of the corporate market strategic advantage theory.This book points out that the vertical structure of value network system has equally important effect on the profitability of a company，and that corporate market advantage analysis and strategic positioning should be determined and completed in a two-dimension coordinate system which includes vertical market structure and horizontal market structure.This is a valuable expansion to the corporate market strategic advantage theory built upon the vertical structure of value network system.Furthermore，this research selects 9 representative businesses as observation sample.Through extensive data collection，analysis and consolidation，our research analyses，compiles and eventually categorizes business into three distinctive operational orientations comprised of “value transfer”，“value appreciation”，and “value creation”.This research also extracts the set of value elements affecting the profit advantage of various businesses.Keywords：Value Network System，Market Value Formation Mechanism，Vertical Market Structure，Components of Value，Contingency Analysis