Stephen L. Vargo

Multiplex retailers versus wholesalers: A test of the total value of purchasing model

Globally a new wave of retailers are threatening the viability of many wholesalers, especially smaller more vulnerable wholesale distributors, as these new wave retailers aggressively compete for the business customer. To better understand this new form of competition, a theoretical model is developed from the organizational buyer behavior literature to explain the relative patronage preferences of business customers for wholesale‐distributors as a supply source versus two types of multiplex retailers ‐ warehouse home centers and office supply superstores. The model, previously untested in the business‐to‐business literature, postulates that business buyers select supply sources based on a “total value of purchasing” criterion. The total value is a function of price and the perceived costs associated with credit services, product‐acquisition services, and risk‐reduction services. The model is empirically tested in both an office supply superstore and warehouse home center setting with survey research conducted in six cities in the USA. Substantial empirical support, with the exception of the credit component, is obtained for the model.

Conceptualizing Value: A Service-ecosystem View:

Abstract The concepts of value-in-use and value-in-exchange have provided the theoretical foundation for scholarly thought since antiquity. The latter has exerted particular influence in economic and business thought since the time of Adam Smith. However, several value-related research streams have, more recently, drawn attention to the contextual and experiential nature of value creation and determination, shifting primary attention to the importance of value-in-use. The convergence of these streams can be seen in the transcending conceptual framework of service-dominant (S-D) logic and its service-ecosystem perspective. Despite its origination in marketing, S-D logic increasingly represents an interdisciplinary endeavour. This commentary elaborates S-D logic’s conceptualization of value—‘a change in the viability of a system’—by capturing the nature of value through four propositions: (1) value is phenomenological, (2) value is always co-created, (3) value is multidimensional and (4) value is emergent. It also provides some specific suggestions for how future scholarly work can contribute to the further refinement of the understanding of value.

Zooming Out and Zooming In: Service Ecosystems as Venues for Collaborative Innovation

In this chapter, we provide a perspective that extends the process of innovation beyond firm activities and new product development. We apply an S-D logic, service ecosystems framework to reframe the context of innovation to include collaboration and social structures (i.e., institutions and institutional arrangements) that guide and are guided by the actions and interactions among multiple actors. Using this framework, we show that market innovation does not automatically occur when actors (e.g., firms) or groups of actors (e.g., innovation networks) introduce new ideas or products, but instead when new practices become institutionalized as solutions. Institutionalization, in this context, is a nonlinear process in which systemic actors engage in institutional work and cocreate institutions through multiple iterations of institutional developments until common templates emerge that reflect imperfectly shared conceptions of problems and solutions. More specifically, we argue that technological innovation can be viewed as the cocreation of new value propositions. Market innovation, on the other hand, is driven by and drives the development of new technologies but also requires the acceptance of value propositions as well as the continued exchange, interpretation, integration, and application of a particular technology among multiple actors, over time (i.e., institutionalization).

Further Advancing Service Science with Service-Dominant Logic: Service Ecosystems, Institutions, and Their Implications for Innovation

Service-dominant (S-D) logic has been recognized as a theoretical foundation for developing a science of service. As the field of service science advances the understanding of value cocreation in service systems, S-D logic continues to evolve as well. Recent updates and consolidation of the foundational premises establish five core axioms of S-D logic and outline a pathway for understanding the role of institutions in value cocreation in general, and innovation in particular. This chapter overviews the evolution of S-D logic and its service ecosystems view, which can contribute to the furthering the development of service science and advancing the study of innovation in service systems. Future research directions are proposed.

Toward a Service-Dominant Logic for International Marketing

The study of international marketing continues to evolve through increases in technical rigor and a growing emphasis on social and environmental issues (Czinkota and Ronkainen; Nakata and Huang 2005). However, a strong theoretical foundation remains needed to clarify core conceptual concepts and transition the discipline away from a “manufacturing mentality” (Ryans, Griffith, and White 2003). Vargo and Lusch (2004) suggest that marketing’s manufacturing or goods-dominant (G-D) paradigm limits the advancement of the discipline because it is largely based on Smith’s (1776) normative theories for increasing national wealth. Hunt (2002, p. 238 emphasis in original) explains that normative theory should be grounded in positive foundations because “understanding how the world works enables one to develop theories and models about how to make the world work better.” Thus, it seems that a positive theoretical foundation for marketing is needed, from which positive and normative theories of marketing, international or otherwise, can be built.

Service-Dominant Logic: Axioms and foundational premises

Production is not the application of tools to materials, but logic to work. Peter F. Drucker Introduction All logics are based on premises and assumptions. Often these are not explicit or spoken but are implicit and unspoken. Logics can be observed in everyday practices and language. In the development of service-dominant (S-D) logic we have attempted to be explicit about its premises, assumptions, and language (or what we call its lexicon). Four axioms form the foundation of S-D logic, as briefly reviewed in Chapter 1. These four axioms serve as a platform for a half-dozen additional foundational premises that, in addition to the four axioms, form the ten foundational premises (FPs) that comprise the underlying structure of S-D logic. These are illustrated in Exhibit 3.1. As noted in Exhibit 3.1, under axiom 1 (FP1), “service is the fundamental basis of exchange,” we have four derivative FPs: FP2, “indirect exchange masks the fundamental basis of exchange”; FP3, “goods are distribution mechanisms for service provision”; FP4, “operant resources are the fundamental source of competitive advantage”; FP5, “all economies are service economies.” Under axiom 2 (FP6), “the customer is always a cocreator of value,” there are two derivative FPs: FP7, “the enterprise cannot deliver value, but only offer value propositions; and FP8, “a service-centered view is inherently customer oriented and relational.” Axiom 3 (FP9), “all economic and social actors are resource integrators,” and axiom 4 (FP10), “value is always uniquely and phenomenologically determined by the beneficiary,” stand alone without direct derivative FPs. The structure and the order of the FPs under the four axioms are used primarily for pedagogical purposes. As you become more familiar with the FPs and all of their intricacies you will begin to see how all of the FPs relate to each other but with the four axioms as the most foundational. In brief, six FPs are nested under four axioms.