Competing with S-D Logic

The foundational premises of S-D logic inform a “competing through service” strategy and allow for the development of nine derivative propositions addressing competing through service (see Table 1). The overall theme is that applied knowledge and collaboration are the key drivers for firms to more successfully compete through service. To accomplish this, the firm must view external environments, customers and partners as operant resources.

Proposition Rationale
1. Competitive advantage is a function of how one firm applies its operant resources to meet the needs of the customer relative to how another firm applies its operant resources. Since applied operant resources are what are exchanged in the market (FP1), they are the source of competitive advantage (FP4)
2. Collaborative competence is a primary determinant of a firm’s acquiring the knowledge for competitive advantage. The ability to integrate (FP9) operant resources (FP4) between organizations increases ability to gain competitive advantage through innovation.
The continued ascendance of information technology with associated decrease in communication and computation costs, provides firms opportunities for increased competitive advantage through innovative collaboration. Reduced barriers to technology utilization combined with the trends of open standards, specialization, connectivity, and network ubiquity increase the likelihood of collaboration with firms and customers (FP6, FP8).
4. Firms gain competitive advantage by engaging customers and value network partners in co-creation and co-production activities. Because the customer is always a co-creator of value (FP6), and the firm is a resource integrator (FP9), competitive advantage is enhanced by proactively engaging both customers and value-network partners.
5. Understanding how the customer uniquely integrates and experiences service-related resources (both private and public) is a source of competitive advantage through innovation. Since value is co-created (FP6) comprehending how customers combine resources (FP8, FP9) provides insight into competitive advantage.
6. Providing service co-production opportunities and resources consistent with the customer’s desired level of involvement leads to improved competitive advantage through enhanced customer experience. Expertise, control, physical capital, risk taking, psychic benefits, and economic benefits influence customers’ motivation, desire, and amount of participation (FP6, FP9) in service provision through collaboration (FP8).
7. Firms can compete more effectively through adoption of collaboratively developed, risk-based pricing value propositions. Appropriately shifting the economic risk of either firm or customer through co-created (FP6) value propositions (FP7) increase competitive advantage.
8a. The value network member that is the prime integrator is in a stronger competitive position.
8b. The retailer is generally in the best position to become the prime integrator.
The ability to effectively combine micro-specialized competencies into complex services (FP9) provides knowledge (FP1) for increased competitive advantage (FP4).
Firms that treat their employees as operant resources will be able to develop more innovative knowledge and skills and thus gain competitive advantage. Since competitive advantage comes from the knowledge and skills (FP4) of the employees, it can be enhanced by servant leadership and continual renewal.

S-D logic asserts that it is not products that are the aim of the customer’s acquisition, but rather the benefit available through the service of the provider. S-D logic inverts the role of goods and service by making service superordinate to goods. In S-D logic, service can be provided directly to another entity or network or through goods – appliances, the basis of FP3. Competition, then, is a function of how one firm provides applied operant resources that meet the needs of the customer relative to another firm providing such applied operant resources. In S-D logic, all competition occurs through service-provision.

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