In their recent paper “Institutions and axioms: an extension and update of service-dominant logic,” Stephen Vargo and Robert Lusch summarize key steps in the evolution of Service-Dominant Logic since their original formulation of S-DL appeared in 2004.
Within this one paper, Vargo and Lusch provide several perspectives on the evolutionary path of S-DL.
Along its evolutionary path, Service-Dominant logic has recognized and taken steps to address two deficiencies:
- An imprecision in delineation of the Foundational Premises (FPs) and specification of the Axioms of S-DL
- An absence of a clearly articulated specification of the mechanisms of (often massive-scale) co-ordination and co-operation involved in the co-creation of value through markets and, more broadly, in society.
To alleviate this limitation and facilitate a better understanding of co-operation (and co-ordination), an eleventh Foundational Premise (Fifth Axiom) is introduced, focusing on:
- the role of institutions and
- institutional arrangements
- in systems of value co-creation (aka service ecosystems)
While Vargo and Lusch have collaborated together and separately with many other researchers in the past decade, their tradition has been to come together (on their own) every two years to refine their specification of Service-Dominant Logic (S-DL):
Table 1. Bi-annual collaboration of Vargo-Lusch on Service-Dominant Logic (2004 – 2014).
Vargo and Lusch have represented the evolution of Service-Dominant Logic in terms of refinements of its Foundational Premises (FPs) and Axioms:
|FP1||The application of specialized skills and knowledge is the fundamental unit of exchange.||Service is the fundamental basis of exchange||No Change – AXIOM STATUS|
|FP2||Indirect exchange masks the fundamental unit of exchange.||Indirect exchange masks the fundamental basis of exchange.||No Change|
|FP3||Goods are distribution mechanisms for service provision.||No Change||No Change|
|FP4||Knowledge is the fundamental source of competitive advantage.||Operant resources are the fundamental source of competitive advantage.||Operant resources are the fundamental source of strategic benefit.|
|FP5||All economies are service economies.||No Change||No Change|
|FP6||The customer is always the co-producer.||The customer is always a co-creator of value.||Value is co-created by multiple actors, always including the beneficiary – AXIOM STATUS|
|FP7||The enterprise can only make value propositions.||The enterprise cannot deliver value, but only offer value propositions.||Actors cannot deliver value but can participate in the creation and offering of value propositions.|
|FP8||Service-centered view is customer oriented and relational.||A service-centered view is inherently customer-oriented and relational.||A service-centered view is inherently beneficiary–oriented and relational.|
|FP9||All social and economic actors are resource integrators.||No change – AXIOM STATUS|
|FP10||Value is always uniquely and phenomenologically determined by the beneficiary.||No change. – AXIOM STATUS|
|FP11||Value co-creation is coordinated through actor-generated institutions and institutional arrangements. – AXIOM STATUS|
Table 2. Development of the Foundational Premises of Service-Dominant Logic.
At a more general level of description, we would describe the evolution of Service-Dominant Logic turns on promoting three new classes of objects:
- service ecosystem
… and four dynamics of service:
- the role of co-operation (versus competition) in service provision
- the role of institutions in value co-creation
- the role of experience in service evaluation
- the role of value co-creation in service innovation
The Service-Dominant Logic of today imagines resource-integrating, reciprocal-service-providing actors co-create value through meaning-laden experiences in service ecosystems governed and evaluated through institutional arrangements.
The major components of this emerging narrative are presented in Figure 1.
Figure 1. The narrative and process of Service-Dominant Logic.
We’d now like to consider the innovative elements of this narrative, beginning with the three new classes of objects (Actor, Institution, and Service Ecosystem) in Service-Dominant Logic.
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