Lusch Vargo And O Brien

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Journal of Retailing 83 (1, 2007) 5–18

Competing through service: Insights from service-dominant logic Robert F. Lusch a,∗ , Stephen L. Vargo b,1 , Matthew O’Brien c,2 a

Eller College of Management, University of Arizona, 320 McClelland Hall, 1130 E. Helen Street, Tucson, AZ 85721, United States b College Of Business Administration, University of Hawaii at Manoa, 2402 Maile Way, Honolulu, HI 96822, United States c Foster College of Business Administration, Bradley University, 1501 West Bradley Avenue, Peoria, IL 61625, United States

Abstract
Service-dominant logic (S-D logic) is contrasted with goods-dominant (G-D) logic to provide a framework for thinking more clearly about the concept of service and its role in exchange and competition. Then, relying upon the nine foundational premises of S-D logic [Vargo, Stephen L. and Robert F. Lusch (2004). “Evolving to a New Dominant Logic for Marketing,” Journal of Marketing, 68 (January) 1–17; Lusch, Robert F. and Stephen L. Vargo (2006), “Service-Dominant Logic as a Foundation for Building a General Theory,” in The Service-Dominant Logic of Marketing: Dialog, Debate and Directions. Robert F. Lusch and Stephen L. Vargo (eds.), Armonk, NY: M.E. Sharpe, 406–420] nine derivative propositions are developed that inform marketers on how to compete through service. © 2006 New York University. Published by Elsevier Inc. All rights reserved. Keywords: Service-dominant logic; Goods-dominant logic; Derivative propositions

Introduction
Business scholars and practitioners are aware that competitive advantage can be enhanced through service (Karmarkar 2004). It is also clear that there is a link between competitive advantage and superior performance (Barney 1991; Coyne

1985; Day and Wensley 1988; Hunt and Morgan 1995; Porter
1985). Yet, by almost any definition or measure, there is little evidence of significantly increasing service. In fact, it is often argued that service is actually on decline (Oliva and
Sterman 2001), at least in the U.S. marketplace. Paradoxically, managers, though motivated to perform and aware of the links among service, competitive advantage, and firm
performance, often fail to execute on that knowledge (cf.
Bharadwaj et al. 1993). Additionally, academics, though
aware of these links, have not sufficiently informed normative theory to adequately assist in that execution.
We submit the problem is that there is not a full and adequate understanding of the concept of “service” and its role ∗

Corresponding author. Tel.: +1 520 621 7480.
E-mail addresses: rlusch@eller.arizona.edu (R.F. Lusch),
svargo@hawaii.edu (S.L. Vargo), mobrien@bradley.edu (M. O’Brien). 1 Tel.: +1 808 956 8167.
2 Tel.: +1 309 677 3482.

in exchange and competition. Accordingly, our purpose is
to advance this understanding by exploring a relatively new
conceptual lens (service-dominant logic) through which we
can view exchange, markets, enterprises – including, but not limited to retailers – and competing through service.
We argue that competing through service is about more
than adding value to products. Importantly, it is also more
than the collective roles of marketing, strategic business,
human resource, information-systems, financial, and operations management to produce and distribute better products. We argue that effective competing through service has to do
with the entire organization viewing and approaching both
itself and the market with a service-dominant (S-D) logic
(Vargo and Lusch 2004).
S-D logic is based on an understanding of the interwoven fabric of individuals and organizations, brought together into networks and societies, specializing in and exchanging
the application of their competences for the applied competences they need for their own well being. It is a logic that is philosophically grounded in a commitment to collaborative
processes with customers, partners, and employees; a logic
that challenges management at all levels to be of...
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