Constructing a service-dominant strategy : a practice-theoretical study of a start-up company

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School of Business | Doctoral thesis (monograph) | Defence date: 2010-06-18
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157 s.
Acta Universitatis oeconomicae Helsingiensis, A, 366
Contemporary marketing studies claim that in order to effectively create value firms should approach themselves and the market through a service-dominant logic (SDL) rather than a goods-dominant logic (GDL). Whereas GDL draws attention to tangible output and discrete transactions, SDL emphasizes knowledge and skills, exchange processes, and relationships. Overall, SDL enables a broader view on value creation. For the purposes of this study I approached SDL as a particular strategic perspective on value creation, forming the backbone of a service-dominant strategy. I focused especially on customer value, which refers to customer-perceived benefits less sacrifices. Despite the proliferation of research on SDL it had attracted little empirical examination. There was a lack of studies on how service-dominant strategies could be constructed and formulated. In addition, strategy research had not focused on how companies could accomplish value creation, although it is a prerequisite for continued success and survival. In order to narrow this research gap I set out to develop a novel theoretical framework to strategizing about customer value creation, and to elaborate on this perspective empirically through a case study set in a waste management start-up. The framework builds on the so-called practice turn in social theory and strategy research. The practice approach enables a simultaneous view on the micro-activities and the macro-cultural structures that constitute strategizing. According to the practice-theoretical framework, strategizing is a social activity that arises from habituated tendencies and dispositions rather than from deliberate and purposeful reflection. Thus, a strategic perspective on value creation is immanent in strategizing: it builds on the social practices that strategy practitioners draw upon. The case study involved ethnographic materials and analysis. Over a period of 20 months I participated in the start-up company’s meetings and negotiations, which constituted a considerable part of the overall strategizing. The aims were to identify the most significant social practices involved, and to analyze how they enabled or inhibited a service-dominant strategy and the tensions they formed with regard to a strategic perspective on value creation. Overall, the case study provided a nuanced view on the practical complexities of strategizing about customer value creation in the context of new business development. I found that the strategizing built largely on ten practices, including engaging in product hobbyism and building large networks, which had different inherent logics that guided the strategizing. I also identified seven tensions between the inherent logics, such as rigid versus flexible organizational boundaries and atomistic versus holistic offerings, which were ‘played out’ in the everyday strategy making, sometimes sparking observable conflicts. Significantly, I discovered that the construction of a service-dominant strategy hinged upon how the tensions were resolved. The present study has several contributions to marketing and strategy-as-practice research. With regard to the SDL literature in marketing, the novel theoretical framework, with its solid foundation in the practice turn, will enable researchers to examine different strategic perspectives on value creation in the social practices of strategizing. The case study provides an extensive empirical exploration of the construction of a service-dominant strategy, which was found to depend on specific practical tensions. It also showed that multiple perspectives on value creation coexist within a single organization. With regard to strategy-as-practice research, this study highlights the worldview on value creation that is always immanent in strategizing, and emphasizes the role of extra-organizational actors in co-creating value. Furthermore, whereas previous strategy research has focused on struggles between ideologies and discourses, this study acknowledges the embodied nature of the tensions between practices. In addition, the empirical part demonstrates the role of historically and culturally transmitted, trans-individual practices. It also sheds light on strategizing in a small entrepreneurial company, which is something that has been overlooked. Finally, practitioners could use this study to create space for alternative strategies to emerge by reflecting on the different perspectives on value creation that are presented in the theoretical framework. In shifting toward a service-dominant strategy they could use the tensions that were identified in the case study as a tool enabling them to focus on the most significant aspects of strategizing
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Tikkanen, Henrikki, professor
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