Int.

Journal of Business Science and Applied Management, Volume 8, Issue 1, 2013

Moving forward with service dominant logic: Exploring the

strategic orientations of a service-centred view of the firm

Lucio Lamberti
Politecnico di Milano, Department of Management, Economics and Industrial Engineering
Via Lambruschini 4b, 20156 Milan, Italy
Telephone: +39 02 2399 4076
Email: [email protected]

Angela Paladino
The University of Melbourne, Department of Management and Marketing
198 Berkeley St, Victoria 3010, Australia
Telephone: +61 3 8344 1916
Email: [email protected]

Abstract

Service Dominant Logic (SDL) has been the subject of great conceptual debate over the past years. We are now
clearly at a crossroad where application is required to cement its practical relevance to the organization and its
performance. This paper extends the SDL debate, as founded by Vargo and Lusch (2004), by analyzing it
through the lens of strategic orientations, in combination with a service-centred view of the firm. In doing so,
the purpose of this paper is twofold. Firstly we aim to identify the existence of common characteristics
between SDL and existing conceptual orientations. Secondly, we go further to explore the conceptual
relationships between these identified and empirically evaluated strategic orientations (market, resource,
learning, service, and entrepreneurship orientations) and SDL theory. We proffer that a service-centred view of
the firm requires the deployment of key facets of all of these strategic orientations. In this way, we argue that a
SD orientation emerges that is in essence a strategic orientation combination. In doing so, we develop a
comprehensive framework and lay the foundation for the initiation of empirical work on SDL to further enrich
the work initiated by Vargo and Lusch (2004). The paper concludes with a discussion of this framework, its
implications for scholars and practitioners and areas for future research.

Keywords: service-dominant logic, strategic orientation, market orientation

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1 INTRODUCTION
Service-Dominant Logic (SDL) has been proposed as a unifying theory for marketing thought, and as such
a topic at the forefront of marketing research. Despite a large number of studies that have analyzed the
conceptual foundations of SDL (e.g. Madhavaram & Hunt, 2008; Vargo & Lusch, 2008), research on the
applicability and utility of SDL for management practice is almost negligible (e.g. Payne et al., 2008). For
instance, despite significant research seeking to contextualize marketing theories or specific cases in a service-
centred view, literature has not yet been able to identify the practices adopted by a company endorsing SDL
principles, nor has it nominated the strategic principles inspiring such practices. Thus, there is a clear dearth of
literature analyzing the nature and the strategic orientations of a company endorsing the SDL principles. This is
particularly relevant as the elicitation of strategic orientations represents the key for investigating the impact of a
service-centred view on profitability.
To the best of our knowledge, no study to date has thoroughly explored (a) whether an orientation of a
company encompasses the SDL principles and (b) if there is a relationship between such an orientation and
other established strategic orientations. We posit that the ability to demonstrate such an intersection with
established strategic orientations could provide the foundation for empirical research on the implementation of a
SDL in firms and its impact on firm performance.
Service Dominant Logic (SDL) or the service-centred view (Vargo & Lusch, 2004), has been the subject of
great conceptual debate over the past years. We are now clearly at a crossroad where application is required to
cement its practical relevance to the organization and its performance. This paper extends the SDL debate, as
founded by Vargo and Lusch (2004), by analyzing it through the lens of strategic orientations, in combination
with a service-centred view of the firm. In doing so, the purpose of this paper is twofold. Firstly we aim to
identify the existence of common characteristics between SDL and existing conceptual orientations. Secondly,
we go further to explore the conceptual relationships between these identified and established strategic
orientations (market, learning, service, and entrepreneurship orientations) and SDL theory. We proffer that a
service-centred view of the firm requires the deployment of key facets of all of these strategic orientations. In
this way, we argue that a SDL orientation emerges that is in essence a strategic orientation combination. In
doing so, we develop a comprehensive framework and lay the foundation for the initiation of empirical work on
SDL to further enrich the pioneering work initiated by Vargo and Lusch (2004).
In addition, concern has been expressed by marketing academics regarding the sharp decline in conceptual
works, particularly in the review of past research and integrating that research to provide new conceptualizations
of marketing issues (Yadav, 2010: 2). This paper seeks to work towards slowing this downward trend. Yadav
(2010) calls for papers that add to discovery and/or justification. Specifically, we seek to advance knowledge
through this conceptual paper, employing the context of discovery. Here, we synthesize existing ideas to
combine previously unconnected fields of knowledge to explore a relatively new phenomenon that we recognize
in the literature as SDL.
In order to set the basis for our arguments, we will review at first the basic concepts of SDL, in order to
highlight its fundamental premises and its nature; by defining its conceptual prerogatives, we will introduce the
concept of Service Dominant Orientation (SDO) to depict the strategic orientation of a company endorsing such
prerogatives. Then we will analyze the linkage of this orientation with established strategic orientations that
have already been discussed and analyzed in literature (namely market, resource, learning, entrepreneurial, and
service orientations) in order to proffer an interpretation of SDO as a strategic orientation combinations, an idea
that, since the established strategic orientations have already been operationalised, may provide useful
operational tools for grounding empirical research on the diffusion, the antecedents and the outcomes of SDO.
This represents the paper concludes with a discussion of this framework, its implications for scholars and
practitioners and areas for future research.

2 LITERATURE REVIEW
Debate in the SDL domain has centred on two main elements: the refinement of the SDL fundamentals
(e.g. Ballantyne & Varey, 2008; Gummesson, 2008), and the analysis of company behaviours in a service-
dominant perspective (e.g. Michel et al., 2008; Blezevic & Lievens, 2008), with a focus on co-creation and
participative innovation (e.g. Payne et al., 2007; Mohr & Sarin, 2009). The former stream has led to a
progressive redefinition of the SDLs fundamental premises (explained later), emphasizing the role of value
networks in a SDL (Vargo & Lusch, 2008). Neither stream however works towards defining the strategic
orientation of a company endorsing the SDL principles.
Vargo and Lusch (2004) synthesize their view of SDL by stating that increasingly, marketing has shifted
much of its dominant logic away from the exchange of tangible goods and towards the exchange of intangibles,
specialised skills and knowledge, and processes which [] points marketing towards a more comprehensive

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and inclusive dominant logic, one that integrates goods with services and provides a richer foundation for the
development of marketing thought and practice (p. 2).

2.1 Principles of a Service-Centred View

The principles of a service-centred view are summarized by Vargo and Lusch (e.g. 2006a) in a number of
fundamental premises (FP). These principles encompass three core concepts: (i) the centrality of operant
resources; (ii) the interactive nature of value generation; (iii) the participative nature of value generation. We
argue these notions are already reflected in part through various theories which we draw together to progress the
development of SDL. Figure 1 reflects these ideas.

Figure 1: Principles of SDL

SDL

Interactive Centrality of Participative

value operant value
generation resources generation

Market-driven Intangible resource Network and co-

management bundles creation
Customer-centricity capabilities as
theory operant resources

The centrality of operant resources. A central issue underlying SDL is the classification of resources
involved in value generation and exchange. Consistent with Constantin and Luschs (1994) taxonomy of
resources, there are two key resource groups for a firm (a) operand resources (i.e. tangible resources on which
an operation is performed) as means for service delivery and (b) operant resources (i.e. intangible, e.g. human,
organizational, technological or relational resources) employed to act on operand resources in value generation.
In other words, goods are argued to be distribution mechanisms for service delivery (Vargo & Lusch, 2004).
These notions clearly borrow learnings from the resource-based view, whereby operant resources are somewhat
analogous to intangible resource bundles, which are largely dynamic in nature (Barney, 1995; Paladino, 2007),
while operand resources are analogous to static resources, requiring deployment to become valuable for the
firm, as well as the customer. These have been empirically assessed through the application of resource
orientation (Paladino, 2007; 2008; 2009), thereby providing us with a starting point for empirical validation of
these notions.
The interactive nature of value generation. The link between SDL and customer orientation has been
identified since the seminal work of Vargo & Lusch (2004). The authors endorse the market-driven management
principles (e.g. Day, 1994), as well as the explicit link with customer-centricity, which affirms the need for
companies to establish an intimate level of customer knowledge and to pursue increased customization to meet
evolving customer needs (Sheth et al., 2000, Shah et al., 2006, Wind & Rangaswamy, 2001). The conceptual
link between SDL, market-driven management and customer-centricity lies in the relational view of resource
exchanges in contemporary markets (Gummesson, 2008), whereby relationships are established and maintained
through information exchange (Gummesson, 1990).
The participative nature of value generation. In FP6, Vargo and Lusch (2004) state: the customer is
always a value co-creator. This statement derives from resource theory: moving from the assumption that: (i)
operand resources are enabled by operant resources, thus market exchanges are but operant resource
capabilities exchanges (Vargo et al., 2008); (ii) customer competences and firms customer relationship

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capabilities are operant resources (Hunt & Madhavaram, 2006), and; (iii) one of the customer relationship
capability is the customer linking capability (Day, 1994), specifically, the ability by the firm to establish and
maintain valuable customer relationships, a conceptual antecedent of co-creation capability (Madhavaram &
Hunt 2008). In this perspective, the participative nature of exchange and the systematic, proactive role of
customers in value generation emerge as a foundation of a service-centred view (e.g. Etgar, 2008; Xie et al.,
2008). Moreover, as highlighted by Vargo and Lusch (2008b), the participative architecture does not involve
just the firm and the customer, but also, at least ideally, all the economic actors potentially interested in the
value exchange. This is particularly evident in research addressing the innovation and SDL relationships, where
the network of economic players emerge as co-creating actors in integrating resources (e.g. Michel et al., 2008).
Again, SDL research has emphasized the importance of the role of customers as value co-creators. Thus, as
a consequence, a service-centred view requires the development of co-creation capabilities, given that customer
orientation is a key component of co-creation orientation (Madhavaram & Hunt 2008). Co-creation capabilities
theory is grounded in Days (1994) work on customer linking capabilities. These essentially refer to creating and
managing close customer relationships. Nonetheless, this is not the complete picture. While it addresses the
establishment of a relationship aimed at co-creating value, it does not depict the operational approaches to co-
creation. Vargo, Maglio and Akaka (2008), for instance, highlight that despite a strong interest in the issue,
research has not explicated clearly what the processes involved in value co-creation are. Accordingly, it remains
an area for further research. Moreover, as Payne et al. (2008) highlight, all value co-creation opportunities are
strategic options, the accomplishment of which requires a relational exchange. This is also confirmed by
Gronroos and Ravald (2009).
In accordance with the extant literature, SDL is identified as a general logic impacting on the nature of
market relationships and, as such, with consequences on organizational policies and behaviours at both a micro-
and a macro-marketing level (see for instance, Madhavaram & Hunt, 2008; Vargo & Lusch, 2006b). Though the
authors emphasize that the managerial sphere of SDL is but a part of the domain of the theory, they also
recognize that the analysis of the effects of SDL on management has thus far remained largely uncovered. To
date, the SDL special issue organized by the Journal of the Academy of Marketing Science [JAMS, 36(1),
2008], has provided the most comprehensive and systematic contribution to the evolutionary debate on SDL.
Some of the papers have focused on the refinement of the theoretical architecture of SDL (Vargo & Lusch 2008;
Ballantyne & Varey 2008); others have analyzed the possible impact on business performances (e.g.
Gummesson, 2008); a third stream, perhaps the most significant for the objective of this paper, has analyzed the
managerial implications of SDL, establishing a link between individual theories and SDL, such as radical
innovation (Michel et al., 2008; Blezevic & Lievens, 2008), co-creation and co-production (e.g. Payne et al.,
2008; Doing et al., 2008; Etgar, 2008; Xie et al., 2008) or resource and service theory (Maglio & Spohrer, 2008;
Arnould 2008). None of these have however drawn upon multiple literature bases to identify an underlying
theme.
As SDL is a general theory of the firm, it cannot be tested in its current form. Thus, comparable to the
marketing concept (and market orientation) (e.g. Kohli & Jaworski, 1990; Narver & Slater, 1990) and the
resource based view (and resource orientation) (e.g. Paladino, 2007), a construct that applies the precepts of
SDL is introduced. We introduce a new term, service dominant orientation (SDO), which assesses the extent to
which a firm is oriented toward developing and nurturing interactive value generation processes, operant
resources and participative value generation behaviours (see Figure 1). Thus, this strategic orientation is
assessed at the same level of these comparable orientations.

3 ANALYZING THE LINK BETWEEN ESTABLISHED STRATEGIC ORIENTATION AND SDL

THEORY
Our idea in this paper is to establish a link between SDO and existing strategic orientations in order to (i)
deepen the understanding of the strategic underpinnings of a SDO, (ii) set the basis for the development of a
sound approach to identify a service-dominant orientation in practice.
In fact, the trend towards SDL in practice observed by Vargo and Lusch (2004) suggests that moving
towards a service-centred strategy should be beneficial for companies. As noted by Olson and colleagues
(2005), indeed, such a shift is determined by and influenced in terms of effectiveness; hence, finding the
strategic orientation(s) of a company endorsing the principles of SDL could establish the basis for testing the
hypothesized benefits for companies in terms of performance.
The service-centred view is not postulated as a new theory or a groundbreaking, radically innovative
view of the firm, but rather as a trend, a progressive attitude observable in companies in response to competitive
and market challenges (Vargo & Lusch, 2006a). It sounds reasonable, thus, that the strategic underpinnings of a
SDO may be found in existing, established strategic orientations, and that establishing a conceptual link between
SDO and existing orientation may help understand the common traits of SDO companies in practice and to
actually test whether a SDO is beneficial. The SDL theory is so broad and general (Brodie, 2009) that rather
than trying to encompass all the possible, different orientations at the basis of SDL, we will focus on a more

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limited set, selected in the glance of two arguments: (i) level of debate in extant literature, (ii) the level of
sophistication reached in the construct elicitation. The first argument follows the principle of relevance
suggested by Zaltman and colleagues (1982) and Kohli and Jaworski (1990) for foundational studies in theory
development; the second argument is instrumental: our objective is to establish these links also in order to
support extensive, empirical research on SDL; the more linked strategic orientations are operationalised, the
more SDO may enjoy the advantage of grounding on existing, reliable scales.
Upon a review of a vast literature of diverse strategic orientations, we identified five orientations which can
respond to the two principles: market orientation (MO), resource orientation (RO), service orientation (SO),
learning orientation (LO), and entrepreneurial orientation (EO). These orientations appear particularly relevant
to be analyzed in relationship with SDL due to their complementarity: MO and RO actually depict two
apparently diverging orientations, the former related to the marketing concept (i.e. the idea that the objective of
the company is to satisfy customers in ways that remunerate the company e.g. Lamberti & Noci, 2009), the
latter to the resource-based view, which postulates that a companys goal is to focus on its internal resource to
generate value (Paladino, 2008). These orientations are thus, respectively, related to (i) an idea of read and
react marketing (e.g. Jaworski & Kohli, 1990), in which the starting point of value generation lies in being
able to understand customers needs and adapt internal resources to provide solutions; (ii) an idea of sell what
you make marketing (Paladino, 2009), in which the company levers on its superior competences to develop
products and solutions which marketing is asked to communicate to the market. SO has emerged as a concept as
the service dimension of economic offering has gained momentum (e.g. Lytle et al., 1997), and as such
encompasses the analysis of the customer relationship management approach by the company, which is
essentially complementary to the philosophy of value generation which is depicted by MO and RO. Finally,
LO and EO encompass the companys approach to innovation. In fact, LO refers to the ability of the company to
absorb knowledge from stakeholders and to turn such knowledge into changes in its behaviour and/or products
(e.g. Lamberti & Pero, 2013), and as such has been considered a cornerstone in the huge literature about
absorptive capacity (e.g. Cohen & Levinthal, 1990) and ambidexterity (e.g. Rothaermel & Alexandre 2009), but
also as a fundamental lever to better accomplish the principles at the core of other orientations (e.g. Slater &
Narver, 1995). EO, finally, depicts the general approach to competition by the company, i.e. its focus on radical
innovation, its competitive aggressiveness, and its attitude to look for new ventures in a market (e.g. Lumpkin &
Dess, 1996).
So, besides the importance and instrumental rationales, these five orientations were chosen also because
they comprehensively encompass all the key-processes of the companys approach to the market: innovation,
marketing, customer relationship management and competitive behaviour. For this reason, analyzing the
relationship between SDL and these orientations represents a useful exercise to analyze the managerial
implications and the operational and strategic underpinnings of SDO all over the key-points of the company-
market relationship.
We underline that we do not consider these five orientations the only ones whose relationship with SDL is
worth to be analyzed, nor that SDO may be fully defined only as a combination of these five orientations.
Rather, we believe that an initial analysis of the relationship between SDO and these orientations may provide
an exploratory overview to set further research on the topic, and as such it is suited to the objective of the paper.
Table 1 summarizes the definitions and the key-references of each of the strategic orientations analyzed in
this paper. In the following, the founding assumptions of these strategic orientations will be introduced and the
conceptual link to SDL discussed.

Figure 2: Conceptual framework: Service-Dominant Orientation and existing strategic orientation

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Table 1: A Synopsis of Orientations

Orientation Description Main references

Market The strategic orientation of a company Deshpand & Webster, 1989; Olson, 1986;
Orientation endorsing the marketing concept Kohli & Jaworski, 1990; Jaworski et al., 1993;
Narved & Slater, 1990
Resource The strategic orientation of a company that Paladino, 2007; 2008; Peteraf, 1993; Teece,
Orientation applies the principles of the resource-based Pisano, & Shuen, 1997
view
Service The service events, practices, and procedures Lytle, Hom & Mokwa, 1998; Hogan, Hogan &
Orientation within a work setting that expect and reward Busch, 1984; Lytle & Timmerman, 2006;
service excellence Gonzalez & Garazo, 2006; Heskett, Sasser, &
Schlesinger, 1997; Schneider & Bowen, 1995;
Schneider et al., 2009
Learning The organization-wide activity of creating and Calantone, Cavusgil & Zhao, 2002; Dixon,
Orientation using knowledge to enhance competitive 1992; Argyris & Schon, 1978; Sherman,
advantage Berkowitz & Souder, 2005; Sinkula, Baker &
Noordewier, 1997
Entrepreneurial The practices, behaviours and activities Covin et al., 2006; Lyon, Lumpkin, & Dess,
Orientation encouraging entrepreneurship in the company, 2000; Lumpkin & Dess, 1996, Hult et al., 2002;
where entrepreneurship is the extent to which Wang, 2008; Baird & Thomas, 1985; Stewart &
to which a company innovates, acts proactively, Roth, 2001; Runyan, Droge & Swinney, 2008
and takes risks

3.1 Market Orientation (MO)

Founding assumptions. Market orientation is the orientation of a company endorsing the marketing concept
(e.g. Deshpand & Webster, 1989; Olson, 1987). It is still one of the most debated topics in marketing strategy
literature, and one of the first orientations to be measured. Two main conceptualizations of market orientation
have emerged: on the one hand, market orientation as composed by intelligence generation (i.e. the ability of the
company to acquire information about the marketing system), intelligence dissemination (i.e. the ability of the
company to spread the information gathered about the marketing system to all the units directly or indirectly
involved in the relationship with customers) and responsiveness (i.e. the ability of the company to respond to
changes in the marketing system in a timely manner to meet evolving expectations) (Kohli & Jaworski, 1990;
Jaworski & Kohli 1993). On the other hand, Narver and Slater (1990) conceptualize market orientation as a
three-dimensional construct composed of customer orientation (i.e. the sufficient understanding of one's target
buyers to create continuous superior value for them), competitor orientation (i.e. the sufficient understanding of
the short-term strengths and weaknesses, long-term capabilities and strategies of both the key current and
potential competitors) and inter-functional coordination (i.e. the coordinated utilization of company resources in
creating superior value for target customers).
Relationship with SDL theory. SDL Fundamental Premise (FP) 8 states that a service-centred view is
inherently customer oriented and relational (Vargo & Lusch, 2004). The authors also state that service
dominance is customer-oriented and market-driven. Day (1994) argues that a market-driven company is
inherently market oriented, as market orientation is the organizational orientation towards a market driven
management; similarly, Vargo and Lusch (2004) highlight that SDL is customer-centric. Sheth, Sharma and
Sisodia (2000) highlight that customer centricity is the extreme consequence of the application of the marketing
concept in contemporary markets, underlining that market orientation represents the organizational shift from
product centricity to the marketing concept. Madhavaram and Hunt (2008) argue that market orientation is a
composite (that is, a second tier) operant resource. As a consequence, this implies that SDL, encompassing
operant resources also by default, reflects the ideals of market orientation. As such, SDL can be assessed in part
through the use of market orientation measures.

3.2 Resource Orientation (RO)

Founding assumptions. Resource orientation is the strategic orientation of a company that applies the
principles of the resource-based view (RBV) (Paladino, 2007; 2008; 2009). The RBV sets the ultimate objective
of a company to gain extra-profitability through the development of persistent and costly-to-imitate bundles
(Peteraf, 1993; Teece et al., 1997). In this perspective, it emerges as a theory for driving performance through
resources in a dynamic competitive environment (c.f. Barney, 1991; Collis & Montgomery, 1995). Unlike MO,
which shows both an external and internal focus, in that it aims at developing a superior knowledge about the
external environment and in developing internal bundles to meet evolving external expectations (Kahn, 2001),
RO is inherently internally oriented. Indeed, its focus lies with the development of superior, stable and flexible
bundles of firm resources (Paladino, 2007).

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Relationship with SDL theory. Barney (1991, p.101) defines firm resources as all assets, capabilities,
organizational processes, firm attributes, information, knowledge, etc., controlled by a firm that enable the firm
to conceive of and implement strategies that improve its efficiency and effectiveness. In this perspective,
resources are a central focal point of SDL (e.g. Arnould, Price & Malshe, 2006). By affirming that value is
created by operant rather than by operand resources and that the customer is a value co-creator, SDL highlights
that some operant resources are external to the firm (Day, 2006). Nonetheless, internal operant resources
represent the levers for companies to create value in a SDL (Madhavaram & Hunt, 2008). Hunt and
Madhavaram (2006) argue that the Resource-Advantage theory of competition, based on the premises of the
resource-based view (see Hunt, 2002) is the competitive framework that could potentially lead to the
development of a general marketing theory based on SDL. As such, service dominance encompasses the
learnings of a resource-based view of the firm.
Accordingly, as the relevant resources in SDL are both internal and external in nature, SDL by default
introduces us to an enlarged concept of RO. In fact, as customers and networks are external resources in a
service-centred view (e.g. Arnould, Price & Malshe 2006; Gummesson 2008), customer orientation and
competitor orientation can be classified as resources (Hunt & Madhavaram, 2008) within the larger
conceptualization of resource orientation.

3.3 Service Orientation (SO)

Founding assumptions. Service orientation has been defined as the service events, practices, and
procedures within a work setting that expect and reward service excellence (Lytle, Hom & Mokwa, 1998, p.
457). Service orientation has been established at both an individual and organizational level. The individual
level centres on understanding the disposition of individuals to be helpful, thoughtful and cooperative (Hogan,
Hogan & Busch, 1984), while the organizational level focuses on the firms capability to develop and encourage
policies and behaviours (also referred to as service climate) (Lytle, Hom & Mokwa, 1998; Lytle & Timmerman,
2006; Gonzalez & Garazo, 2006). A favourable service climate is established when an organization engages in a
set of practices that encourage employee behaviours towards service excellence (Kelley 1992). Comparable with
MO and RO, SO is also argued to be positively related to superior value creation, by increasing customer
satisfaction and loyalty, growth, and, finally, profit (Heskett et al., 1997; Schneider & Bowen 1985; Schneider et
al., 2009).
Relationship with SDL theory. According to SDL, people engage in exchange to acquire the benefits of
services, while goods are transmitters of embedded operant resources (Vargo & Lusch, 2004, p.7). This is
the starting assumption for Vargo & Luschs (2006a) FP3 (Goods are distribution mechanisms for service
provision) and FP5 (All economies are services economies). The association between SDL and service
orientation is thus quite overt (Brodie, 2009). With SDL, value is co-created with the customer (see also
Boaretto, Noci & Pini, 2009; Payne et al., 2008) and exchanged through services (Brown & Bitner, 2006). It
follows that, in order to create superior value, the organization must co-create superior services with the
customer; to deliver superior services, the organization must employ its operant resources to provide customers
with superior services. Thus, by default, it must develop a service orientation. The link between service
orientation and SDL is also emphasized at an operational level. Brown and Bitner (2006) argue that SDL
implies a radical change in the competitive differential, from products to employees, whereas Bettencourt and
Brown (2003) show that poor service performance are driven by a poor service orientation, translated in role
ambiguity and conflict by the employers. In this perspective, employee empowerment, one of the dimensions of
service orientation (Lytle, Hom & Howka, 1998) represents a fundamental lever to apply SDL.
In summary, it is evident that a service orientation lies at the heart of a SDL. It is however somewhat
diverse to the other orientations in its measurement and application. In fact, market orientation and resource
orientation have been depicted as orientations at a corporate level (and, in fact, the measures were developed
mainly with top managers or marketing managers) while their application at an individual level of analysis has
been disregarded by comparison (e.g. Nath & Mahajan, 2008; Chiesa et al., 2009). In contrast, service
orientation has emphasized the operational dimension and the role of the employees have been the core of the
orientation (e.g. Schneider, Brief, & Guzzo, 1996). In fact, the Serv*Or scale (Lytle, Hom & Mokwa, 1998),
was purified through an empirical exercise involving all levels of employees rather than only top-level
management. This is indicative of activities and behaviours conducted at an individual level of analysis.

3.4 Learning Orientation (LO)

Founding assumptions. Learning orientation has been defined as the organization-wide activity of
creating and using knowledge to enhance competitive advantage (Calantone et al., 2002, p. 516). Learning
orientation is argued to impact on the type of information gathered by the company (Dixon, 1992), as well as on
its use in terms of interpretation and sharing (e.g. Argyris & Schon, 1978; Sherman et al., 2005). Sinkula, Baker
and Noordewier (1997) depict a learning-oriented company as a company where learning is valued and
promoted organization-wide and where there is a willingness to critically analyze routines and to accept new

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ideas. It is not surprising, thus, that learning orientation has been associated to corporate innovativeness (Siguaw
et al., 2006), and that this orientation has been associated also to market-driven management (e.g. Day, 1994).
Relationship with SDL theory. Under the tenets of SDL, the customers are value co-creators (see FP6), and
the role of operant resources is to fine tune the service provision to customer needs (Vargo & Lusch, 2006b).
This fine tuning is associated to information gathering from the market and consistent adaptation of behaviours
to achieve positive performance outcomes (Payne et al., 2008) (see also absorptive capacity theory and dynamic
capabilities theory; Teece, Pisano & Shuen, 1997). Information gathering deals with learning whereas
adaptation is related to organizational open-mindness, shared vision and commitment to learning, three of the
four components of a learning orientation (Calantone et al., 2002). The fourth dimension, intra-organizational
knowledge sharing, may be associated with SDL in that a learning-oriented company is inherently market
focused (Slater & Narver, 1995). Thus it is accustomed to share intelligence among units (Kohli & Jaworski
1990). So, if we accept that market orientation is conceptually linked to SD-orientation, as a consequence, it is
also structurally committed to knowledge sharing.

3.5 Entrepreneurial Orientation (EO)

Founding assumptions. The conceptualization of EO has been widely debated in literature (e.g. Covin et
al., 2006; Lyon, Lumpkin, & Dess, 2000). EO refers to the practices, behaviours and activities that encourage
entrepreneurship in a company. It has been described as the extent to which a company innovates, acts
proactively, and takes risks (e.g. Miller, 1983). Similarly, it has been described as the activities and processes
leading to new ventures or market entry (e.g. Lumpkin & Dess 1996, Hult et al., 2002). In time, a shared vision
of EO has emerged whereby it has primarily been associated to market proactiveness, i.e. the extent to which a
firm anticipates and acts on future needs (Covin & Slevin, 1989; Lumpkin & Dess, 1996), and to risk taking
(social, personal, psychological and strategic in nature), i.e. the extent to which managers are willing to make
significant and risky resource commitments (Wang, 2008; Baird & Thomas, 1985; Stewart & Roth, 2001;
Runyan, Droge & Swinney, 2008). EO has been the subject of wide debate given the lack of evidence
supporting its often hypothesized positive relationship with performance (e.g. Dess, Lumpkin, & Covin, 1997;
Hamel 2000; Wang, 2008). In time, EO has been analyzed in various contexts, that is, with a learning
orientation, small business orientation, and so forth. In these instances, results generally have demonstrated a
strong and positive relationship between EO and performance, particularly in new ventures, thereby renewing
debate regarding the utility of this construct for larger organizations (Runyan et al., 2008; Wang, 2008).
Relationship with SDL theory. A link between SDL and EO may be established looking at the interactive
nature of entrepreneurship orientation (Lumpkin & Dess, 1996): the concept of proactiveness strongly emerges
in the operant resources theory, whereby, customers are classified as operant resources. In contrast, through the
lens of SDL, these customers actively participate in value creation (Vargo & Lusch, 2004). SDL requires
continuous fine-tuning between the companys operant resources and customers. It must accordingly empower
employees and delegate decision making about customer management to the key resources that lie at the
interface between the organization and the customer. As such, market proactiveness is stimulated by a service-
centred view. Also, service orientation theory suggests that interface resource empowerment is a cornerstone for
achieving superior service performance (Lytle et al., 1997). In accordance with customer centricity and SDL,
firms seek external opportunities through their interaction with the customer, as well as through the
empowerment of employees in the use of interface resources (Galbraith, 2005). These provide an organization
with the ability to innovate, anticipate market changes and be a proactive player (Michel et al., 2008). These are
not only elements of SDL but also key requirements of entrepreneurship and EO.
According to EO, risk is equated to resource commitment in proactive ventures, a strong component of
SDL (Wang, 2008). In this perspective, the customer-centric nature of SDL (Vargo & Lusch, 2006a), which
requires the consistent investment in customer management resources, new performance measurement systems
and innovative organizational structures (Shah et al., 2006; Lamberti & Noci, 2010), supports the existence of a
conceptual link between SDL and EO.
Thus, the link between EO and SDL stands in their interactive, resource focused and participative nature.
Customer centricity (a focus on customers), the co-creative approach to value generation and the focus on
operant resources in unison enable a firm to create value for both the customer and the firm. These notions are
consistent with the tenets of all strategic orientations presented thus far.

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Table 2: The Link with SDL: A Review of the Founding Orientations

Orientation Founding assumptions Conceptual Links with SDL

Market Intelligence generation and dissemination FP8: a service-centred view is inherently
Orientation (Jaworski & Kohli, 1990) customer oriented and relational (Vargo &
Customer orientation and interfunctional Lusch, 2006a)
coordination (Narver & Slater, 1990; Slater & Link with market-driven management and
Narver, 2005) customer-centricity (Vargo & Lusch, 2004)
Customer orientation as an operant resource
(Hunt & Madhavaran, 2008)
Resource Development of persistent, stable, flexible, Resource-centricity (e.g. Arnould et al., 2006;
Orientation costly-to-imitate resource bundles (e.g. Collis, Gummesson, 2008)
1991; Grant, 1991; Hitt et al., 1995) Customer as value co-creator, thus as external
Driving performance through resources in a operant resource (Day, 2006)
dynamic competitive environment (e.g. Resource-advantage theory (Hunt, 2002) as a
Henderson & Cockburn, 1994; Makija, 2003) RBV-based possible competitive framework for
Inherently internally oriented (Paladino, 2006) SDL (Hunt & Madhavaram, 2006)
Establishment of MO drives resource
empowerment (Lamberti & Noci, 2009)
Service Disposition to be helpful, thoughtful and People as transmitters of embedded operant
Orientation cooperative (e.g. Hogan, Hogan & Busch, resources (e.g. Vargo & Lusch, 2004)
1984) Value co-creation requires service excellence in
Capability of the firm to develop and operant resources and suited policies (Boaretto,
encourage policies and behaviours for service Noci & Pini, 2009; Payne et al., 2008; Brodie,
excellence (e.g. Lytle, Hom & Mokwa, 1998) 2009)
Shift in the differentials from products to
employees driving empowerment (e.g. Brown
& Bitner, 2006)
Learning Centrality of information gathering, Fine-tuning of value creation with customers
Orientation interpretation and sharing (Dixon 1992; requiring information gathering and
Argyris & Schon, 1978; Sherman et al., 2005) adaptiveness organizational open-mindness,
Learning valued and promoted & willingness shared vision and commitment to learning
to critically analyze routines (Sinkula, Baker & (Vargo & Lusch, 2006; Payne et al., 2008;
Noordewier, 1997) Teece, Pisano & Shue, 1997)
Learning is linked to market-driven
management (Siguaw et al., 2006), and SDL is
market driven (Vargo & Lusch, 2006a)
Entrepreneurial Market proactiveness and anticipation of Interactivity for value co-creation requiring
Orientation future needs (e.g. Covin & Slevin, 1989; open-mindness and operant resource
Lumpkin & Dess, 1996) commitments (Lusch et al., 2009)
Risk taking and willingness to make resource Proactiveness is a key feature of operant
commitments (e.g. Wang, 2008; Baird & resources (Vargo & Lusch, 2004)
Thomas, 1985; Stewart & Roth, 2001; Runyan, Customer-centric nature of SDL requires ad-hoc
Droge & Swinney, 2008) internal resources for customer management,
new PMS and organizational structures (e.g.
Shah et al., 2006) risk taking and resource
commitments

4 DISCUSSION
It has been clearly articulated by Yadav (2010) that more conceptual works are needed in high impact
journals. It has also been recognized that such conceptual works are synergistically intertwined with other
conceptual and empirical contributions (p. 5). Using discovery as a basis for contribution, this paper has
reviewed and synthesized a large body of literature to take us forward towards empirically assessing SD -
orientation as a construct and thereby enabling researchers to quantifiably assess its impact on various facets of
performance. To achieve this we have also provided a synthesis of previously unconnected fields of knowledge.
This has not yet been achieved in the extant literature and as such represents a considerable contribution.
SD-logic, thus, emerges as a unifying theory for marketing thought, and in this perspective it urges
marketers to modify the traditional ways to approach strategies and decisions (Ballantyne & Aitken, 2007).
Since their seminal work on SD-logic, Vargo and Lusch have emphasized that a service-centred view of the firm
must be translated into requisite behaviours to enable a firm to attain a competitive advantage: a service-
centred view [] implies that the goal is to customize offerings, to recognize that the consumer is always a co-
producer, and to strive to maximize consumer involvement [] the resources must be developed and
coordinated to provide (to serve) desired benefits for customers [] It challenges marketing to become the
predominant organizational philosophy and to take the lead in initiating and coordinating a market-driven

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perspective [][Service-centred firms] must establish resource networks and outsource necessary knowledge
and skills to the network [] and they must learn to manage their network relationships (Vargo & Lusch,
2004, pp. 12-13).
Literature contends that the accomplishment of a competitive advantage through a service-centred view lies
in the translation of the SDL principles into consistent behaviours within the firm (e.g. Vargo & Lusch, 2008).
On the other hand, the implementation of these behaviours, in turn, have been argued as being encouraged,
developed and institutionalized through the development of one or more orientations (e.g. Lusch et al., 2007;
Ballantyne & Varley, 2006). This demonstrates a shift in the literature towards an understanding of the actions
that a company chooses to pursue when applying the principles of a service-centred view. This illustrates a
movement towards the conceptual development of what we term a service-dominant orientation (see, for
instance, Gummesson, 2008). This is particularly salient for two reasons. Firstly, this step represents a
significant starting point towards the development of a strategic measure of a service-centred view. This is
comparable to past works, including that of the marketing concept and the resource-based view, which have
provided an important lever for the theoretical development and empirical testing of their respective
orientations, namely market orientation (Jaworski & Kohli, 1988; Narver & Slater, 1990; Slater & Narver, 2006)
and resource orientation (Paladino, 2007; 2008; 2009). Secondly, as noted by Venkatraman (1989), the
conceptualization of strategic orientations is the key to enable the development of reliable, valid measures and
move forward with empirical research.
Overall, this paper contributes several relevant insights. First, it shows that SDL encompasses several
different strategic orientations, systematizing established knowledge in a broader theoretical perspective. This
provides support for the contentions put forward by Vargo and Lusch (2006a), where they note that the response
in the academic community to SDL ranges from scepticism to enthusiasm, passing by an intermediate state of
consideration of the theory as a new package making sense out of formerly established concepts. Indeed,
SDL plays a noteworthy role under both a theoretical and practical viewpoint in marketing wisdom. In fact,
several studies have demonstrated that companies indeed reflect the concurrent application of several
orientations (e.g. Paladino, 2008). As such, analyzing the impact of a single orientation at any one time is but a
limited view of the strategic orientation-performance link (Paladino, 2009). Olson and colleagues (2005), for
instance, contend that concurrent orientations are naturally and systematically in play in companies; this leads
the authors to state that the message for managers is not to ignore any of the orientations but rather to
prioritize them (Olson, Slater & Hult, 2005, p.61).
Though literature concerning the relationship between a single orientation and firm performance has often
shown positive effects (e.g. Cano, Carillat & Jaramillo, 2004), it has fallen short in justifying or explaining why
some variables remain insignificant or indeed surprisingly depict negative relationships (e.g. Grewal &
Tansuhaj, 2001; Han, Kim & Srivastava, 1998). In this paper, we note that the conceptual links between the
different strategic orientations of a service-centred view are both direct and indirect. Hence, strategic
orientations emerge not only as complementary, but also in many cases as synergistic and conceptually
entwined. Moreover, literature has observed that the concurrence of strategic orientations either enhances the
predictive power of the orientation/performance models (e.g. Olson et al., 2005; Paladino, 2008) or elicits
superior performance than the application of a single orientation (e.g. Paladino, 2009; Zhou et al., 2005). As
such, it is reasonable to hypothesize that using a SD-orientation as a predicting or a moderating variable in the
relationship between strategic (marketing) behaviour and firm performances should provide interesting insights
on the actual effectiveness of SDL in practice and also refine the outcomes related to single orientations in past
studies in a broader framework. In particular, we believe that the measures already developed for the single
orientations may be used conjointly in order to, at first, understanding how pervasive SDO is practice, in which
industries, size-classes, level of competitiveness in the market or other dimensions of classification SDO is more
adopted or present and inferring about why it is like this. Finally, by studying the impact of the concurrent
orientations on business performance, a preliminary discussion of the sustainability of a SDO in practice can be
faced.
Further, we presented a synthesis of orientations that have been empirically evaluated that could in parts
assist towards empirically assessing SDL without the need to reinvent the wheel. We also contend that there
are environments in which a SD-orientation may be ineffective, just as this is the case for the multiple
orientations that we have reviewed. Curiously, most of the empirical research in the SDL domain, has focused
on interpreting phenomena from a SDL perspective (e.g. Ngo & OCass, 2007; Etgar, 2008) or in eliciting
confirmation of SDL theory in company behaviours (e.g. Lusch, Vargo & Tanniru, 2010; Warnaby, 2009).
These studies often do not consider that SDL may be affected by contingencies, and as such, remains a gap in
the literature to be explored.
Finally, it is interesting to notice a consequence of the above-mentioned existence of studies showing
negative relationships between the strategic orientations analyzed in this paper and business performance, at
least under specific circumstances (e.g. Cano et al., 2004; Lumpkin & Dess, 1996; Han et al., 1998; Wiklund,
2000; Theoharakis & Hooley, 2008). This means that a SDO, if seen as the combination of other strategic

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orientations, might not be beneficial for the firm under certain circumstances. Obviously, empirical research on
the topic, which can be now grounded in the framework presented in this paper, could provide evidence
supporting or refuting this statement. Up until now, to our best knowledge, SDL scholars have not yet
considered the area of application of the SDL paradigm. In the glance of the results of this paper, we contend
that there is a possibility that SDO may be (temporally) ineffective in presence of specific contingent elements,
and this is a very important outcome in enhancing the falsificability of the SDL theory, thus its scientific value.

5 MANAGERIAL IMPLICATIONS
Since the managerial implications of each of the strategic orientations have been widely discussed in the
respective literature, the main area of interest for this work deals with the management implications of
concurrent orientations. Olson and colleagues (2005) suggest that there is the need for companies, when
endorsing multiple orientations, to prioritize them. As strategic orientations may be (at least partly)
contradictory (e.g. a resource orientation emphasizes the role of internal resources while market orientation
stresses more on the interface and external ones), the endorsement of a SDO may generate organizational
stresses. Hence, implementing a SDO should pass through an identification of the common traits of the different
orientations, and by an increased emphasis on them in order to move the organizational culture towards a
service-centred view. The main common trait of all the orientations presented is the knowledge-centricity. In
fact, beyond the obvious knowledge intensity of a learning orientation, as Day (1995) notes, marketing
capabilities in a market orientation lie also in the ability to generate market knowledge; a resource-based view
emphasize how superior knowledge is a key, difficult-to-imitate resource bundle; service orientation, by
focusing on interactions and adaptability, remarks market knowledge and employee empowerment as
fundamental levers to pursue service excellence, and; finally, entrepreneurship emphasizes the ability to get
knowledge and information before competitors to be proactive. So, the development of a SDO appears
intimately linked to the ability by the top management to nurture behaviours suited to continuously gathering
and sharing knowledge about the market, but also to empower employees by making them more prone and able
to provide customized responses to customer requests. An increase in the knowledge-intensity, also through an
increased autonomy by employees, of the company is thus required to pursue genuinely service-centric
behaviours.
Nonetheless, it must be noted that the gradual shift towards the service-centred view, and indeed the greater
autonomy for employees, enables a structural driver of complexity occurring in whatever service company: an
increase in variability in the offer provision, due to the human-centricity of a service-centred view making it
structural to obtain heterogeneous levels of performance by employees in the interaction with customers. This is
particularly remarkable taking into account how co-creation becomes a structural value generation activity, and
sets the basis for the development of new offers: different level of effectiveness in the interaction with the
customers may lead to very diversely effective ideas for new product/new service development. This remarks
once more how the resources involved in the establishment of a SDO do not belong only to marketing units, but
also R&D, customer service, sales, technical assistance, etc. Thus SDL impacts each organizational function and
as such, the companys mission and business model, urging companies to assume customer-centred approach in
all their processes. Over the last few years, several calls for an increase in the degree of influence of marketing
throughout the organization has placed renewed focus on areas including customer-centricity (e.g. Sheth et al.,
2000; Shah et al., 2006), marketing awareness and skills in strategic decision making (e.g. Homburg et al., 1999;
Lamberti & Noci, 2012). These outcomes support the idea of a shift towards SDL. In this respect, as Vargo and
Lusch (2004) suggest that the service-centred view is not only a trend in business, but also a general logic for
the public sector, even if in this view evidence is much more limited. Nonetheless, the idea of co-creation in the
public sector is not new, and it may assume different forms, including stakeholder participation in decision
making (e.g. Jamal & Getz, 1999; Lamberti et al., 2011; Li, 2006).
Finally, it must be noted that the turn towards an increasingly customer-focused, knowledge-intense
company with an increased autonomy by employees makes it harder and harder to communicate a solid,
univocal brand identity when approaching the market, especially whereas companies are large, hence with a
large number of both customers and employees interacting with the customers. This remarks how the challenge
of a shift towards a service-centred view is not merely cultural in nature, but it clearly depicts important
challenges at an organizational level, and especially in the establishment of business processes able to leave
enough degrees of freedom to interface resources when interacting with customers, but maintaining an identity
and a clear positioning in the overall relationship with the market, fundamental to get market success.

6 CONCLUSIONS
This study investigated the conceptual linkages between SDO, i.e. the strategic orientation of a company
endorsing the SDL principles and established strategic orientations in order to provide a first framework of the
characteristics of a company endorsing a service-centred view of the firm. The choice of five strategic

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orientations that are (i) established in literature, (ii) debated in terms of operationalisation and managerial
implications, (iii) impacting on the main processes of market relationship by the company, provided a first
comprehensive understanding of the nature of the impact of a SDO on the company-market relationship.
In this perspective, the main contribution lies with the identification of primary strategic orientations that
build towards the establishment of a service-centred view, setting the basis for further research examining the
link between SD-orientation and firm performance. We also briefly introduced the notion of a SD-orientation, as
comparable terminology to alternative orientations that are employed when examining the application of the
tenets of the broader theory, in this case, SDL.
We show that the five strategic orientations identified and analyzed (market orientation, resource
orientation, service orientation, and learning orientation), selected among the countless orientations proffered in
literature in the glance of relevance and operationability arguments, have strong conceptual associations with
SDL, thus with SDO. As such, SDL acts as a framework where concurrent orientations coexist. Moreover, we
show that a part of these linkages are indirect in nature, depicting possible correlations among strategic
orientations. This assists managers in prioritizing the orientations and provides scope further research to
examine the nature and effects of these interdependencies.
In conclusion, we contend that this work represents a first step to develop a framework to build towards an
empirical assessment of SDL. We do not contend that the framework is definitive or complete. Indeed there is
scope for further orientations to potentially be linked. Nonetheless, the main goal of this paper tackled with
reinforcing the linkage between the SDL theory and current managerial and marketing wisdom and to set the
basis for a development of empirical research on SDL. Indeed, we hope that this review will motivate an
empirical stream of inquiry to further our knowledge and understanding of the applicability of this area of
research.

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