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João Fernando Marinho Vieira
Servitization implications on service classifications
Dissertação de Mestrado
Mestrado em Sistemas de Informação
Trabalho efetuado sob a orientação do/da/de
Professor Doutor Carlos Sousa Pinto
RESUMO
O sector secundário foi confrontado, durante os ultimos trinta anos, com uma crescent saturação dos
seus principais mercados de produtos, causados pela crescente internacionalização da sua actividade
produtora para paises em desenvolvimento. Este fenomeno causou uma explosão do sector terciário,
sendo agora os serviços a principal actividade economica dos paises desenvolvidos, o que levou a que
se sugerisse que, para sobreviver em economias de serviço, as empresas do sector secundário teriam
de expandir a sua actividade verticalmente na cadeia de valores, de forma a não estarem dependentes
de concorrer com base no preço. Como a escola clássica de marketing estava demasiado focada na
distribuição e troca de comodidades e bens, diminuindo frequentemente a importância dos serviços para
as economias, os investigadores começaram por se afastar desta escola de pensamento e
desenveolveram novas filosofias e abordagens ao marketing, ciência organizacional e gestão de
produção.
Este trabalho visa a apresentação de uma revisão de literatura, focada nos novos pardigmas de serviços
(Servicização, Ciência de Serviços e Service-Dominant Logic), que servirá como base para a construção
de um modelo de classificação de serviços, focado no impacto da servicização na fronteira de produtos
e serviços.
ABSTRACT
Manufacturers were faced, in the last thirty years, with a growing saturation of their core product markets,
caused by the growing internationalization of their manufacturing activity to developing countries. These
caused the service sector to explode and now services are the mains economic activity in the Western
World, which led to the suggestion that to survive in this service economies, the firms in the manufacturing
sector would have to move upwards the value chain, so they would not be dependent of cost-based
competition. As the classical marketing school was too focused on distribution and exchange of
commodities and goods and, frequently, hindered the importance of services to the economies,
researchers started to drift from this school of thought and developed new philosophies and new
approaches to marketing, organizational science and production management.
This work aims to present a literature review on these new service paradigms (servitization, Service
Science and Service-Dominant Logic), which will serve as basis to the construction of a service
classification model, focused on the impact of servitization on the frontiers of services and products.
CONTENTS
Resumo............................................................................................................................................... ii
Abstract.............................................................................................................................................. iii
Contents ............................................................................................................................................. v
Figure List ......................................................................................................................................... vii
Table List ........................................................................................................................................... ix
Acronym List ...................................................................................................................................... xi
1. Introduction .............................................................................................................................. 13
2. Analysis of the literature ............................................................................................................ 13
2.1 Research Method .............................................................................................................. 14
3. Key findings .............................................................................................................................. 18
3.1 Servitization ...................................................................................................................... 18
3.1.1 Servitization drivers .................................................................................................... 20
3.2 Service-Dominant Logic ..................................................................................................... 21
3.3 Service Science, Management and Engineering.................................................................. 24
3.3.1 Service Systems ........................................................................................................ 25
4. Design Science Research .......................................................................................................... 26
4.1 Schedule ........................................................................................................................... 27
5. Conclusions .............................................................................................................................. 27
Bibliography ..................................................................................................................................... 29
FIGURE LIST
Figura 1 The product-service continuum (adapted from Oliva & Kallenberg (2003) ............................. 19
Figura 2 Service dominant marketing (adapted from Lusch, Vargo, & O’Brien (2007) ......................... 23
Figura 3 Value co-creation among service systems (adapted from Vargo, Maglio, & Akaka (2008) ...... 26
Figure 4 Gantt Diagram .................................................................................................................... 27
TABLE LIST
Table 1 Most cited articles on "Service Science" (search realized in 2017/12/22) ............................ 15
Table 2 Most cited articles on "Servitization" (search realized in 2017/12/22) .................................. 16
Table 3 Most cited articles in "Service Dominanant Logic" (search realized in 2017/12/22) .............. 17
Table 4 Overview of the publications in which reviewed articles were published ................................. 17
Table 5 Definitions of servitization ..................................................................................................... 20
Table 6 Service-Dominant Logic Foundational Premises (adapted from Vargo & Akaka, 2009) ............ 22
Table 7 Summary of principles of Service Science (adapted from Barile & Polese, 2010) ................... 24
ACRONYM LIST
IHIP Intangible, Heterogeneous, Inseperable, Perishable
SSMED Service Science, Management, Engineering and Design
PSS Product-Service Systems
DSR Design Science Research
POP Publish or Perish
ICT Information and Communication Technologies
GD-L Goods-Dominant Logic
SD-L Service-Dominant Logic
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1. INTRODUCTION
Service, as a concept, has been suffering several transformations throughout the centuries. Since its
characterization as ”unproductive labour” (A. Smith, 1776) to the present moment, numerous scholars,
from economics and other fields, have produced an enormous amount of research work concerning this
subject. Its nature has been, however, mostly static until the late 1970s, when Hill defined service as “a
change in the condition of a person, or of a good belonging to some economic unit, which is brought
about as the result of the activity of some other economic unit, with the prior agreement of the former
person or economic unit” (Hill, 1977). Until the 1980s, the so-called IHIP characteristics (intangible,
heterogenous, inseparable and perishable) were the paradigm in service related literature (Fonseca &
Sousa Pinto, 2014), focusing mainly on tracing the differences between services and goods.
As the most developed countries evolved towards service economies (Kenessey, 1987), the ecosystem
for marketing changed greatly and therefore, changed the nature of service. In the light of this new view
over marketing, a new service definition was born. Service was, by then, perceived as the application of
specialized competences (knowledge and skills) through deeds, processes, and performances for the
benefit of another entity or the entity itself (Vargo & Lusch, 2004). This included all procedures which
could add value to the receiver of the service in question.
This new scope on services did not, however, reflect solely in its definition. The surging of new works and
study fields, such as service science, service systems and servitization brought a more renewed view on
the subject, mirroring a new service market paradigm. Since services are estimated to be over 60 percent
of the gross national product in Western democracies (O’Shaughnessy & O’Shaughnessy, 2009b), the
impact of the changes on service classification should be recognized as an important study case.
2. ANALYSIS OF THE LITERATURE
The aim of this chapter is to identify, interpret and summarize the existing literature on the topic of
servitization and its impact on service classification. The focus were articles that are central and relevant
to servitization and service science. Papers that are related with service characterization, such as Hill
(1977) or Gadrey (2000) are accounted as relevant, as they provide a roadmap for the evolution of the
activities described as “services” in the last decades. Within the scope of this review there will be articles
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on service science, management, engineering and design (SSMED) and service systems, as Spohrer &
Kwan (2009) and Lusch, Vargo & Wessels (2008).
There is a number of research communities, academic, business or governmental, that take close
concern with servitization (T. S. Baines, Lightfoot, Benedettini, & Kay, 2009)(Lightfoot, Baines, & Smart,
2013). This work will focus on Service Science, Management Engineering and Design (SSMED), but there
are important contributions from the manufacturing sector, mainly by Scandinavian researchers, to the
business model known as Product-service Systems (PSS). This research community seek to address the
ability of product-service combinations to improve social, economic, environmental and industrial
sustainability (Lightfoot et al., 2013).
In order to guide this literature review, a series of questions have been posed. Even if these will not
necessarily lead to research findings, they will ensure a thorough and comprehensive understanding of
the existing work on this theme. These questions are:
1. How is service generally defined?
2. What is servitization and is it defined in literature?
2.1 Research Method
A review of prior, relevant literature is an essential feature of any academic project (Webster & Watson,
2002). The cumulated knowledge compiled through a systematic review, by searching, filtering and
classifying articles and papers result in the full understanding on the subject at hand. Design Science
Research (DSR) promotes the following patterns to conduct a literature search:
• Familiarization with new area;
• Understanding Research Community;
• Framework Development;
• Industry and Practice Awareness.
As DSR also indicates, the last step can and should be revisited in latter phases of the research (Vaishnavi
& Kuechler Jr., 2008).
To address the previously stated research questions, several searches were undertaken, using several
academic search engines. This initial phase brought forward an ample scope of the subjects in study, as
well as the identification of the seminal works in the different research communities. We used the following
search engines:
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• RepositoriumUM;
• Google Scholar;
• IEEE Explore;
• Elsevier Science Direct;
• Web of Science;
• Scopus;
• Emeraldinsight.
In order to ensure the quality e relevance of the articles to include in the review, we took into special
account those published in highly referenced scientific journals, as Industrial Marketing Management,
International Journal of Operations & Product Management; Journal of the Academy of Marketing Science
or Communications of ACM. Harzing’s Publish or Perish (PoP) software program was used in order to
collect these articles. PoP retrieves and analyses academic citations and allows the user to calculate a
series of citation metrics, which can be used to evaluate the impact of the articles in analysis. The
keywords used in this search were: Service Science, Servitization and Service-Dominant Logic.
Table 1 Most cited articles on "Service Science" (search realized in 2017/12/22)
Cites Author Title Year Publication
1212 J Spohrer, PP Maglio, J Bailey et
al.
Steps toward a science of service systems 2007 IEEE Computer Society
977 AL Ostrom, MJ Bitner, SW Brown
et al.
Moving forward and making a difference: research
priorities for the science of service
2010 Journal of Service Research
913 PP Maglio, J Spohrer Fundamentals of service science 2008 Journal of the Academy of
Marketing Science
631 J Spohrer, PP Maglio The emergence of service science: Toward
systematic service innovations to accelerate co‐
creation of value
2008 Production and Operations
Management
542 RF Lusch, SL Vargo, G Wessels Toward a conceptual foundation for service
science: Contributions from service-dominant logic
2008 IBM systems journal
413 PP Maglio, SL Vargo, N Caswell et
al.
The service system is the basic abstraction of
service science
2009 Information Systems and e-
business Management
386 SL Vargo, MA Akaka Service-dominant logic as a foundation for service
science: clarifications
2009 Service Science
194 ICL Ng, R Maull, N Yip Outcome-based contracts as a driver for systems
thinking and service-dominant logic in service
science: Evidence from the defence industry
2009 European Management Journal
159 J Spohrer, SK Kwan Service science, management, engineering, and
design (SSMED): an emerging discipline--outline
and references
2009 International Journal of Information
Systems in the Service Sector
153 J Spohrer, PP Maglio Service science: Toward a smarter planet 2010
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All articles with subjects not related to the object of study were removed from this tables. In Table 1
appears six articles with authorship from Spohrer, Maglio, followed by Vargo with two contributions, with
a contribution that gives insight into Service-Dominant Logic.
Table 2 Most cited articles on "Servitization" (search realized in 2017/12/22)
Cites Author Title Year Publication
1467 S Vandermerwe, J Rada Servitization of business: adding value by adding
services
1988 European Management Journal
821 T Baines, H Lightfoot, O
Benedettini et al.
The servitization of manufacturing: A review of
literature and reflection on future challenges
2009 Journal of Manufacturing Technology
Management
759 A Neely Exploring the financial consequences of the
servitization of manufacturing
2008 Operations Management Research
295 T Baines, H Lightfoot, J Peppard
et al.
Towards an operations strategy for product-
centric servitization
2009 International Journal of Operations &
Production Management
225 A Neely The servitization of manufacturing: an analysis of
global trends
2007 14th European Operations
Management Association Conference
186 IV Kastalli, B Van Looy Servitization: Disentangling the impact of service
business model innovation on manufacturing firm
performance
2013 Journal of Operations Management
126 A Neely, O Benedettini, I Visnjic The servitization of manufacturing: Further
evidence
2011 18th European Operations
Management Association Conference
102 B Clegg, Jillian MacBryde et al. The servitization of manufacturing: A systematic
literature review of interdependent trends
2013 International Journal of Operations &
Production Management
86 T Baines, H Lightfoot Made to serve: how manufacturers can compete
through servitization and product service systems
2013
84 T Baines, H Lightfoot Servitization of the manufacturing firm: Exploring
the operations practices and technologies that
deliver advanced services
2013 International Journal of Operations &
Production Management
The term “servitization” was coined by Vandermerwe and Rada (1988), and their article “Servitization of
business: adding value by adding services” is the seminal work on this subject and, by far, the most cited.
Baines and Lightfoot also made several contributions to the research on servitization, four of those present
in Table 2. Even if some are outside of this list, article by Spring, Araujo, Neely, Benedettini and Gebauer
were also reviewed. They do not appear in this list because servitization is the most mature subject of
study in this review, this reflecting in the numerous number of articles and research works available in
various academic databases.
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Table 3 Most cited articles in "Service Dominanant Logic" (search realized in 2017/12/22)
Cites Author Title Year Publication
3847 SL Vargo, RF Lusch Service-dominant logic: continuing the evolution 2008 Journal of the Academy of Marketing
Science
1327 RF Lusch, SL Vargo Service-dominant logic: reactions, reflections
and refinements
2006 Marketing Theory
1319 RF Lusch, SL Vargo, M O'Brien Competing through service: Insights from
service-dominant logic
2007 Journal of Retailing
792 SL Vargo, RF Lusch The service-dominant logic of marketing: Dialog,
debate, and directions
2014
542 RF Lusch, SL Vargo, G Wessels Toward a conceptual foundation for service
science: Contributions from service-dominant
logic
2008 IBM Systems Journal
450 MA Merz, Y He, SL Vargo The evolving brand logic: a service-dominant
logic perspective
2009 Journal of the Academy of Marketing
Science
409 B Stauss, K Heinonen, T
Strandvik et al.
A Customer-Dominant Logic of Service 2010 Journal of Service Management
386 SL Vargo, MA Akaka Service-dominant logic as a foundation for
service science: clarifications
2009 Service Science
358 E Gummesson Extending the service-dominant logic: from
customer centricity to balanced centricity
2008 Journal of the Academy of Marketing
Science
341 J Pels, SL Vargo Toward a transcending conceptualization of
relationship: a service-dominant logic
perspective
2009 Journal of Business & Industrial
Marketing
Service-Dominant Logic is a term coined by Vargo and Lush in their influential 2004 article “Evolving to
a New Dominant Logic for Marketing” and they are the most cited authors on this subject, even if there
are numerous contributions from other authors, as Stauss and Gummeson.
Table 4 Overview of the publications in which reviewed articles were published
Journal of the Academy of Marketing Science 4
International Journal of Operations & Production Management 3
Service Science 2
IBM Systems Journal 2
European Management Journal 2
The publications come from a high number of publications, as there are several research communities
working in these subjects, under different scopes. Servitization features several articles from the
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production management research community, some of those appear in the International Journal of
Operations & Production Management.
3. KEY FINDINGS
3.1 Servitization
The term “Servitization” was first coined by Vandermerwe and Rada in 1988 in order to explain the
growing tendency of manufacturing firms to “offer fuller market packages or bundles of customer-focused
combinations of goods, services, support, self-service, and knowledge”. Since then it has been the object
of study of multiple articles, moved by the belief that a move towards servitization is a means to create
additional value, by adding capabilities for a, otherwise, traditional and somewhat stagnated
manufacturing sector (T. S. Baines et al., 2009).
Even if it is not a recent transformation , as it is possible to trace integration of manufacturing and services
back to the 1850’s, through the integration of non-manufacturing, service elements in 1800’s
(Schmenner, 2009), it has accelerated in recent years, as the world economies are becoming dominated
by the service sector, and the manufacturing sector is deploying its plants in developing countries. In fact,
leading companies, such as GE, IBM, Rolls Royce, Fujitsu and Siemens have already started to sustain
themselves on the basis of value delivered by shifting their market share from manufacturing to more
product-service-orientated systems. IBM was, in the late 80’s, a firm tormented with layoffs and in face
of looming disaster. Its recovery was credited to the shift from computer manufacturing to a freestanding
software business. Instead of selling personal computers, IBM now focused in offering business solutions
drawn from a portfolio of consulting, delivery and implementation services, enterprise software, systems
and financing, achieving record breaking revenues in this new business model (Ahamed, Inohara, &
Kamoshida, 2013). Vandermerwe and Rada (1988) argued that there were three reasons why
manufacturing should look to servitization as pertinent strategy: first, to lock out competitors, building
strategic industry entering barriers; second, to lock in customers, building consistent synergies with them;
and third, to increase the level of differentiation, an increasingly harder mission, especially in mature
sectors, such as automotive and aeronautical industries.
Customer centricity plays an important role in a servitized firm strategy. Customers are now provided with
more tailored solutions, result from the shift in service offering from product-oriented service to user’s
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processes oriented services, as now the firms focuses in ensuring the proper functioning and use of the
sold product, raising efficiency and effectiveness of end-user’s processes related to said product (T. S.
Baines et al., 2009).
Customers are, also, more inclined to contract for capability in detriment of product buying. This has
roots in Rolls Royce business model Power-by-the-hour. When confronted with the reduced demand for
spare parts, Rolls Royce devised a contract with the US Navy for the provision of maintenance and
logistical support for the aircrafts equipped with Rolls-Royce Turbomeca F405 Adour engines (D. Smith,
2013).
Figura 1 The product-service continuum (adapted from Oliva & Kallenberg (2003)
Servitization is, also, closely related to Product-Service Systems (PSS). To some extent, a PSS can be a
special case of servitization, one which values asset performance or utilization rather than ownership,
and achieves differentiation though the integration of product and services that provide value in use to
the customer (Lightfoot et al., 2013) . Typically, PSS involve offerings that include one or more product
functionality and one or more associated service functionality (Kuijken, Gemser, & Wijnberg, 2015). A
solution based on a PSS model presents eight stages in the supply process: production, business analysis,
solution design, supply network design, implementation, operation, support and disposal (Brax & Visintin,
2015). Literature suggests three forms of PSS: product-orients PSS, use-oriented PSS and result-oriented
PSS. In product-oriented PSS, ownership of the tangible product is transferred to the customer, but the
additional services directly related to the product are assured by the manufacturer. In use-oriented PSS,
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the ownership is retained by the provider, who sells the functions of the product trough modified
distribution and payment systems (sharing, pooling or leasing). In result-oriented PSS, the provider
replaces services for products (Neely, 2008).
It is possible to find a wide array of definitions on servitization on literature from various research fields,
such as operations management, service management and service marketing. Parallel definitions were
excluded, such as product-service systems, tertiarization and service diffusion.
Table 5 Definitions of servitization
Author Definition of servitization
(T. S. Baines et al., 2009) Innovation of an organization’s capabilities and processes to shift from selling
products to selling integrated products and services that deliver value in use.
(Kowalkowski, Gebauer, Kamp, &
Parry, 2017)
The transformation processes whereby a company shifts from a product-centric
to a service-centric business model and logic
(Spring & Araujo, 2013) Shift in the vertical scope of firm’s activities from those typically classified as
manufacturing by standard industry classification to those similarly classified as
services.
(Tether & Bascavusoglu-Moreau,
2012)
Provision of services to clients by manufacturing firms.
(L. Smith, Maull, & Ng, 2012) Offering complex packages of both product and service to generate superior
customer value and thus enhance competitive edge.
(Vandermerwe & Rada, 1988) Market packages or “bundles” of customer-focused combinations of goods,
services, support, self-service and knowledge.
3.1.1 Servitization drivers
There are several advantages in adopting a servitized business model recorded in several articles
throughout the literature, which can be sorted in three sets of driving factors to pursue a servitized
strategy: financial, strategic and marketing (T. S. Baines et al., 2009).
Financial Drivers
By developing its services, a firm will play a larger role in the value chain, increasing its turn-over. While
one-off transactions of product systems are not often repeated during months or years with the same
customer, the sale of services follows a recurring pattern, usually in the form of maintenance contracts
or consumables supply, generating a steadier cash flow (Malleret, 2006) (Sawhney, Blasubramanian, &
Krishnan, 2004). Servitization can generate the possibility for firms to provide services that specifically
21
support customers that want to maintain control over their own operations, increasing their operational
efficiency through customer insight. This often occurs in firms that promote the use of ICT’s for customer
relation management (CRM) or implementing online customer interfaces in front-end operations
(Coreynen, Matthyssens, & Van Bockhaven, 2015).
Strategic Drivers
It is suggested, throughout the literature, that a service strategy, within the manufacturing sector can be
a “smart strategy”, as it enables firms to side-track the difficulty in maintaining technological innovation
while keeping low prices as a lasting strategy (Mathieu, 2001). Instead, it promotes smart differentiation
strategies and can help in building industry barriers to entry (Mathieu, 2001).
In mature markets, the customers can happen to fall to what is known as the commodity trap. This occurs
when a customer cannot distinguish a true value advantage between two or more competitors, defaulting,
normally, to a price-based decision (Shore, 2012).Literature suggest that firms can better avoid what is
known as commodity trap, by reducing the distance between itself and its customers, through expansion
of product-related services (Matthyssens & Vandenbempt, 2008) (Opresnik & Taisch, 2015).
Marketing Drivers
The manufacturing industry has undergone something of a service revolution. Until the 1980’s , services
in manufacturing firms were limited to after-sales services (Gebauer & Fleisch, 2007). he change of
landscape in western economies pushed the manufacturing sector deeper to a service logic, as there
resides a potential for a higher profit margins, especially in the case of manufacturers with high installed
product bases, such as the aerospace, locomotive and automotive industries (T. Baines, Lightfoot,
Benedettini, Whitney, & Kay, 2010). The capacity for augmenting goods offering and client appealing is
broadly evidenced in literature (Vandermerwe & Rada, 1988)(Mathieu, 2001)(L. Smith et al.,
2012)(Visnjic Kastalli & Van Looy, 2013) (Valtakoski, 2015), as is the strengthening of the client’s
confidence and the supplier’s credibility (Mathieu, 2001).
3.2 Service-Dominant Logic
Services, as an economic activity, has certainly evolved in the last decades. The classical service
characteristics of intangibility, heterogeneity, inseparability and perishability (IHIP) are no longer suitable
to differentiate service from goods and are dimed as inaccurate and misleading, as services have become
the largest part of most industrialized nation’s economies (Moussa & Touzani, 2010) (Spohrer, Maglio,
22
Bailey, & Gruhl, 2007) and knowledge and competence-based cooperation between firms would be the
economic paradigm in the future (Vargo & Lusch, 2004). In literature, this is reported as an evolution
from a good-dominant logic (GD-L) to a service dominant logic (SD-L).
This new marketing paradigm migrates customers from buyers of value to collaborators and value co-
creators (Olexova & Kubickova, 2014), redefining marketing itself as a process to do things in interaction
with the customer (Vargo & Lusch, 2004).
While a GD-L is centred on the economic exchange of tangible goods that are embedded with value during
manufacturing process, SD-L places service as the primary focus of exchange activity, relegating good
exchange to a subset of economic exchange (service-delivery). Instead, it focuses on the benefits of
acquiring specialized competences, as knowledge and skills. These competences are known as operant
resources. In GD-L, an operand resource was the production factors which the firm converted to outputs
at low cost, being the technology used in the production process classified as operant resource(Vargo &
Lusch, 2004). Operant resources can be hierarchized as basic, composite or interconnected. A basic,
operant resource enables a more efficient production or permits a more effective market offering. A
composite, operant resource consists in two or more operant resources that collectively enable the firm
to increase levels of sustainability if competitive advantage. An interconnected, operant resource is a
combination of two or more distinct basic/high-order operant resources wherein the lower order resources
interact and reinforce each other in enabling the firm to further production efficiency and sustainability of
competitive advantage (Madhavaram & Hunt, 2008).
Table 6 Service-Dominant Logic Foundational Premises (adapted from Vargo & Akaka, 2009)
Foundational Premise Justification
FP1 Service is the fundamental basis of exchange. The application of operant resources (knowledge and
skills), “service,” is the basis for all exchange. Service is
exchanged for service.
FP2 Indirect exchange masks the fundamental basis of
exchange.
Goods, money, and institutions mask the service-for-
service nature of exchange.
FP3 Goods are distribution mechanisms for service
provision.
Goods (both durable and non-durable) derive their value
through use – the service they provide.
FP4 Operant resources are the fundamental source of
competitive advantage.
The comparative ability to cause desired change drives
competition.
FP5 All economies are service economies. Service (singular) is only now becoming more apparent
with increased specialization and outsourcing.
23
FP6 The customer is always a cocreator of value. Implies value creation is interactional.
FP7 The enterprise cannot deliver value, but only offer value
propositions.
The firm can offer its applied resources and
collaboratively (interactively) create value following
acceptance, but cannot create/deliver value alone.
FP8 A service-centred view is inherently customer oriented
and relational.
Service is customer-determined and co-created; thus, it
is inherently customer oriented and relational.
FP9 All economic and social actors are resource integrators. Implies the context of value creation is networks of
networks (resource-integrators).
FP10 Value is always uniquely and phenomenological
determined by the beneficiary.
Value is idiosyncratic, experiential, contextual, and
meaning laden.
Another foundational premise in service marketing theory is that the enterprise can only make value
propositions. Classical marketing dictated that consumer needed to find embedded value, in the tangible
good, useful to his own activity, determining that the value in that good was embedded during the
manufacturing process. The concept of value cocreation denied that possibility, forcing service marketing
to redefine the value-creation process. The focus of marketing shifted from distribution to creation, in
partnership with customer, increasing the customer’s perception of the product’s value (Grönroos, 2006).
The value in exchange was now embedded in the knowledge or competences (operant resources) needed
to create the good or service available to the customer (Vargo & Lusch, 2004).
Figura 2 Service dominant marketing (adapted from Lusch, Vargo, & O’Brien (2007)
24
This new scope on service marketing was not without critique. O’Shaughnessy & O’Shaughnessy (2009)
argued against, among other things, the definition on services, the enunciation of operant and operand
resources, and the approach of “marketing as technology” brought by Vargo and Lusch.
3.3 Service Science, Management and Engineering
Many manufacturing firms have started a migration process to the service sector, as knowledge-intensive
business services are becoming more lucrative than their manufacturing counterparts (Kenessey, 1987).
One of the seminal cases in this migration was IBM, who many still as solely a consider an information
technology (IT) company, but has, since it has acquired PriceWaterhouseCoopers Consulting in 2002,
broaden its portfolio to business consulting and outsourcing services (Spohrer & Maglio, 2008).
Within IBM grew an interdisciplinary research that sook to integrate efforts of different research
communities, such as computer science, operations research, engineering, management, marketing,
social and cognitive sciences and legal sciences, in an unified and systematic discipline known as service
science, management and engineering (SSME) (Moussa & Touzani, 2010). Other authors describe the
birth of service science as the increasing importance of services settled against the backdrop of low
productivity in the service industry (Abe, 2005). Service science aims to contribute to systematic
innovation and improved productivity through the probing of the value of service providers and clients
within collaborative activities (IBM Research, 2004).
Service science is built around ten basic concepts: Resources, service system entities, access rights,
value-proposition-based interactions, governance, mechanisms, service system ecology, stakeholders,
measures and outcomes.
Table 7 Summary of principles of Service Science (adapted from Barile & Polese, 2010)
SSME Basic Concepts Main Focus
Resources: Everything that has a name and is useful can be viewed as a resource Useful instruments for activities
Entities: Some complex resource configurations can initiate actions, and these are
called service system entities
Openness of evolving systems
Access Rights: dealing with the social norms and legal regulations associated with
resource access and usage
Supra-Systems relevance
Value Co-creation Interactions: also known as value-proposition-based
interaction mechanisms
Joint process within Service
Systems
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Governance Interactions: Intuitively, governance mechanisms are a type of
value-proposition between an authority service system entity and a population of
governed service system entities
Common finality, internal and
external equilibrium
Outcomes: When service system interact, value co-creation is only one of the
possible outcomes
Value intended in an extended way
Stakeholders: the four primary types of stakeholders are customer, provider,
authority and competitor
Contextual influences and self-
regulation
Measures: the four primary types of measures are quality, productivity, compliance
and sustainable innovation
Up to now, only quality was taken
into account
Networks: also known as service system networks, service system entities interact
with other service system entities (normatively) via value-propositions
Networked embeddedness
Ecology: also known as service system ecology, the macro-scale interactions of the
populations of different types of service system entities
Service Ecosystems
3.3.1 Service Systems
According to Maglio and Spohrer (2008), service science seeks to explain the origins and growth of service
systems by combining organizational and human understanding with business and technological
understanding. These service systems comprise service providers and service clients working together to
coproduce value in complex value chains or networks (Spohrer et al., 2007) (Spohrer, Vargo, Caswell, &
Maglio, 2008) (Spohrer et al., 2008). They are dynamic value co-creation configurations of resources
(people, technology, organizations and shared information), which require a multidisciplinary approach.
It is here where service science and service-dominant logic started building common ground. Maglio &
Spohrer (2008) present SD-L as the “philosophical foundation” of service science and service systems
as its “basic theoretical construct”. Both SD-L and SSME hold that the integration of needs, resources,
information and objectives among providers and users stimulates co-creation processes (Barile & Polese,
2010). As some articles pointed out, SD-L must be anchored as a complex holistic theory, but still lacks
stronger empirical research to support its premises in practice (Olexova & Kubickova, 2014). Service
science represents the chance to put into practice and further mature the premises of SD-L.
26
Figura 3 Value co-creation among service systems (adapted from Vargo, Maglio, & Akaka (2008)
4. DESIGN SCIENCE RESEARCH
The methodological approach adopted in this dissertion is Design Science Research (DSR). DSR is na
analytical referential which contemplates a positivist and interpretative scope in investigation (Vaishnavi
& Kuechler Jr., 2008), and results in the production of na artefact that can assume the form of a
construct, model, methods ou instations (Hevner, March, Park, & Ram, 2004). In this dissertion, the
artefact will be a service model which takes into account the changes brought by the new paradigms in
service marketing, as service science and servitization.
DSR is based in na iterative process that considers the possibility of returning to the initial phases in order
to mature the artifact in order to bring it closer to what is expected, and has five fundamental phases:
• Awareness of Problem
• Suggestion
• Development
• Evaluation
• Conclusion
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4.1 Schedule
This is the proposed schedule for this dissertion.
Figure 4 Gantt Diagram
5. CONCLUSIONS
Servitization, SSMED and SD-L appear, even if by the authory of different researchers, not isolated from
each other. They represent the growing awareness that marketing no longer reflected the present market
reality, and that various sectors were stagnated for different reasons. IBM could no longer cope with the
appearence of more agile and sustentable business models in the hardware sector, opting to provide
technological consulting, a service where few firms had the same king of experience and maturity as they.
Rolls Royce were staggered by the growing R&D expense and small demand for spare parts, choosing to
provide the functionality of the motors instead of the motors themselves. This change helped to bring a
new logic to marketing (SD-L) and a new discipline that studied the impact of service systems (SSMED).
The review of literature provided na insight on the evolution and impact that services have on marketing,
and its possible to see that the concept of service itself has changed to pace with this new paradigms.
The purpose of this dissertion is to construct a service classification model, trough which will be possible
to measure the impact of servitization on the nature of services and their frontiers.
29
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