Service-Dominant Orientation 2.0: Consideration of Sustainability Concerns

Abstract: Abstract Service-Dominant (S-D) logic suggests mutual strategic benefit for all actors of the value network (Vargo & Lusch 2016). However, theoretical reasoning lacks empirical validation of S-D logic implications for performance indicators as well as customer experience. First step in operationalization of S-D logic was undertaken by Karpen et al. (2012; 2015). The model nevertheless grasps dyadic relationship of company and customer, while S-D logic theory requires zooming out interactions to the level of multiple actors. Thus, to ensure multi-actor resource integration external environment has to be added. Additionally, sustainability concerns nowadays gain growing attention, which urges companies to reckon with environmental and societal issues to achieve strategic benefit.   The present paper aims at empirical testing of an extended framework of S-D orientation 2.0. Incorporation of Sustainability Interaction capability into the operational model proposed by Karpen et al. (2011) is expected to strengthen association between S-D orientation and customer-related indicators. The study is designed as quantitative explanatory research based on survey via questionnaire in the context of Ikea furniture retailing. Hypotheses to examine relationship between variables S-D orientation 2.0 and customer-related indicators are based on the S-D logic theory and research of Karpen et al. (2015). Hypotheses testing empirically supports the previous research regarding importance of S-D orientation in predicting customer-related indicators. Besides, S-D orientation 2.0 has superior fit over the previous model, which is explained by additional factor. Sustainability interaction as an additional value co-creation capability significantly influences market performance indicators, since corporate activities towards society and environment influences customer connection and loyalty to the company. The research has both theoretical and practical implications. From theoretical perspective the research further develops middle-range theory for abstract S-D logic framework by translating its premises into service-driving skills of company to co-create value in conjunction with customers. The contribution of the study is in inclusion of external environment, which ensures complexity of interactions between multiple actors, through sustainability interaction capability. Service-driving skills in form of corporate capabilities provide managers with practical guideline to improve customer experience and perception. Strategical implementation of interaction capabilities has a positive influence on customer-related indicators, while sustainability interaction capability enhances trust, affective commitment and repurchase intention. Thus, implementation of S-D orientation capabilities with reckoning sustainability issues provides companies with competitive advantage.