Market Resistance to Innovative Service-Focused Business Models: Insights from the Service-Dominant Logic

Abstract:     
Innovative business models in B-to-B settings allow suppliers to renew their business and to tighten the customer/supplier relationship while customers may benefit from more innovative and customized solutions. Astonishingly, the pace of adoption of these new business models is rather low. By now, it is still open what the final reasons for this market resistance might be. We analyze this sluggish adoption by making reference to total cost of ownership (TCO) concepts as a prominent example of innovative, service focused business models. To this end, we mirror the diffusion and the obstacles to trade in the light of the concept of the service-dominant logic (SDL), developed by Vargo and Lusch (2004). So doing, we employ the competence-based theory of the firm (CbTF) as our theoretical foundation. We propose that the diffusion of innovative service business models such as TCO depends on the stage of the transition process from a goods-dominant to a service-dominant logic in business and society. Thus, we raise our research question: To what extent is the sluggish adoption of TCO business models influenced by the state of the transition process from the goods-dominant to the service-dominant logic? Due to newness and complexity of our research topic we employ qualitative research and conduct case studies to better understand the reasons of sluggish TCO adoption.

Number of Pages in PDF File: 13

Keywords: Service Innovation, Business Models, Total Cost of Ownership, Service-Dominant Logic, Competence-based Theory of the Firm

JEL Classification: D21, F23, L10, L21, L60, L80, M19, O31

working papers series