Service-Dominant Logic Foundations of E-Novation

Service-Dominant Logic Foundations of E-Novation

Stephen L. Vargo (University of Hawaii at Manoa, USA) and Robert F. Lusch (University of Arizona, USA)
DOI: 10.4018/978-1-60566-394-4.ch001


A major change is taking place in most national economies, and even the world economy. It has been variously described under rubrics of globalization, global flattening, and global outsourcing, and has resulted in debate over how firms and nations gain and retain competitive advantage. Innovation has become perhaps the most often used term to capture the process of achieving this competitive advantage.
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Contrasting Goods-Dominant With Service-Dominant Logic

The easiest way to conceptualize S-D logic is by contrasting it with G-D logic. In its most rudimentary form, goods-dominant logic postulates the following (see Vargo and Lusch 2004):

  • 1.

    The purpose of economic activity is to make and distribute products, ideally tangible goods, at a profit.

  • 2.

    These products are embedded with value (utility) by the firm(s) during the production and distribution processes.

  • 3.

    To maximize profits, production efficiency should be maximized; thus the (ideally tangible) good should be standardized, produced away from the market, and inventoried until demanded.

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