Service-Dominant Logic and Performance-Based Contracting: A Systems Thinking Perspective

David Nowicki (), Brian Sauser (), Wesley Randall () and Robert Lusch ()
Additional contact information
David Nowicki: Jim McNatt Institute for Logistics Research, University of North Texas, Denton, Texas 76203
Brian Sauser: Jim McNatt Institute for Logistics Research, University of North Texas, Denton, Texas 76203
Wesley Randall: Jim McNatt Institute for Logistics Research, University of North Texas, Denton, Texas 76203
Robert Lusch: Department of Marketing, University of Arizona, Tucson, Arizona 85721

Service Science, 2018, vol. 10, issue 1, 12-24

Abstract: This paper extends recent theoretical advances by merging service-dominant logic (S-D logic) and performance-based contracting (PBC). S-D logic is a conceptual frame of reference that defines supply chain knowledge and skill as its fundamental building blocks of strategic benefit. Cocreation of value between actors and beneficiaries is central to S-D logic and is measured through performance outcomes. PBC is a transformational departure from traditional supply chain strategies that focuses on delivering performance instead of goods and services. PBC has found increasing use in large-scale complex systems where the postproduction costs exceed the production cost, such as defense, transportation, and healthcare. These systems are commonly called sustainment-dominated systems (SDSs). We use systems theory and the Boardman Soft Systems Methodology to develop a systemigram that corresponds to the 11 foundational premises of S-D logic in the context of PBC. We also verify the use of the systemigram as an instrument to instantiate systems thinking and move S-D logic from an abstract framework to a more actionable framework. This paper provides managers and researchers a systematic insight into how investment into knowledge, skills, and the cocreation of value can drive improved SDS life-cycle affordability in the context of PBC.

Keywords: logic; language and modeling; service systems and dynamics; theory and principles (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:orserv:v:10:y:2018:i:1:p:12-24

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