When and why do customer solutions pay off in business markets?

Stefan Worm (), Sundar G. Bharadwaj (), Wolfgang Ulaga () and Werner Reinartz
Additional contact information
Stefan Worm: BI Norwegian Business School, Department of Marketing
Sundar G. Bharadwaj: University of Georgia
Wolfgang Ulaga: Arizona State University

Journal of the Academy of Marketing Science, 2017, vol. 45, issue 4, No 6, 490-512

Abstract: Abstract Manufacturers invest in customer solutions to differentiate their offerings and sustain profitability despite declining margins from goods sales. Notwithstanding strong managerial and academic interest, an examination of whether and explanations for when and why solutions translate into superior performance are lacking. We test hypotheses developed from the resource-based theory and transaction cost economics, supplemented with in-depth theory-in-use interviews, on primary and secondary data collected from 175 manufacturers. From a model that corrects for endogeneity, the findings suggest that, compared with other service offerings, solutions are associated with increased return on sales. This positive profitability effect is enhanced in firms with greater sales capabilities; it is stronger in industries with greater buyer power but weaker in technology-intensive industries. These results caution against the simplistic view of solutions as a universal route to gaining competitive advantage and aid in better identifying the role of solutions in a manufacturer’s offering portfolio.

Keywords: Customer solutions; B2B services; B2B marketing; Firm performance; Return on sales; Differentiation (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (17)

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DOI: 10.1007/s11747-017-0529-6

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