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Session Overview
02-12: Michael Ehret
Friday, 19/Jul/2019:
11:00am - 11:25am

Seminar Room 3-7

Chair: Leon Gim Lim

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Competitive Advantage in the Service Economy

Authors: Michael Ehret (Nottingham Trent University, UK), Jochen Wirtz (National University Singapore)

Reflecting on the rise of the service economy, a growing range of researchers is questioning the value of asset-ownership for businesses (Lovelock & Gummesson 2004; Wittkowski, Möller, Wirtz, 2012; Quinn 2000). Service researchers show rationale and evidence for the value of nonownership services enabling clients to enjoy benefits like transportation without bearing the burdens of assets used for service provision like cars. Authors have been identifying platforms as enablers for asset-light business models offering services at historically unprecedent scale. In the field of strategy, a growing range of world class service provides empowers companies to substitute almost any asset or activity with unbeatable cost-quality ratios. Taken as whole, this growing body of literature shows strong rational and evidence for the nonownership value of services, where providers offer services as substitutes reducing the burdens of ownership, calling researchers to reconsider the role of ownership if not assume ownership as obsolete.

However, service researchers have yet to consider both evidence and rationale for the contribution of ownership in forming value propositions of service businesses. World-leading platform companies are intensifying their investments in communication and information infrastructures, positioning them as owners of hubs for the configuration of nonownership value propositions like ride-hailing, use of accomodation or facilities or industrial services. Economic theories offer strong arguments for positive impact of asset ownership, especially as an efficiency condition for transactions or its capacity to empower entrepreneurs to direct ventures and appropriate profits (Grossman & Hart 1986; Foss, Foss, & Klein 2007; Mises, 2007, 2008). Thus, economic perspectives have yet to consider the role of ownership in enabling mutually beneficial modes of value creation and to consider ownership configuration a key element of service strategies unlocking mutual value propositions for providers and clients.

The purpose of this article is to demonstrate the role of ownership in enabling mutually beneficial modes of value creation in service transactions and explore its implications for service strategies. On the theory level, the article explores the role of ownership as institution of uncertainty sharing for the mutual benefit of providers and client in value cocreation. As a major implication, we are able to identify the contribution of ownership configurations in value cocreation. We further explore three types of cocreation advantage building on ownership configurations in theory-building case study approach (Eisenhardt & Graebner, 2007; Ridder, 2017; Siggelkow, 2007):(1) uncertainty consolidation through asset championship, with the case of Indigo consolidating airplane ownerhip (2) cocreation of opportunities, with the case of Qualcomm, offering the world largest pool of mobile technology for the industry (3) meta-ownership of cocreation infrastructures as cocreation assets, with the case of Amazon, operating the front-end retailing and the back-end webservices as infrastructures for digital services.

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