406 American Marketing Association / Winter 2008 PROPOSING AND CONCEPTUALIZING A SERVICE-DOMINANT STRATEGIC ORIENTATION Ingo O. Karpen, The University of Melbourne, Australia Liliana L. Bove, The University of Melbourne, Australia Alexander P. Josiassen, The University of Melbourne, Australia ABSTRACT In a seminal article Vargo and Lusch (2004) present a service-dominant (S-D) logic for marketing that pro- vides strategic implications for competing through ser- vice (see also Lusch, Vargo, and O’Brien 2007). Taking a strategy perspective, this study conceptualizes an S-D strategic orientation, proposes its dimensions, and looks at potential benefits. INTRODUCTION The service-dominant (hereafter S-D) logic of mar- keting (Vargo and Lusch 2004) as an emerging marketing paradigm (see Webster Jr. 2006), challenges the existing perspective and assumptions that marketing inherited from economics. For example, under an S-D logic, value is not added to a product but is what customers get out of a product and, thus, value arises within individual cus- tomer (usage) experiences (e.g., Grönroos 2006; Prahalad and Ramaswamy 2004; Vargo and Lusch 2004). Service provision rather than goods represent the core of ex- change processes (Vargo and Lusch 2004). As such, the S-D logic has been characterized as a perspective or framework that promotes a service-based understanding of marketing phenomena (e.g., Lusch, Vargo, and Malter 2006; Vargo and Lusch 2004) and rests on nine founda- tional premises (see, e.g., Lusch, Vargo, and O’Brien 2007). Managers might adopt the S-D logic as their own mental model or mindset for viewing the business world and identifying new ways of (co-) creating value in light of competitive advantage. However, academia currently does not provide a strategic orientation that focuses on a simultaneous and coherent set of organizational practices consistent with the S-D logic (see also Winklhofer Palmer and Brodie in press). That is, despite the significance and applicability of S-D principles in theory and practice, there are no respective strategic orientation addressing service-dominant organizational behaviors, activities, and processes. Considering the call for a fresh contribution of mar- keting to the strategy dialog and the criticism of existing strategic orientations (see, e.g., Day 1992; Hunt and Lambe 2000), this is especially relevant. The primary purpose of this paper is thus to conceptualize an S-D strategic orientation and its dimensions. The focus will be directed toward organizational practices because a strate- gic orientation in general concerns broad strategic choices as manifested in respective behaviors/activities that en- able an organization to achieve long-term success (see Gatignon and Xuereb 1997). Furthermore, we will present potential benefits of implementing an S-D strategic orien- tation as a combined effect of the proposed dimensions of this behavioral concept. To this end, we will first highlight the relevance of an S-D strategic orientation in today’s challenging environ- ment to achieve a competitive advantage. Second, we will outline the nature of S-D logic and synthesize its strategic implications. Third, we will briefly review marketing’s key contribution to the strategy dialog and emphasize the necessity for a new strategic orientation that addresses the fundamentals of S-D logic concurrently. Fourth, we will propose an S-D strategic orientation that is consistent with S-D logic but focuses on activities, behaviors, and pro- cesses. Fifth, the five proposed dimensions of the S-D strategic orientation will be discussed and specified. Fi- nally, potential benefits of the presented S-D strategic orientation will be suggested. STRATEGY IN TODAY’S BUSINESS REALITY The reasons as to why and how firms succeed or fail in business present the central question in strategy (Fréry 2006; Porter 1991). From a strategy perspective, achiev- ing and sustaining competitive advantage in today’s highly competitive, proliferated, and dynamic market environ- ments is increasingly challenging (e.g., Court, French, and Knudsen 2006). For instance, strategists have to increasingly deal with intensified global networked com- petition, segment-of-one demand characteristics, and more empowered customers (see, e.g., Cares 2006; Oliver, Rust, and Varki 1998; Pires, Stanton, and Rita 2006). As the nature of the business arena is transforming, the traditional roles of economic actors are changing and becoming blurred (Prahalad and Ramaswamy 2004). For example, customers progressively take on employee roles and perform activities in value creation processes. As such, more informed, connected, and active customers progressively demand participation in service provision processes even in traditional manufacturing industries,