University of Phoenix Value of Quality Article Discussion

Emma K. Macdonald, Michael Kleinaltenkamp, & Hugh N. Wilson
How Business Customers Judge
Solutions: Solution Quality and
Value in Use
Many manufacturers look to business solutions to provide growth; however, success is far from guaranteed, and it is
unclear how such solutions can create superior perceived value. This article explores what constitutes value for
customers from solutions over time—conceptualized as “value in use”—and how this arises from quality perceptions
of the solution’s components. The authors develop a framework for solution quality and value in use through 36
interviews combining repertory grid technique and means-end chains. The findings significantly extend the extant view
of quality as a function of the supplier’s products and services, and show that customers also assess the quality of their
own resources and processes, as well as the quality of the joint resource integration process. The authors report that
value in use corresponds not just to collective, organizational goals but also to individuals’ goals, a finding that strongly
contrasts with prior research. Four moderators of the quality–value relationship demonstrate customer heterogeneity
across both firms and roles within what the authors term the “usage center.” When shifting toward solutions,
manufacturers require very different approaches to market research; account management; solution design; and
quality control, including the need for value-auditing processes.
Keywords: product-service systems, servitization, resource integration, repertory grid, means-end chains
Online Supplement: http://dx.doi.org/10.1509/jm.15.0109
nder pressure from market maturity and globalization, many manufacturing firms are looking to services as a means of increasing revenue and profits
(Kowalkowski et al. 2015). Although in some instances
services and products form distinct offers, a significant trend
in many industries, from automotives and aerospace to
pharmaceuticals and information technology, is to provide
“solutions”—that is, “products and services combined into
innovative offerings” (Shankar, Berry, and Dotzel 2009,
p. 95). We adopt this as a working definition, though we
subsequently refine it in light of our findings. Worldwide,
approximately 30% of manufacturers provide such solutions, ranging from 20% in China to 55% in the United
States (Neely, Benedettini, and Visnjic 2011).
Solutions promise to provide differentiation where the
core product is becoming commoditized. An example is
Rolls-Royce’s archetypal solution TotalCare, begun in 1997
with American Airlines, which combines an engine and its
servicing in a long-term contract. Because the manufacturer
retains reliability data across numerous airlines, it can
accurately predict and pre-empt engine problems, providing a
reliability benefit as well as reducing the airline’s financial
risk (Kim, Cohen, and Netessine 2007). Although General
Electric soon launched its own variant, the Rolls-Royce model
has proved difficult to copy. Solutions can also enable
suppliers to compete in expanded profit pools, providing a
route to growth for firms such as Xerox and IBM in industries
in which equipment prices have fallen dramatically over the
last 20 years.
Shifting toward solutions is, however, far from a guaranteed route to improved performance. Manufacturers offering
solutions or “product-service systems,” on average, appear
to have lower profits than those that do not (Neely 2008).
Supplier margins may decrease, particularly early in such a
“servitization” transition when services provide less than
20%–30% of turnover (Fang, Palmatier, and Steenkamp
2008). It would seem that solutions providers face a sharp
learning curve, but what they need to learn is not clear.
There has been some research progress in helping manufacturers understand what drives successful solutions. For
U
Emma K. Macdonald is Associate Professor of Marketing, Cranfield School
of Management, Cranfield University, and Adjunct Senior Research Fellow,
Ehrenberg-Bass Institute for Marketing Science, University of South
Australia (e-mail: Emma.Macdonald@cranfield.ac.uk). Michael Kleinaltenkamp
is Professor of Business and Services Marketing, School of Business and
Economics, Freie Universitaet Berlin (e-mail: Michael.Kleinaltenkamp@
fu-berlin.de). Hugh N. Wilson is Professor of Strategic Marketing,
Cranfield School of Management, Cranfield University (e-mail: Hugh.
Wilson@cranfield.ac.uk). The authors gratefully acknowledge funding from
the Engineering and Physical Sciences Research Council through the
Cranfield Innovative Manufacturing Research Centre (grant number
EP/E001874/1). The authors also acknowledge with thanks the assistance of Tim Baines, Marko Bastl, Helen Bruce, Ignas Bruder, Alice Duda,
Steve Evans, Rick Greenough, Mark Johnson, Helen Lockett, Veronica
Martinez, Andy Neely, Kamran Razmdoost, Emanuel Said, Mark Tang, Amir
Toossi, and the anonymous practitioner informants. They also thank the
three anonymous JM reviewers for their helpful suggestions on previous
versions of the article. Werner Reinartz served as area editor for this article.
© 2016, American Marketing Association
ISSN: 0022-2429 (print)
1547-7185 (electronic)
96
Journal of Marketing
Vol. 80 (May 2016), 96–120
DOI: 10.1509/jm.15.0109
example, through supplier interviews, Ulaga and Reinartz
(2011) identify capabilities needed by suppliers, calling for
complementary research with customers. Tuli, Kohli, and
Bharadwaj (2007) find that suppliers and customers indeed
view solutions differently: whereas suppliers tend to regard
solutions as simply a bundle of products and services, customers emphasize the importance of the relational processes
of solution design and delivery. Processes can be defined as
“the procedures, tasks, mechanisms, activities and interactions
that support the co-creation of value” (Payne, Storbacka, and
Frow 2008, p. 85). These solution processes draw on a set
of resources (Ulaga and Reinartz 2011), the tangible and
intangible entities available to the firm that enable it to
produce a market offering that has value for some market
segments (Hunt and Madhavaram 2012; e.g., Rolls-Royce’s
engine reliability database). The research challenge remains to
explore how a solution combining these processes and resources succeeds or fails.
In this article, we take a customer perspective to this
challenge, guided by the following research question: How
do business customers judge solutions and the value they
create? Despite the fundamental position of value within the
marketing discipline (see the American Marketing Association’s [2013] definition), practitioners continue to express
difficulties in understanding the drivers of customer perceived value (Marketing Science Institute 2014). Scholarly
work on this issue has focused on the concept of quality,
with a substantial body of both conceptual (Woodruff 1997;
Zeithaml 1988) and empirical (Bolton and Drew 1991) literature examining product and service quality as antecedent
to value. Solutions are, however, more than the sum of their
product and service parts (Tuli, Kohli, and Bharadwaj 2007;
Ulaga and Reinartz 2011). Solutions solve a business problem
not simply by enhancing the quality of component products
and services but by integrating these components (Nordin and
Kowalkowski 2010; Storbacka 2011). For example, the
increased flight reliability touted by Rolls-Royce’s TotalCare
results from the taut integration of product features such as
automated engine state reporting, services such as dynamic
maintenance scheduling, and the airline’s own processes,
such as flight scheduling. Thus, there is a need for grounded
discovery of how the quality of solutions is judged. Our first
objective is therefore to explore how customers assess solution quality. Following Zeithaml (1988), we define quality
as the perceived excellence or superiority of an entity—in this
case, a solution.
Implicit in our research question is the requirement to
explore what constitutes value from solutions. Empirically,
value has received less attention than quality. Although some
prior work has examined value in business markets (Ulaga
and Eggert 2006), the constructs by which the value of
solutions is judged have yet to be explored. Our second
objective is therefore to understand what constitutes value
for solution customers. In this relational context, this value
perception is of interest not just at the moment of exchange
but throughout the solution’s relational processes. Accordingly, we draw on service literature and focus on value in use
(Grönroos and Voima 2013; Vargo and Lusch 2004), which
we adapt previous definitions (Macdonald et al. 2011; Payne,
Storbacka, and Frow 2008; Woodruff 1997) to define as all
customer-perceived consequences arising from a solution
that facilitate or hinder achievement of the customer’s goals.
We expand on this definition in the following section.
We address our research question through 36 interviews
of industrial solutions customers, using repertory grid
technique (Goffin and Koners 2011) along with means-end
chains (Reynolds and Gutman 1988) to explore the links
between quality and value. We thereby make three main
contributions to literature on quality, value, and solutions.
First, we find that customers assess the quality of not only the
supplier’s processes and resources but also customer processes and resources as well as joint processes—a significant
extension of the quality concept (Golder, Mitra, and Moorman
2012) that may apply more broadly in both business and
consumer markets. Second, we find that customers link their
solution quality perceptions to individual value-in-use constructs as well as collective ones. This significantly extends
the dominant view of value in business markets as a function of organizational goals (Ulaga and Eggert 2006);
equally, it contrasts in the opposite direction with the dominant typologies of consumer value, which relate exclusively
to the goals of the individual, even if some of those goals (e.g.,
status) relate to the individual’s position in social groups
(Holbrook 1999; Sheth, Newman, and Gross 1991). Third, we
identify moderators of the relationship between solution
quality and value in use, demonstrating heterogeneity in
how solutions are judged as arising both from the manager’s
role in what we term the “usage center” and from firm
characteristics.
Overall, these findings suggest a very different view of
value from that which predominates among both scholars and
practitioners. A solution’s value proposition is not proposed
by the supplier alone but is jointly designed by the supplier
and the customer; it depends on the quality not only of the
supplier’s resources and processes but also of customer
resources and processes as well as of the joint resource
integration process; and the value that arises is not predetermined and simply verified (Storbacka 2011) but is,
rather, continually optimized by both parties. Shifting toward
solutions therefore involves far more than pricing a product/
service bundle. For example, suppliers need a joint resource
integration effort with the customer to make customization
decisions such as where the boundary between the firms
should lie; they require competences in optimizing not only
their own processes but also those of the customer; they need
to continually audit and enhance the value from the solution,
rather than simply meeting the contract; and they require
market research that extends beyond customers’ judgments
of the supplier to include customers’ judgments of their own
resources and processes.
The article proceeds as follows: We expand on our
conception of value in use and solution quality. We then
explain our use of repertory grid and means-end chains. An
overview of the emergent conceptual framework is followed
by sections detailing value in use, solution quality, and
moderators of their relationship. Finally, we discuss theoretical contributions, including a refined definition of solutions, practitioner implications, and research directions.
How Business Customers Judge Solutions / 97
Understanding Solution Quality and
Value in Use
Table 1 shows exemplars of empirical work on value, with an
emphasis on studies that explicitly or implicitly include
quality perceptions. In some prior literature, the terms are
almost equivalent, in that value is viewed as a function of
purely quality and price (Cronin, Brady, and Hult 2000;
DeSarbo, Jedidi, and Sinha 2001). More commonly, quality
is distinguished from the anticipated or realized benefits of
a product or service (Bolton and Drew 1991; Ulaga 2003),
whereas price is generalized to costs (Ulaga and Eggert
2006), sacrifices (Faroughian et al. 2012), or “what is given”
by the customer (Zeithaml 1988).
The relationship between quality and value (Zeithaml
1988) can be conceptually underpinned by goal theory
(Woodruff 1997). People have a goal hierarchy in which
higher-level “abstract goals,” such as the desire to protect
the natural environment, relate to lower-level “concrete
goals,” such as the desire to buy a hybrid car (Barsalou
1991; Peterman 1997). Similarly, a manufacturing manager may associate the abstract goal of overall equipment
effectiveness with the concrete goal of fast response times
for repairs (Macdonald et al. 2011). The customer essentially
hypothesizes a causal chain or “ladder” (Reynolds and Gutman
1988) from product features to their desired outcomes from
use—the concept of attribution (Raghubir and Corfman 1999).
These outcomes constitute value in use, which is generally
interpreted as the customer’s functional and/or hedonic outcome, purpose, or objective that is served through product/
service usage (Woodruff 1997).
These goals may be preventative, such as avoiding
high prices, or promotional, such as looking good to others
(Chitturi, Raghunathan, and Mahajan 2008). A goal-based conception of value in use thus integrates the notions of benefits
and sacrifices, as a sacrifice such as a high price corresponds
to low achievement of the goal of minimizing the price
paid (Macdonald et al. 2011). Similarly, customers may
have a goal to minimize their effort (Mathwick, Malhotra,
and Rigdon 2001). With this goal perspective, the notion of
trading off benefits and sacrifices is more precisely described
as the customer balancing and prioritizing between all goals
(Epp and Price 2011).
Further work has extended the application of goal theory
to suggest that value arises not only through product usage
processes but also at any point in the customer journey
(Lemke, Clark, and Wilson 2011). This has led to the suggestion of such alternative terms as “value in context” (Vargo
and Lusch 2016), “value in social context” (Edvardsson,
Tronvoll, and Gruber 2011), and “experiential value”
(Mathwick, Malhotra, and Rigdon 2001). Although we adopt
the term “value in use” to avoid unnecessary terminological
multiplicity, its definition must allow for goals to be met at any
point in the relational process of a solution; thus, we define
value in use as all customer-perceived consequences arising
from a solution that facilitate or hinder achievement of the
customer’s goals.
Our definition distinguishes value in use from value in
exchange, the product or service attributes promised by the
98 / Journal of Marketing, May 2016
supplier and expected by the customer at the time of purchase
(Grönroos and Voima 2013). This does not automatically
translate into value in use, which is also dependent on other
resources, such as a customer’s own skills, and other processes, such as peer-to-peer processes (McColl-Kennedy
et al. 2012). In this vocabulary, some studies referring simply
to “value” examine value in exchange (e.g., Sweeney and
Soutar 2001), whereas others examine value in use, such as
Sirdeshmukh, Singh, and Sabol’s (2002) study of the value
perceived through service delivery.
The customer’s role in creating value in use also has implications for quality. Literature on quality overwhelmingly
assumes that value arises from the quality of the supplier’s
offering (Ulaga and Eggert 2006; Zeithaml 1988). Golder,
Mitra, and Moorman (2012), however, call for further focus
on the underresearched topic of the quality implications of
coproduction. In a solutions context, if value is “realized
from integration of resources through activities and interactions with collaborators in the customer’s service network”
(McColl-Kennedy et al. 2012, p. 1), the question arises
whether customer evaluation is focused not only on supplier
processes but also on customer processes (Payne, Storbacka,
and Frow 2008). This leads us to ask whether these customer
processes, too, have a quality—a perceived excellence or
superiority.
From these concepts follow several implications for empirical work, as we illustrate in the column headings of
Table 1. First, to understand how solution quality leads to
value in use, it is necessary to allow for the possibility that the
customer may make quality appraisals of not only supplier
processes and resources but also customer processes and
resources. Second, because goals are multifarious, value in
use is inherently multidimensional. Thus, it is important to
understand the more granular constructs by which value is
perceived (Ulaga and Eggert 2006). Third, because value in
use is inherently phenomenological (Vargo and Lusch 2016),
different people within the customer firm may perceive it
differently. We define the group of people involved in the
use of a solution as the usage center. Whereas most previous research has focused on a single informant—most
commonly a purchasing manager—to represent each customer firm, exploration of value in use requires the perspectives of multiple members of this usage center. Fourth,
goal theory suggests that people have both their own individual goals and shared, collective goals (Epp and Price
2011). Although consumer research has been criticized for
ignoring collective goals (Epp and Price 2011), Table 1
illustrates our observation that the opposite bias may be
present in business research, in which value is assumed to be
purely collective, despite the known importance of personal
motivations in decisions on suppliers (Johnston and Bonoma
1981).
In a solutions context, one would expect uncovering
value-in-use perceptions, not just quality perceptions, to
be particularly critical to an understanding of what makes
for successful solutions. Not only are solutions customized
(Nordin and Kowalkowski 2010), they also affect such
fundamental issues as the division of tasks between customer and supplier firms (Macdonald et al. 2011). For
How Business Customers Judge Solutions / 99
Definition of Value
Business-to-Consumer Contexts
Zeithaml (1988)
The consumer’s judgement Overall assessment of the
utility of a product based on
about a product’s overall
excellence or superiority. perceptions of what is
received and what is given.
Trade-off between a
Bolton and Drew
The customer’s
(1991)
assessment of the overall customer’s evaluation of
excellence or superiority of the benefits of using a
service and its cost.
a service.
Keeney (1999)
Not defined.
Net value of benefits and
cost of a product and
processes of finding,
ordering, and receiving it.
Perceived value for
Sweeney, Danaher, Not defined. Measured
money—the customer’s
and Johnson
dimensions of quality
(1999)
include functional service assessment of net valence
resulting from perceived
quality, technical service
quality, and product quality. return and perceived risk.
Cronin, Brady, and
Implicit definition: service Overall assessment of the
Hult (2000)
performance perception.
utility of a product based on
perceptions of what is
received and what is given
Implicit definition: product
Sweeney and Soutar Implicit definition:
(2001)
perceived product and
quality relative to price.
service excellence or
superiority.
Experiential value has four
Mathwick, Malhotra, Affordable quality, or
dimensions (consumer
and Rigdon (2001) economic utility, plus
ROI, service excellence,
exchange encounter
playfulness, and aesthetic
efficiency comprise
appeal).
consumer return on
investment.
The consumer’s
Sirdeshmukh, Singh, Drivers of value studied
and Sabol (2002)
close to the quality concept: perception of the benefits
minus the costs of
operational competence,
benevolence and problem- maintaining an ongoing
relationship with a service
solving orientation.
provider.
The ratio of the consumer’s
Yang and Peterson
Not explicit. Satisfaction
(2004)
measure includes service outcome/input to that of the
performance and ease of service provider’s
outcome/input.
use.
Study
Definition (or
Operationalization) of
Quality
Value Appraisals
Sample
—
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Yes
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Yes
—
—
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—
—
—
—
—
Customer
MultiProcess dimensionala Individual Collective Buyer User Multipleb
Yes
Supplier
Process
Quality Perceptions
TABLE 1
Empirical Studies of Customer Value in Business-to-Consumer and Business-to-Business Contexts
100 / Journal of Marketing, May 2016
Definition of Value
aApplies summative assessment of value, unless listed as multidimensional.
bInterviews held with a single company/household informant, unless listed as
cSample included sellers rather than buyers/users.
multiple.
Supplier-perceived value:
trade-off between benefits
and sacrifices from
relationship.
DeSarbo, Jedidi, and The consumer’s judgement Perceived value is a
Sinha (2001)
about a product’s overall
function of perceived
excellence or superiority. quality and perceived
price.
Ulaga (2003)
Product quality: the extent The trade-off between the
benefits (“what you get”)
to which product meets
and the sacrifices (“what
customer specifications.
you give”) in a market
Key aspects are
exchange.
performance, reliability,
and consistency.
Lam et al. (2004)
Not defined. Service quality A comparison of weighted
items include ease,
“get” attributes to “give”
timeliness, and reliability. attributes.
Benefits and costs.
Ulaga and Eggert
The extent to which the
(2006)
product meets customer
specifications. Key aspects
are performance, reliability,
and consistency.
Faroughian et al.
Not defined. Dimensions of Benefits and sacrifices
(which vary
(2012)
e-service quality include
independently).
efficiency, fulfillment and
availability.
Aarikka-Stenroos and Implicit definition: the
The trade-off between
Jaakkola (2012)
performance of offering and benefits and sacrifices
interaction.
emerging through the
customer’s valuegenerating processes.
This study
The perceived excellence All customer-perceived
consequences arising from
or superiority of an
a solution that facilitate or
entity—in this case, a
hinder achievement of the
solution.
customer’s goals.
Business-to-Business Contexts
Walter, Ritter, and
Not defined.
Gemünden (2001)
Study
Definition (or
Operationalization) of
Quality
Value Appraisals
Sample
—
Yes
—
—
Yes
—
—
—
—
—
—
Yes
Yes
Yes
Yes
Yes
Yes
—
Yes
Yes
Yes
—
—
Yes
—
—
—
—
—
—
—
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Yes
Yes
Yes
Yes
Yes
Yes
Yes
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Yes
Yes
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—c
Yes
Yes
—
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—
Yes
—
Yes
—
—
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—
—
—
—
Customer
MultiProcess dimensionala Individual Collective Buyer User Multipleb
Yes
Supplier
Process
Quality Perceptions
TABLE 1
Continued
example, Rolls-Royce has taken over large numbers of
service personnel from some of its TotalCare clients.
Comparing two options such as in-house maintenance
versus adoption of TotalCare cannot readily be done on
the basis of product or service quality alone, as the very
entities being compared differ substantially. Instead, one
would expect such diverse solutions to require comparison further up the goal hierarchy at the level of value
in use (Storbacka 2011): in this instance, by judging the
extent to which the total solution keeps the plane in the
air at maximum reliability and minimum total cost—thus
Rolls-Royce’s trademark, “Power by the Hour.”
Accordingly, in our empirical work, we elicit from
multiple members of the usage center how solution quality
is appraised while allowing for the possibility that the answers may extend beyond the quality of supplier inputs
alone. We also explore how these quality appraisals relate
to the multiple facets of value in use, without prior assumption as to whether customer goals are collective, individual, or both.
Research Method
Sample
We study members of the usage center in four manufacturers,
eliciting their solution quality and value-in-use perceptions
relating to factory equipment and its maintenance, repair, and
operations. The firms were in a spread of sectors: medical devices (which we call “DeviceCo”), printing (“PrintCo”),
pharmaceuticals (“HealthCo”), and building products
(“BuildCo”). Solution innovation in factory equipment
includes not only maintenance but also such services as
parts procurement and stores management (Kastalli and Van
Looy 2013). In each company, an exploratory interview led
to identification of other usage center members. A sample
was drawn up representing four main usage center roles that
emerged: maintenance, operations, purchasing, and general
management. We held eight to ten interviews in each company, totaling 36 interviewees. Interviews averaged 47 minutes
in length (see Table 2).
Data Collection and Analysis
We synthesized literature on repertory grid technique, meansend chaining, and qualitative data reliability to develop a
robust method for eliciting quality and value constructs
and their relationships (see the Appendix). Derived from
Kelly’s (1963) personal construct theory, repertory grid
technique uses structured interviews to identify the constructs
by which people make judgments. This technique is useful
when these judgments result from tacit knowledge (Brown
and Detoy 1988), and it has high test-retest reliability (Smith
2000). Applications within management include supplier
quality (Goffin, Lemke, and Szwejczewski 2006), cognitions
about information technology (Tan and Hunter 2002), new
product development (Goffin and Koners 2011), and experience quality (Lemke, Clark, and Wilson 2011). We used the
technique to identify the constructs by which interviewees
judge solutions. Because these constructs were generally at
the more concrete level of quality in the customer’s goal
hierarchy, we combined the technique with means-end chains,
or “laddering” (Gutman 1982), to elicit the more abstract
value constructs. For an example grid and related ladder, see
Figure 1.
Following Goffin, Lemke, and Szwejczewski (2006),
the first stage of analysis identified quality constructs
(Table 3) and value-in-use constructs (Table 4) from the
grids and transcripts, and named these with reference to
literature following the approach of Gioia, Corley, and
Hamilton (2012). Following Tuli, Kohli, and Bharadwaj
(2007), among others, we checked intercoder reliability
with the proportional reduction-in-loss method (Rust and
Cooil 1994).
The second stage of analysis involved recording ladders
between constructs and deriving an implications matrix from
them that summarizes the links, or “implications,” between
quality and value constructs (Reynolds and Gutman 1988).
Table 5 shows the resulting matrix and includes three
indices summarizing the role of the constructs: abstractness is the average level of a construct in the ladder from
concrete (approaching 0) to abstract (approaching 1); centrality measures how often a construct appears in a ladder;
and prestige is an index of how often a construct is the
destination in implications, as a proportion of all implications in the matrix (Pieters, Baumgartner, and Allen 1995; a
more detailed implications matrix appears in the Web
Appendix). From this matrix, we drew up a hierarchical
value map summarizing the constructs and their relationships (Gengler and Reynolds 1995; Reynolds and Gutman
1988; see Figure 2). For further details of the method, see the
Appendix.
How Value in Use Arises from
Solution Quality
Tables 3 and 4 present solution quality and value-in-use constructs, with definitions and illustrative quotations. (The code
following each quotation indicates company, interviewee,
and construct number; e.g., H2-15 is construct #15 elicited
from HealthCo’s interviewee #2.) We report the relationship
between solution quality and value in use in the implications
matrix (Table 5) and the related hierarchical value map
(Figure 2). We integrate these findings in the framework of
Figure 3, Panels A and B, and begin with an overview based
on Panel A in this figure.
In evaluating a solution, customers assess the quality of
not only the supplier’s resources and processes but their own
as well. Furthermore, the resource integration process for
which both parties are responsible plays a central role in the
customer’s evaluation, in that it draws on resources from both
the customer and the supplier, and in turn leads to value in
use. Suppliers, then, do not deliver solutions; rather, suppliers
and customers cocreate them. This joint contribution to solution quality is a significant departure from the majority of
research into quality, which regards quality as a function of
only the supplier’s actions. It is also at odds with common
market research practice, in which suppliers ask customers
How Business Customers Judge Solutions / 101
solely about their assessment of the supplier and not their
assessment of their own processes or joint ones.
This symmetry between supplier and customer is also
evident in two further processes: value auditing by the supplier and by the customer. The supplier’s value-auditing
process extends the set of solution processes identified by
Tuli, Kohli, and Bharadwaj (2007). Furthermore, this monitoring and optimizing of value in use is equally an important
customer process—and both of these processes themselves
form part of the customer’s quality assessment.
An emergent finding is that the value in use that is thereby
cocreated is individual and not just collective. Managers
within a usage center perceive multiple dimensions of both
collective value in use (i.e., constructs relating to the goals of
the organization) and individual value in use (i.e., constructs
relating to the individual’s personal role and interests). This is
in stark contrast to the predominant, albeit implicit, view of
value in business relationships as a function of organizational
outcomes alone (Ulaga and Eggert 2006). We next consider
the components of Figure 3 in more detail, beginning with
value in use and followed by solution quality, before turning
to heterogeneity in quality and value perceptions.
Collective Value in Use
As might be expected, several of the nine collective value-inuse constructs (see Table 4) relate to improved operational
performance of the customer firm: avoiding downtime, fast
problem solving, low costs, and fixed capital reduction.
Process improvement—the simplification of or other enhancements to the customer’s processes—is valued both in
itself (centrality = .15, second only to low costs among valuein-use constructs; details are available in the Web Appendix)
and as a means to achieve these operational gains
(abstractness = .69, the least abstract of the value-in-use
constructs); here, we again note the centrality of the customer’s processes in solution success. The firm’s operational
performance is a core motivation for solutions and frequently
forms the basis for presale conversations with suppliers
(Ulaga and Reinartz 2011), though we found that achievement of performance gains is only rarely embedded in the
contract, despite research attention to performance-based
contracting (Kowalkowski et al. 2015).
Two additional constructs represent value that is more
likely to emerge through the solution: the solution’s impact
on the customer’s innovativeness and competitive advantage.
For example, a central stores manager commented on the
importance of innovative ideas within his somewhat traditional printing firm: “I’m quite positive that we needed
somebody from an outside industry to lead us a bit more.
Yes, I would say there is an improvement because you’ve
got a different opinion, different angle from an outside firm”
(P6-24). Competitive advantage occurs when the solution
improves the customer’s own market position. This formed
part of the solution appraisal by an engineering manager
in DeviceCo: “These guys have a much more commercial
focus, whereas [supplier] has been treated up to now as an
improvement to our service, as opposed to ‘can you give us
any competitive advantage?’” (D2-84). These value-in-use
constructs go beyond those typically noted in business value
research (Ulaga and Eggert 2006). Their emergent nature
raises the question of how either party can track their
occurrence; this forms part of the role of the value-auditing
processes, which we return to subsequently.
Two final constructs correspond to preventative goals
and, in particular, risk management: reduced financial risk
and dependence avoidance. A solution can result in reduced
financial risk through the supplier taking on this risk. Equally,
the resource integration process may provide better risk
management with third parties, as discussed at PrintCo: “If
there’s a problem with anything breaking in warranty [with
any of our suppliers], then [a representative from the solution provider] would recover this money as well” (P6-28).
Conversely, dependence avoidance is expressed in the concern that through the transfer of some responsibilities to the
supplier, the customer risks losing competencies such as
TABLE 2
Sample
Role
Case
BuildCo
Number of interviewees
Interviewee IDs
DeviceCo
Number of interviewees
Interviewee IDs
PrintCo
Number of interviewees
Interviewee IDs
HealthCo
Number of interviewees
Interviewee IDs
Total
Maintenance
Operations
Purchasing
General
Management
Total
Interviews
6
B3, B4, B6, B7, B8, B9
1
B5
1
B2
1
B1
9
4
D5, D7, D8, D9
3
D1, D3, D6
1
D4
1
D2
9
3
P4, P5, P7
3
P2, P3, P6
1
P8
1
P1
8
5
H1, H2, H4, H5, H7
18
2
H6, H11
9
1
H9
4
2
H3, H10
5
10
36
Notes: Interviewee IDs are unique to each interviewee and appear as the first part of the label in each quotation that appears in this article.
102 / Journal of Marketing, May 2016
FIGURE 1
Example of Repertory Grid and Laddering: Engineering Manager (D2), DeviceCo
A: Repertory Grid a
Construct
Number
Supplier Supplier Supplier Supplier Supplier Supplier
Construct Pole
(1)
1
2
3
4
5
6
Contrast Pole
(5)
1
Gives us purchasing power
4
2
2
3
1
2
No benefit to the prices we pay
2
Focused on our organization’s needs
5
2
1
2
2
3
Not much focus on our
organization
3
Tries to be seamless with us
3
2
2
2/3
2
1
Just delivers
4
Embedded
3
2
2
3/4
2
2
Replaceable
5
Motivated to reduce our costs
4
2
2
3
1
2
Accepts the status quo
6
Monthly or quarterly reviews
5
2
2
3
1
2
No regular reviews
B: Example Ladder
Collective Value in Use: Avoiding
Downtime
Supplier Resources:
Organizational Competences
“[Supplier] was one of the few companies we felt
gave us the most complete offering for what we
were looking for at the time…. Doing a statistical
analysis and saying we need to hold more of these
and less of these…. They were very proactive in
coming back with suggestions as well.”
Resource Integration:
Asset Management Effectiveness
“Nine times out of ten, when a machine
goes down here … the machine is off
for two or three days, and that’s a real
problem…. The key metric for me is
uptime on machines…. [Supplier]
absolutely do[es] that for us.”
Collective Value in Use: Competitive
Advantage
“We’re driving our lead time down. Our
lead time three years ago was 16 days…. It
now takes 4 and a half days, and within three
years we want it less than a day, so
maintenance is becoming a real competitive
advantage for us.”
“[Supplier] manages our suppliers
on our behalf…. You have a
supplier who’s very proactively
managing your spares and making
sure you have the right mix of
spares.”
a
Each row (numbered 1 to 6 in this example) represents a construct by which the interviewee assesses solution suppliers. Each of six suppliers
named by the customer is rated from 1 to 5 on each construct, where 1 represents the “construct pole” (e.g., “embedded”) and 5 represents the
“contrast pole” (e.g., “replaceable”).
sourcing expertise. This was a concern aired by interviewees
at PrintCo, for example: “It’s no use putting all your eggs in
one basket, as they might be a global supplier, but it’s no good
if all they can get us is in [city name]” (P5-35). Although
these risk-related constructs are absent from much of the
literature on business value (such as the research reviewed in
Table 1), they seem a natural consequence of the redrawing of
boundaries between supplier and customer that can occur in
a solution’s resource integration process (which we consider
in more detail later). We summarize these observations in the
following proposition:
P1: Collective value in use includes emergent dimensions that
may go beyond those anticipated at the time of exchange.
Individual Value in Use
Extending previous work on how business customers judge
value, we found that six constructs corresponding to goals of
the individual form part of the evaluation of the solution.
Three relate to job ease (Glass and Camarigg 1992). The first
is task simplicity, or the simplicity and time efficiency of the
processes that make up one’s job. For example, PrintCo’s
outsourcing of day-to-day operations of a factory’s production line stores had a beneficial impact on the working life
of the stores manager: “I’m responsible overall for all procedures governing all our stores. I am still linked with the
repairs, but obviously [the supplier] now manage[s] it day to
day, whereas before I was actually doing it all the time”
(P6-1). In contrast, BuildCo’s maintenance manager found
that a solution did not aid task simplicity: “It doesn’t get my
job done, … and by the time I have explained to him, what’s
the point? I can do the job myself” (B4-13). Task simplicity is
valued in part because of its impact on work–life balance.
A related and also commonly occurring construct is pressure reduction, or minimized pressure and stress in one’s
daily job. An engineer at HealthCo provides a typical example of an employee who preferred a solution that reduced
the personal pressure on him when equipment failed: “It’ll
save you stress and pressure: when you’re designing something, you’re not under pressure, because you know that if
you make an improvement, it’s a plus, whereas if a [production] line is down, there’s pressure, and that is very
important” (H2-48).
The third construct relating to job ease is perceived
control, or a perception of control over the processes and
resources that make up one’s job. A project engineer appreciated the control benefits of a solution that involved an
on-site customer representative at DeviceCo: “They are on
How Business Customers Judge Solutions / 103
site, yes, so I suppose I have a neck to grab at the end of each
evening if something goes wrong” (D8-4). The pressure
reduction and perceived control constructs are in line with
insights from stress theory (Lazarus 1990) stating that the
degree of perceived stress has an impact on the assessed
quality of an encounter.
The fourth individual value-in-use construct is uncertainty reduction, or minimized uncertainty related to the
processes and decisions that make up one’s job. This construct is illustrated by a maintenance technician at HealthCo,
who stated, “Some suppliers will work with you and
collaborate with you, so you get a sense with them of
complete confidence; you stop challenging, questioning,
seeing every report because you know they’re going to
deliver, they’re going to take care of it” (H9-52). This echoes
research in the service sector showing that customers try to
reduce their perceived uncertainty and purchase anxiety
during the buying process (Berry 1995); our data show that
uncertainty reduction is also valued after the sale.
The final two constructs relate to the individual’s social
context. Personal reputation, or being viewed as a person with
high job competence, can be affected negatively as well as
positively by the quality of the solution. A maintenance
manager at DeviceCo relayed the reputational damage to him
and his team that could arise from a supplier’s slow response
time compounded by lack of skills in the customer organization: “It’s not good for us to be saying we can’t fix it. …
We’re not trained enough, so we’re under pressure straight
away and we look poor … because [supplier staff] can’t come
on site” (D7-13).
Social comfort, or feeling comfortable with the other
people involved in one’s work, is a function of individual
personal relationships. It can also be aided by processes that
lead to repeated contact with the same person, as observed
by DeviceCo’s maintenance engineer: “Working with the
individuals is the main thing. If you can’t work with the
individual who’s sorting out your problems, where are you
going? It’s all personal. All day, every day, I’ll be with him”
(D8-11).
The role of individual motivations has largely been ignored in the literature on organizational buying behavior (a
notable exception being Hollman, Jarvis, and Bitner 2015).
Yet our data show that individual value in use plays a
substantial role in solutions evaluation (centrality = .32,
compared with centrality of collective value in use of .60; see
Table 5). Thus,
P2: The value in use from solutions is judged relative to the
individual goals of usage center members (individual value
in use) and not just to organizational goals (collective value
in use).
Individual and collective value in use have very similar
abstractness (.81 and .83, respectively). Table 5 shows that
individual value in use sometimes leads to collective value in
use (36 direct implications); for example, a person’s task
simplicity can lead to fast problem solving (9 implications;
see the Web Appendix). Equally, collective value in use
can lead to individual value in use (36 implications); for
example, fast problem solving can lead to pressure reduction
104 / Journal of Marketing, May 2016
for an employee (5 implications). We therefore propose the
following:
P3: Individual value in use and collective value in use interact,
as the achievement of individual goals can support collective goals, and vice versa.
Supplier Resource Quality and Customer
Resource Quality
We next turn to solution quality, beginning with resource
quality. We have commented that extant quality research
across multiple sectors has tended to view value as arising
from the quality of what the supplier provides. Our data
show that solution customers indeed judge supplier resource
quality at three levels: employee, organization, and network.
As we show in Table 3, this evaluation is, however, mirrored
in their assessment of the quality of their own resources,
though a fourth construct—customer orientation—is found
only in the supplier evaluation. The interplay between customer and supplier resources in solution design is exemplified by a comment from a HealthCo maintenance coordinator
about the importance of employee competence within both
firms: “In terms of operating equipment, you can’t just
replace your in-house technical people and expect new people to walk in and know how to operate the plant. There’s a
lot of experience built up” (H4-24). To our knowledge,
research has not previously examined the quality of customer
resources as an input to solution quality.
Furthermore, previous quality research has predominantly overlooked the quality of both the supplier’s network
and that of the customer. In our data, quality perceptions of
sourcing network competence were prominent, the supplier’s competence appearing in 25 of the 36 interviews and
the customer’s in 22 interviews. For example, a BuildCo
engineering manager reflected positively on a supplier’s
competence as follows: “He has a network of sourcing the
suppliers which covers a multitude of repairs that we need.
He takes care of that” (B1-8). When the supplier’s sourcing
network competence exceeds that of the customer, it can
make sense for the resource integration process to transfer
sourcing responsibilities. A general manager and a maintenance professional, respectively, commented on this at
HealthCo: “Because they have power within purchasing,
they get it so much cheaper” (H3-24); “[Supplier] could go
to [subsupplier] and buy directly from them, so there’s a
multitude of doors that are opened from [supplier]” (H5-29).
This notion is consistent with the social network perspective on interorganizational relationships, which shows the
importance of the supplier’s network (Palmatier et al. 2008),
and this is particularly the case for solution providers
(Möller and Törrönen 2003). Importantly, in addition to
evaluating the supplier’s network competence, customers
judge their own network competence, as this comment
from a maintenance team leader at HealthCo illustrates:
“What happened originally was the team leaders made
contact with contractors to get service, but nobody [had]
oversight of the whole issue, nobody had a look at why
we had contractors here doing the same work as down
there” (H7-5).
The quality of these supplier and customer resources in
turn influences resource integration quality, providing empirical support for recent conceptual literature stating that
value in use emerges from resource integration (Grönroos
and Voima 2013; Vargo and Lusch 2016). Equally, however, supplier and customer resource quality frequently lead
directly to value in use at both collective and individual levels
(see Table 5). In conclusion,
P4: In addition to supplier resource quality, customer resource
quality is instrumental in contributing to value in use.
Resource Integration Process Quality
Beyond the quality of customer and supplier resources, the
quality of the resource integration process plays a central role
not only within solution quality assessments but also as a
driver of value in use (centrality = .45, second only to collective value in use). As might be expected, resource integration process quality is itself dependent in part on the
quality of the supplier resources (with 73 direct implications)
and customer resources (with 41 direct implications) being
integrated, so in means-end chain terminology, it frequently
acts as a consequence bridging from resource attributes to
value (Reynolds and Gutman 1988; abstractness = .31,
compared with .12 for supplier resources and .14 for customer resources).
The first construct through which resource integration
process quality is judged is coordination effectiveness, which
every interviewee mentioned (centrality = .26). Service
quality literature has examined supplier–customer interaction
extensively but, in general, has done so with the perspective
of judging the supplier’s role rather than joint processes
(Golder, Mitra, and Moorman 2012). Our data show, however, that customers are aware that coordination requires
involvement from two parties. For example, an engineering manager at BuildCo acknowledged his firm’s role in
allowing a supplier representative to coordinate effectively,
in part by creating a local working space: “He has an office in
the stores now, and we have given him the ability to access
our computer system to book in deliveries and so on and
do the basics” (B1-11). This is consistent with Joshi’s
(2009) finding that collaborative communication enhances
supplier knowledge, supplier commitment, and, thus, supplier performance.
The second construct of resource integration process
quality is asset management effectiveness, which concerns
the coordination of assets rather than information flows. It
involves collaborative decisions on such issues as the best
place to hold stock, the best process to deliver physical assets, and whether inventory management is best outsourced
to a supplier. A maintenance technician at DeviceCo, for
example, described improvements to joint asset management
as a result of a solution: “You can search on your machine
under product type and part number and find it a lot quicker.
And he [the on-site supplier representative] manages it better
so you don’t have to order as many, so we’re carrying less
inventory” (D9-4). Effective asset management too, then, is
a result of shared processes. Thus,
P5: In assessing the value in use of solutions, customers assess
the quality of the joint resource integration process, which in
turn draws on customer and supplier resource quality.
Value Auditing by the Customer and the Supplier
Value in use is, by definition, perceptual. In a usage center
with multiple members, the question arises how these perceptions are formed and shared. This is an issue of instrumental concern for managers within both customer and
supplier firms, as value perceptions influence future buying
decisions. Extending the solution processes identified by
Tuli, Kohli, and Bharadwaj (2007), we identify a value-auditing
process within the supplier that is sufficiently important to
form part of the customer’s solution quality assessment.
This process involves both value-in-use monitoring and
value-in-use optimizing. A technical services manager at
DeviceCo illustrated the monitoring of value in use achieved: “[Supplier representative] would come down with
the list of items that has been ordered through him versus
our old costs and show if we were originally paying V500
for a part and they got it for V450” (D1-35). Storbacka
(2011) reports that suppliers believe that value verification
by the supplier is an important part of solution delivery. Our
data show that customers agree and, furthermore, that this
value auditing is assessed for quality by the customer.
Moreover, we find that a closely related value-auditing
process in the customer firm is also assessed for quality as
part of solution quality appraisal. An engineering manager,
for example, reported that “we typically have a weekly
review internally with the value teams here where they have
to review usage and cost. I have engineers in each of the
teams who are responsible for the consumable spend on a
weekly basis and who get measured as part of their performance appraisal. So [the supplier] guys work very
closely with our engineers to make sure they’ve got the
information” (D2-39).
This process of value monitoring and optimization goes
considerably beyond the traditional role of quality control.
Customers want suppliers not only to deliver their part of
the contract with high quality but also to proactively seek
additional ways to add value beyond the contract. Furthermore, the customer assesses the quality of this value
management itself. Because these value-auditing processes
focus on explicit and generally measurable benefits to the
firm, it is not surprising that our data show that the respective
quality assessments are primarily linked with collective valuein-use constructs, with relatively few links to individual value
in use (see Table 5 and Figure 2). Thus,
P6: The quality of value-in-use auditing processes by the supplier
and the customer affects collective value in use.
Differences Across Employee Roles
and Customer Firms
An important issue for suppliers is whether there is heterogeneity in quality and value-in-use perceptions across employee roles and customer firms. We reflected on differences
between interviewees both in the qualitative data and in
How Business Customers Judge Solutions / 105
106 / Journal of Marketing, May 2016
Resource Integration
Coordination
effectiveness
Sourcing network
competence
Employee competence
Customer Resources
Organizational
competences
Sourcing network
competence
Customer orientation
Employee competence
Supplier Resources
Organizational
competences
Entity of Evaluation/
Construct
The extent to which the processes
of supplier–customer interaction
act to integrate resources for the
customer’s benefit
Availability, skills and
professionalism of customer
personnel contributing to
customer benefits
Capabilities of customer’s
organization and personnel to
leverage their knowledge of and
relationships with other firms for
the benefit of the customer
Customer’s organizational
capabilities relating to processes,
knowledge, and physical assets
contributing to customer benefits
Supplier’s organizational capabilities
relating to processes, knowledge,
and physical assets contributing to
customer benefits
Availability, skills, and professionalism
of supplier personnel contributing to
customer benefits
Attitudes and practices of supplier’s
personnel relating to understanding,
prioritizing, and proactively satisfying
individual customer needs
Capabilities of supplier’s
organization and personnel to
leverage their knowledge of and
relationships with other firms for
the benefit of the customer
Definition
6
12
9
5
“Before [contracting solution], we had no traceability 11
that the motors were bought [from any particular
supplier] so you couldn’t send it back.” (D9-13)
“We wouldn’t see these people routinely on site at 18
all; we might see them once a year, possibly less.…
As needed, yes. [Supplier] are here every month.”
(H5-13)
4
11
7
7
11
11
6
13
7
9
“There’s one man and he does
it all and he does a wonderful
job.” (D4-24)
“Amazingly enough, these guys
are a long time in the trade and
they would know what people
require and need.” (H6-4)
“Where [supplier] would add huge
benefit is that they would continue
to manage all your suppliers, you
know, they could handle all your
suppliers on your behalf.” (D2-26)
18
17
“This plant was miles behind
maintenance best practice. We
didn’t really understand the value of
the inventory, we had no systems.”
(H10-1)
“Because we do have our own
skill set, we apply a full-time
reliability engineer.” (H10-1)
Company
4
2
3
4
2
4
4
4
4
5
4
4
5
5
4
4
4
5
7 6 5 25
7 8 5 26
8 8 4 27
9 8 7 32
6 5 4 22
9 5 4 22
9 10 9 8 36
7
4
3 10 6 8 27
7
6
7
8
100
61
61
75
69
72
75
89
% of
9 10 9 8 36 Interviews
Ma Op Pu GM D H B P Tot
Role
Number of Interviews
“They’d machine it for you and
make up the parts for you to try
it out.” (H2-15)
Illustrative Quotation
TABLE 3
Solution Quality Constructs
How Business Customers Judge Solutions / 107
All customer activities of
identifying and reporting the
value-in-use resulting from the
solution
All customer activities of reflecting
on and disseminating
opportunities for value-in-use
enhancement
All supplier activities of reflecting
on and disseminating
opportunities for value-in-use
enhancement
All supplier activities of identifying
and reporting the value in use
resulting from the solution
The extent to which the resource
integration processes fulfill the
tasks of purchasing, maintaining,
using, and disposing of physical
assets for the customer’s benefit
Definition
“The discussions that are going on right now is,
‘What are our KPIs [key performance indicators]?’
‘What is it we really want from this?,’ and then see
that there’s a plan that underpins it.” (H9-5)
“The one area we may not be as good as we’d like to
be is reporting back to [ourselves] on how the
performance is going.” (P8-40)
4
3
5
2
2
9
5
4
5
“Our hands are tied because we’re pharmaceutical. 14
They know the autoclaves on our filling lines that we
would need their parts, so it’s difficult to negotiate
pricing.” (H3-28)
“Yes, they’re [monitoring] hard and soft savings for
the month and [they provide] the tracker of stock
lines and total value of stock giving us a guide.”
(P7-10)
“These guys have monthly management reviews
that I attend.… They present to me on a monthly
basis in terms of the cost options and they … ask for
feedback from me in terms of where I want them to
go.” (D2-44)
9
18
Illustrative Quotation
Company
1
4
2
3
4
4
3
5
3
5
5
5
2
5
2
5
8
9
3 4 2 11
7 5 6 23
4 1 2
4 3 5 17
8 7 5 27
31
64
25
47
75
% of
9 10 9 8 36 Interviews
Ma Op Pu GM D H B P Tot
Role
Number of Interviews
Notes: The numeric columns count the number of interviews in which the construct emerged. Ma = Maintenance; Op = Operations; Pu = Purchasing; GM = General Management/Factory
Management; D = DeviceCo; H = HealthCo; B = BuildCo; P = PrintCo; Tot = total number of interviews in which the construct emerged.
Value-in-use optimizing
Value-in-Use Auditing by
the Customer
Value-in-use monitoring
Value-in-use optimizing
Value-in-Use Auditing by
the Supplier
Value-in-use monitoring
Asset management
effectiveness
Entity of Evaluation/
Construct
TABLE 3
Continued
the formal laddering analyses. We thereby identify four
moderators of the quality–value relationship (see Figure 3,
Panel B).
Resource Integration Involvement
It was striking in the interviews that employees who were
intimately involved in the resource integration process on a
day-to-day basis, typically from maintenance and operations,
spoke more about individual value in use than did those in
general management and purchasing. For employees who
are more embedded in the core resource integration process,
it seems that solution quality has a greater impact on their
individual job performance and well-being. For example,
for a maintenance project engineer (D8), the supplier’s responsiveness to an emerging problem led to task simplicity
for him: “I have two guys on the plane to solve the problem.
They took it seriously; that was at 6 o’clock this evening, they
are landing in [city] for 1 o’clock to solve it. That’s important
to me because at least I’ve not then got tomorrow with the
issue.” By contrast, similar stories from general and purchasing managers tended to end with a collective goal, such
as reduced financial risk, rather than an individual goal.
To explore this insight, we drew up hierarchical value
maps by job role (see Figure 4, Panels A–D).1 Following
Overby, Gardial, and Woodruff (2004), we use a comparison
of means test on construct centrality to explore the apparent
difference between maintenance and operations staff on the
one hand and purchasing and general management on the
other.2 Individual value in use is significantly more central for
the former (mean of centrality = .40, SE = .04) than the latter
(centrality = .18, SE = .05), a large effect (t = 2.77, p = .009,
d = 1.14). Thus,
P7: Resource integration involvement moderates (enhances) the
relationship between solution quality and individual value
in use.
Role Extraversion
The extent to which a person’s job role is focused on the
contribution of outside suppliers we term “role extraversion.”
We found that some interviewees whose role focused on
managing suppliers accordingly focused more on supplier
resources in creating value, whereas others had a more symmetrical view about the contribution of their own organization’s
resources as well. For example, PrintCo’s procurement manager referred little to customer resources in his extensive discussion of a solution: “[Supplier] has quite a presence on site as
far as plant and equipment is concerned, and a lot of the
software that our plant and equipment is running on is [supplier]
1As with Figure 2, we used a cutoff of 1% of implications, with
a minimum of 5 implications for job roles for which the total number
of implications was fewer than 500, following Gengler and
Reynolds (1995); see method step 14 in the Appendix.
2We follow these authors as well as Tuli et al. (2007) in warning
that in qualitative research such as this in which a purposive sample
is neither random nor independent, such statistical examination
should be regarded as exploratory and in the interest of generating
plausible theory that appears consistent with the data collectively,
and not as theory testing.
108 / Journal of Marketing, May 2016
based.… With a potential turnover of anything up to
£5 million a year, the main thing is how much money can they
save us. The commonly held belief is that they have saved us
money” (P8-4; P8-14). Conversely, the operations manager
in charge of the storeroom repeatedly referred to customer
resources that needed improving before explaining how joint
resource integration leads to collective value: “The purchase
repairs that hadn’t been cleared up were going back 15 years,
and they’d never been closed. We and [supplier] now get
together and say ‘this is going to happen at this point,’ and
then we’ll be more specific with dates and times.… If you
know what’s going to happen, you can plan your plant and
say, this part is going to be away; if we haven’t got a spare,
then this is the time it’s going to take. You don’t want to have
the same downtime twice for the same fault on the same part”
(P2-19; P2-29).
Customer resources, then, are significantly more central
for those in an internally focused or balanced role such as
operations or general management (centrality = .23, SE = .04)
and less central for those with an externally focused role
dealing with suppliers on a constant basis, such as in purchasing and maintenance (centrality = .13, SE = .03; t = 2.22,
p = .033, a large effect: d = .75). These results help explain
differences in our findings as compared with previous work in
which purchasing managers mainly serve as respondents
(e.g., Ulaga and Eggert 2006). Following this discussion,
we propose the following:
P8: Role extraversion moderates (reduces) the relationship
between customer resource quality and (a) resource integration process quality; (b) value in use (collective and
individual).
Solution Ownership
A third way in which heterogeneity exists by role is the extent
to which the value-auditing processes were an important part
of the solution quality assessment. This appeared to depend
on the extent to which the individual has responsibility for
solution outcomes. We call this “solution ownership.” As
Figure 4 shows, general managers and, to a lesser extent,
operations managers placed emphasis on both the supplier’s
and the customer’s value-auditing processes as important for
both tracking and optimizing value in use. For HealthCo’s
engineering manager, for example, it was important to
explicitly link these processes: “[A supplier] would provide
us with a monthly scorecard, and I would sign off on the hard
savings on agreed KPIs [key performance indicators]. If they
saved us less than V45,000, then that’s all they got paid. If
they saved us V100,000, they get paid V45,000, so that’s a
very attractive option for any manufacturer” (H10-35; H1038). This element of outcome-based contracting lowered
financial risk, lowered costs, and motivated both parties to look
for additional savings. Conversely, maintenance staff did not
discuss value auditing much. Purchasing managers were
interested in value auditing, but just as they put more emphasis
on supplier resources (as discussed in the previous section),
they tended to regard value auditing as the supplier’s job.
We further explored the impact of solution ownership by
comparing the centrality of value auditing by the supplier in
How Business Customers Judge Solutions / 109
Minimized dependence on the
supplier
Minimized use of the customer’s
fixed capital
Generation and use of ideas for
business improvement
Fixed capital
reduction
Innovativeness
Minimized uncertainty with
respect to financial liabilities
Reduced financial
risk
Dependence
avoidance
13
“In a manufacturing plant like this,
if a critical machine goes down,
people have to be sent home, it’s
that serious, people can’t work.”
(D6-25)
Minimizing nonproductive time in
the firm’s operations
Avoiding downtime
6
5
1
“Your suppliers being so entwined
in your business. There’s pluses
and minuses to that, it can be
extremely dangerous because
you’ll never be able to get them out.”
(D4-66)
“If they’re put in the wrong place, it’s
pointless. If I can get a product
within two days [but] it takes
someone four days to find it, you’ve
got to establish what sort of
inventory system you have and [get]
your housekeeping done.” (D5-22)
“If they see any opportunity that
can add value to our business,
even if we’ve got existing contracts
in place, I’ve told them to come to
us.” (D1-79)
6
11
“We’re dealing less and less with
vendors.” (H1-10)
Simplification of or other
enhancements to the customer’s
processes
Process
improvement
“So that we’d have a warranty of a
repair, which we didn’t have before
[supplier] took over.” (P1-4)
16
“That is going to be better because
they are there to source the parts
cheaper and save the company
money.” (H1-47)
18
18
“I would have heard a lot, you
know, the line is down because
there was a part missing or there
was stock out, and that has
reduced dramatically.” (H3-10)
Illustrative Quotation
Low operational costs from low
purchase prices or other
operational savings
Rapid resolution of operational
difficulties
Definition
Low costs
Collective Value in Use
Fast problem solving
Entity of Evaluation/
Construct
Ma
TABLE 4
Value-in-Use Constructs
5
3
2
2
6
9
7
8
9
Op
2
2
1
3
2
3
3
3
4
Pu
Role
3
2
3
5
3
4
5
5
5
GM
3
6
4
5
7
7
9
9
9
D
3
4
5
4
6
7
9
9
10
H
3
0
1
4
3
7
7
9
9
B
Company
Number of Interviews
2
2
2
3
8
6
6
7
8
P
11
12
12
16
24
27
31
34
36
Tot
31
33
33
44
67
75
86
94
% of
Interviews
110 / Journal of Marketing, May 2016
Minimized pressure and stress in
one’s daily job
Minimized uncertainty related to
processes and decisions
involved in one’s job
Feeling comfortable with other
people at work
Being viewed as a person with
high job competence
Pressure reduction
Uncertainty reduction
Social comfort
Personal reputation
14
12
11
10
7
[With this supplier], “I know where I
am, but if they come to
me and it’s something that I’ve
sent out through [other supplier], I
have no control.” (P5-28)
“It’s just a big improvement for me,
I’m not stressed trying to find parts;
I know where to find them now.”
(H1-57)
“I would rather know today than
find out tomorrow it is going to be
three days. Now and again they
want to please me and say yes, but
that is actually worse than if they
said, ‘Sorry, I can’t get it until
Thursday.’” (B3-27)
“It’s nice to come into work and be
relaxed with people when they
come up to you rather than people
that you don’t trust” (D7-25)
“Ultimately, it will come back to
me.… It’s muck in your face …
from management: ‘Why aren’t
you delivering what we require?’”
(D3-25)
16
2
18
Ma
3
4
5
7
6
7
2
9
Op
0
2
2
2
2
3
1
4
Pu
0
1
1
3
2
3
1
5
GM
4
4
5
6
7
5
3
9
D
2
5
4
7
8
7
0
10
H
2
4
5
5
4
9
2
9
B
Company
Number of Interviews
Role
2
4
5
6
5
8
1
8
P
10
17
19
24
24
29
6
36
Tot
28
47
53
67
67
81
17
% of
Interviews
Notes: The numeric columns count the number of interviewees in which the construct emerged. Ma = Maintenance; Op = Operations; Pu = Purchasing; GM = General Management/Factory
Management; D = DeviceCo; H = HealthCo; B = BuildCo; P = PrintCo; Tot = total number of interviews in which the construct emerged.
Perception of control over
processes and resources that
make up one’s job
“Makes my job easier in that I don’t
have to deal with any of these
people, I just give it to [supplier] and
that’s it.” (P4-13)
“It was chaos, but it’s very organized
now. I prefer it like this.” (H2-8)
“[Compared with another
supplier], these two guys give us a
competitive advantage.” (D2-33)
Impact on the firm’s own market
position
Simplicity and time efficiency of
the processes that make up
one’s job
Illustrative Quotation
Definition
Perceived control
Individual Value in Use
Task simplicity
Competitive
advantage
Entity of Evaluation/
Construct
TABLE 4
Continued
How Business Customers Judge Solutions / 111
Resource
Integration
Value
Auditing by
the Supplier
Value
Auditing by
the Customer
Collective
Value in Use
Individual
Value in Use
25
4
10
1
24
4
10
1
2
4
9
9
2
4
9
9
10
5
13
41
73
13
6
13
48
78
7
8
3
3
7
8
4
4
3
8
5
3
5
3
8
6
6
6
81
39
36
50
46
266
133
223
71
26
32
172
60
110
25
36
5
7
107
33
51
27
41
11
9
146
62
115
Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect
Customer
Resources
Value-in-Use Constructs
(Number of Implications)
1629
265
506
53
52
327
154
272
Direct
.81
.83
.31
.28
.31
.14
.12
Direct
.32
.60
.08
.07
.45
.17
.31
Direct
.26
.50
.02
.02
.14
.02
.04
Direct
Total
Indicesb
(Number of
Implications) Abstractness Centrality Prestige
bIndices are calculated as follows: abstractness is the average level of a construct in the ladder
column). In means-end terminology, the “Indirect” column therefore includes the sum of direct and indirect implications.
from concrete (approaching 0) to abstract (approaching 1); centrality measures how often a construct
appears in any ladder (ranging from 0 to 1); and prestige is an index of how often a construct is the destination in implications, as a proportion of all implications in the matrix (ranging from 0 to 1).
aEach cell shows the number of times the row construct is followed by the column construct within a ladder, as the next step in the ladder (“Direct” column) or at any point later in the ladder (“Indirect”
Supplier
resources
Customer
resources
Resource
integration
Value
auditing
by the
supplier
Value
auditing
by the
customer
Collective
value in
use
Individual
value in
use
Total
Construct
Supplier
Resources
Solution Quality Constructs (Number of Implications)
Entities of Evaluationa
TABLE 5
Implications Matrix (Total Sample)
FIGURE 2
Hierarchical Value Map (Total Sample)
Value-in-Use Auditing
by Supplier
GF = .89
Pa1 = .33
Pa2 = .44
Supplier
Resources
Value-in-Use Auditing
by Customer
Collective
Value in Use
Resource
Integration
Customer
Resources
Individual
Value in
Use
Notes: GF = goodness-of-fit (% of all implications); Pa1 = Parsimony1
(% of all squares in the matrix); Pa2 = Parsimony2 (% of all
nonzero squares in the matrix). The horizontal axis represents
the construct’s abstractness (0–1); the circle area is proportional to construct centrality; the line thickness is proportional to
the number of implications between two constructs. Number of
implications represented in this map = 1,021.
maintenance roles (centrality = .04, SE = .02) versus other
roles (centrality = .09, SE = .02). The difference is only
significant at the 10% level (t = -1.81, p = .079); if it is indeed
present, it appears to be a medium effect (d = .60). Similarly,
centrality of value auditing by the customer is lower for
maintenance managers (centrality = .04, SE = .01) than for
other roles (centrality = .11, SE = .02; t = -3.57, p = .001, a
large effect: d = 1.19). We therefore propose the following for
further exploration:
P9: Solution ownership moderates (enhances) the relationship
between value-in-use auditing quality (by both the supplier
and the customer) and collective value in use.
Reconfiguration Capability
We also examined the data for differences across customer
firms. One difference related to reconfiguration capability,
which we define as the customer firm’s ability to amend its
processes in order to optimize value in use from the solution.
A striking difference in PrintCo, irrespective of job role and
supplier firm, was the presence in many ladders of customer
resources playing a negative role. Interviewees regarded this
state-owned company as having structural inertia (Hannan
and Freeman, 1984), with outdated, inflexible processes. In
the view of an operations manager (P2), “[Ours is] such an
archaic system, you’ve got no visibility with it. Fundamentally, [supplier] are in here because the material function
in [our company] failed” (P2-4). To some extent, resource
integration decisions could take account of this inflexibility,
outsourcing such processes as stock control to a supplier as
part of the solution design. However, in other respects, the
difficulty of reconfiguring the customer organization’s processes provided a barrier to the realization of value in use. For
112 / Journal of Marketing, May 2016
example, outsourcing of some parts purchasing to a competent supplier held the potential to reduce costs but had been
halted as a result of the inflexibility of PrintCo’s signoff
processes: “Pete [supplier representative] has been looking to
drive down the cost of each vendor.… [Supplier] did start
to order, but then a stop was put to it by [PrintCo].… I think
to the older people, they don’t like having things taken off
them.… You’ve always got that comfort zone in the civil
service and you can’t get sacked” (P2-39). Because solutions
dig deeply into the customer organization, this difficulty in
reconfiguring the organization provided a barrier to the realization of value in use through an innovative solution.
Although similar issues certainly came up in other firms,
they seemed particularly prominent with PrintCo. Figure 4
graphically illustrates the relative prominence of customer
resource quality in PrintCo interviews (Panel E) as compared
with the other companies (Panel F). Customer resource
quality is more central for those in PrintCo than the other
three companies (PrintCo: centrality = .26, SE = .05 vs. other
companies: centrality = .15, SE = .02; t = 2.28, p = .03, a large
effect: d = .84). We therefore propose the following:
P10: A customer firm’s reconfiguration capability moderates
(reduces) the relationship between customer resource
quality and (a) resource integration process quality; (b)
value in use (collective and individual).
Conclusions
This study aimed to explore how business customers assess
solution quality as antecedent to value and aimed to investigate what constitutes the value in use that results from the
solution. Figure 3 presents the resulting framework. In
assessing solution quality, customers evaluate not only the
quality of supplier resources but also the quality of their own
resources and of the joint resource integration process. In
addition, they judge the quality of the value-in-use auditing of
both parties (see all constructs listed in Table 3). These
contribute to value in use at both collective and individual
levels, judged through the constructs in Table 4. Laddering
reveals the central role of the resource integration process that
draws on resources from both parties and in turn is central to
value creation (see Figure 2). We identify four moderators of
the relationship between solution quality and value in use
(Figure 3, Panel B).
These findings make three main contributions to literature
on solutions and, more broadly, on quality and value. The first
is the conception of solution quality and elicitation of its
components, which critically include quality assessments of
both parties’ resources and processes, and not just those of the
supplier. This contrasts with the overwhelming focus in
quality research on the quality of the supplier’s offerings
alone (Bolton and Drew 1991; Sivakumar, Li, and Dong
2014; Ulaga and Eggert 2006). Although both conceptual
(Vargo and Lusch 2004) and empirical (Macdonald et al.
2011) work on cocreation has acknowledged the role of the
customer’s usage process, our data show that, in a solutions
context, the customer’s role is not simply to use the supplier’s
offering; rather, the very nature of the solution is jointly
designed and evolved through the joint resource integration
FIGURE 3
How Solution Quality Leads to Value in Use
A: Quality–Value Relationship
Value in Use
Solution Quality
Resource Quality
Process Quality
Value-in-use
auditing by the
supplier
Value-in-use
auditing by the
customer
Supplier
resources
P6
P6
P1
P4
Collective
value in use
P4
P5
P5
Resource
integration
P3
P2
P5
P5
P4
Individual
value in use
P4
Customer
resources
B: Moderators of Quality–Value Relationship
Value in Use
Solution Quality
Resource Quality
Process Quality
Value-in-use
auditing by the
supplier
Solution Ownership
+
P9
Value-in-use
auditing by the
customer
Supplier
resources
Collective
value in use
Resource
integration
Individual
value in use
Customer
resources
Role
Extraversion
–
–
P8
P 10
Reconfiguration
Capability
+
P7
Resource Integration
Involvement
How Business Customers Judge Solutions / 113
process, which importantly is itself quality-assessed by the
customer. Innovation occurs as this process draws on both
supplier and customer resource assessments to redefine the
boundary between supplier and customer. The quality
assessment of both the supplier’s and the customer’s sourcing
network competence provides an example; when the supplier’s network is perceived to be superior to the customer’s,
the customer firm may configure its supply network to make
more use of the supplier as an intermediary. Thus, our data
suggest that a solution’s value proposition is itself cocreated
through the resource integration process. Furthermore, this
value proposition is not simply delivered; rollout of the
solution does not just involve meeting predefined goals.
Rather, value in use is itself managed, redefined, and optimized throughout the value-auditing processes of both the
supplier and the customer. These processes are sufficiently
critical that they themselves are quality assessed.
Overall, then, our data paint a radically different picture
of quality from the traditional view of the supplier’s product
and service quality alone. Most fundamentally, practitioners
and scholars alike seem to have a blind spot, looking for
quality in the wrong place: it resides not only in customer
perceptions of the supplier’s actions at the customer interface
but also in (1) the customer’s own resources and processes
and (2) the supplier–customer relationship, through quality
assessment of the resource integration process. Golder, Mitra,
and Moorman (2012) observe that customer coproduction
can affect the quality of the supplier’s offering, which in turn
can affect the customer’s experience of and evaluation of
the offering; for example, self-assembling furniture may
affect the quality of the assembled item. We add that coproduction processes themselves are assessed for quality by
the customer.
Our second contribution is the grounded elicitation of
what constitutes the value in use that results from solution
quality. Again, the picture that emerges is very different
from the extant view. Whereas business literature has overwhelmingly assumed value to be a function of the firm’s
collective goals, we find that business solutions are also
judged relative to the individual goals of usage center
members. Although this may prove true for a broader range
of business offerings, it is perhaps particularly the case for
product-service solutions, in which the redefinition of organizational boundaries within the resource integration process creates profound changes to the working lives of customer
staff. The extent to which people perceive these changes
positively is instrumental to how the solution is judged. In
addition, some dimensions of collective value in use are
emergent and, to some extent, tacit rather than formally
specified in advance, namely process improvement, dependence avoidance, and the impact on the customer’s competitive
advantage and innovativeness.
Our third contribution is in uncovering heterogeneity in
how solutions are judged. Although research on heterogeneity in the quality–value relationship is rare, the topic has
received some attention in consumer markets (Overby et al.
2004). We add to this literature by identifying moderators
in the solution context: resource integration involvement,
role extraversion, solution ownership, and reconfiguration
114 / Journal of Marketing, May 2016
capability. We thereby contribute to the interest in service
literature on how value depends on context (Edvardsson,
Tronvoll, and Gruber 2011; Vargo and Lusch 2016).
Collectively, these findings suggest a very different view
of solutions from that in the existing literature. Current
definitions emphasize that solutions (1) integrate products
and services, (2) are customized by the supplier, (3) exist
to solve a customer (organizational) problem, and (4)
achieve better (organizational) outcomes than the sum of
the individual product and service components (Nordin and
Kowalkowski 2010; Shankar, Berry, and Dotzel 2009;
Storbacka 2011; Tuli, Kohli, and Bharadwaj, 2007). We add
that solutions (5) also integrate customer resources and
processes, (6) are customized through a joint resource
integration process, (7) are judged in terms of individual as
well as organizational value in use, and (8) are continually
optimized to meet emergent goals and not just solve predefined problems. We accordingly propose the following
revised definition of business solutions: The combining of
supplier and customer processes and resources through a joint
resource integration process to create collective and individual
value in use, which is monitored and optimized through valueauditing processes.
Implications for Practice
Our findings shed light on how manufacturers can succeed
in shifting toward solutions. Our field conversations with
manufacturers suggest that some regard a solution primarily
as a pricing tactic to increase margins through bundling of
products and services. However, as Figure 3 shows, an
additional range of skills is needed to provide high-quality
solutions. Most critically, the supplier needs to work with the
customer to create an effective resource-integration process
that combines the resources of both customer and supplier.
This process requires a range of asset management decisions
to be made between the customer and supplier that answer
questions such as (in this maintenance and operations context) where to hold stock, who will maintain what equipment,
who is best placed to purchase equipment, and who can best
develop predictive maintenance systems. The answer should
be contingent on the quality of the resources that each party
contributes. For example, a supplier to both DeviceCo and
HealthCo applied the same approach with each, taking over
the sourcing of some parts from the customer as part of the
solution. However, although the supplier’s sourcing network
competence in the devices sector was considerable, regulatory differences in the health sector meant that this aspect
of the solution did not work well. The resource-integration
process, then, is integral to the joint development of the value
proposition, not subsequent to it.
In the previous example, resource integration redefined
the boundary between supplier and customer; this is not
uncommon. For example, Finland’s Neste Oil achieved a
price premium with shipping operator Tallink by taking over
the customer’s oil stocks and switching oil storage from
trucks to a ship, reducing overall cost. The supplier also took
over some financial hedging because it could achieve better market rates (Neste Corporation 2016). Such boundary
FIGURE 4
Hierarchical Value Maps (Subsamples)
Job Role
A: Maintenance (Implications = 469)
B: Operations (Implications = 262)
GF = .92
GF = .94
Pa1 = .33
SR
VAC
VAS
Pa2 = .53
Pa1 = .33
Pa2 = .53
VAC
SR
V-C
V-C
RI
RI
V-I
CR
C: Purchasing (Implications = 100)
D: General Managers (Implications = 109)
GF = .78
GF = .68
VAS
V-I
CR
VAS
Pa1 = .14
Pa2 = .29
SR
Pa1 = .22
VAC
Pa2 = .33
SR
V-C
RI
V-C
RI
V-I
CR
V-I
PrintCo Versus Other Companies
E: PrintCo (Implications = 254)
F: HealthCo/DeviceCo/BuildCo (Implications = 767)
GF = . 91
GF = . 87
VAS
Pa1 = .33
VAC
VAS
Pa2 = .41
Pa2 = .50
SR
Pa1 = .35
SR
VAC
V-C
V-C
RI
RI
CR
V-I
CR
V-I
Notes: GF = goodness-of-fit (% of all implications); Pa1 = Parsimony1 (% of all squares in the matrix); Pa2 = Parsimony2 (% of all nonzero squares in
the matrix); SR = supplier resources; CR = customer resources; RI = resource integration; V-C = collective value in use; V-I = individual value
in use; VAS = value-in-use auditing by supplier; VAC = value-in-use auditing by customer.
How Business Customers Judge Solutions / 115
shifting carries risks as well as benefits for the supplier. To
gain greater access to service profit pools, for example, RollsRoyce’s TotalCare solution makes long-term service pricing
commitments for which the firm carries risk. Overoptimistic
pricing of some of these contracts has left the company with
financial problems years later. Taking risk away from the
customer makes sense only if the supplier can reduce that
risk, estimate it, mitigate it, and price for it. A compromise we
noted on several occasions in our data was to contract on
value in use for only part of the contract. Another example of
this is DHL’s solution for a train operator, in which the
provision of food and drink logistics to station and train
buffets was contracted at approximately cost, with additional
payments dependent on the traveling consumer’s satisfaction
with the buffet, which was staffed by the train operator.
Neither party could achieve this value in use on their own, but
this element of outcome-based contracting aligned their
interests in achieving successful resource integration without
exposing either party to excessive risk.
Making this resource integration process work requires
high coordination effectiveness—again, a quality of the dyad
rather than of the supplier alone. Our data suggest that what
works well here is integrated teams, typically involving
supplier personnel working permanently on site at the customer’s premises. DHL’s successful Customer4Life initiative
takes this integration logic further than most: its account plans
for its key accounts are written not by account managers but
by a joint team with the customer, and they are distributed in
both firms.
To make resource integration work, the employee competence and customer orientation required of supplier staff
are critical. More broadly, the resource integration process
can only improve on the prior situation if the supplier
contributes some superior resources. Importantly, these go
beyond the ability to serve competently (the traditional
notion of service quality) to emphasize an ability to improve
the customer’s processes. Solutions providers thus need to
redesign not only their own offerings but also their customer’s
processes to optimize not product quality but value in use.
For example, Neste helped Tallink refit its engines to use
more efficient and environmentally friendly oil, which lowered
the shipping firm’s total journey cost as well as meeting its
environmental objectives.
This reconfiguration of customer processes can lead to
resistance within the customer firm because its employees
may fear losing influence or even their jobs, or because
employees just want to avoid any changes within their job
roles. This leads to the necessity to jointly design adequate
change management strategies at an early stage to overcome
such conflicts and capture a solution’s overall success.
Another potential challenge to keep in mind when altering
customer processes to improve solution quality is that these
changes may disrupt the solution quality for the customer
and other suppliers. For example, U.K. telecommunications
firm BT provided its customer relationship management
system to its key distributors to help them share a single
customer view on the end customer’s relationship with
BT. Although this helped the distributor sell and service
BT products, it added complexity for the distributor in
116 / Journal of Marketing, May 2016
navigating between BT’s system and its own database for
other equipment suppliers.
The combining of joint processes and resources raises
the issue of quality control. In a preferred solution, both the
supplier and the customer are engaged in quality control, and
their chief focus is not on what the supplier delivers but on the
value in use jointly created. Developing an effective value-inuse auditing process should therefore be a high priority for
solutions providers. This process needs to monitor the value
in use created by the solution, including emergent benefits
such as unanticipated innovations or improved competitive
advantage. The value-in-use typology of Table 4 forms a
checklist as to where these benefits may lie, though others are
possible. The auditing process also needs to optimize that
value in use, continuously looking for ways to increase
valued outcomes, irrespective of whether they form part of
the contract. What seems to work best is for this process to be
coupled with the customer’s auditing efforts, giving the
partnership’s joint findings credibility with senior management. For example, DHL holds quarterly reviews in which
benefits and problems for both parties are openly shared and
tracked, and further value-creating opportunities are brainstormed. Reflecting the symmetry between customer and
supplier in our conceptual framework, these meetings are
noticeably open, with both parties declaring their satisfaction
with the other and listing ways in which the other could
improve. This value-in-use auditing should be a key focus of
account managers, given its importance in generating and
signaling beneficial outcomes within the customer firm.
Perhaps solutions providers should rebrand quality control as
“value control.”
When purchase or renewal decisions approach, account
managers should be aware of the distinct emphases of different members of the usage center revealed by our moderator analysis. Employees such as purchasing managers who
spend more time dealing with suppliers (which we term “role
extraversion”) are likely to be less concerned than others with
the quality of customer resources. In addition, roles with low
responsibility for the solution’s commercial success (such as
maintenance managers) place less emphasis on value-in-use
auditing than others. Conversations with customers will need
to be tailored to these different interests. Finally, hands-on
employees (such as operations and maintenance staff) who are
deeply involved in resource integration focus more than others
on individual value-in-use dimensions such as task simplicity.
Account managers may need to take account of these individual motivations despite their absence from the formal
outputs of the customer’s value-in-use auditing processes.
Marketing or sales people cannot easily undertake many
of these conversations around individual value in use, however; it is the service and operations staff involved in the
various processes of resource integration who are in a position to optimize such value. This leads to the necessity of an
integrated communications strategy, so that all supplier
activities in the customer journey aim to increase quality and
value perceptions. Again, this points to a broader role for key
account managers, who need to not only manage contacts
with purchasing and general managers but also coordinate
wider communication activities with the customer.
A final management implication relates to market research. We have commented that the picture of solution
quality that emerges from our data is radically different from
the literature’s extant view of product and service quality; it is
equally different from the implicit view embedded in most
firms’ customer insight processes. Suppliers’ satisfaction
surveys and interviews commonly focus on capturing the
customer’s view of the supplier’s products and services and,
in particular, emphasize moments of service delivery. While
important, these moments form only part of the solution;
equally important in value creation is the customer’s assessment of the quality of their own resources as well as of
the joint resource integration process. Suppliers need to
expand the scope of their customer insight substantially to
uncover these perceptions. Furthermore, this insight should
go beyond quality to incorporate value-in-use perceptions.
Unlike the customer’s value-auditing process, which focuses
purely on collective value, suppliers may wish to include
individual value in use in such market research. Such qualitative techniques as open interviews or, ideally, observation
could be used to check and, if necessary, extend the set of
individual value-in-use constructs we have identified in other
contexts. Surveys could then track the extent to which the
solution creates or destroys individual value in use through
items for each construct. Where feasible, survey research
needs to avoid the trap of a single purchasing respondent and
should instead include multiple job roles across the usage
center.
Research Directions
One important research direction is to conduct quantitative
research exploring the antecedents and outcomes of solution quality and value in use. This could usefully check the
proposition that value in use mediates the relationship
between solution quality and overall satisfaction (Yang and
Peterson 2004). The many other issues requiring examination include (1) how customers trade off or otherwise
combine value-in-use constructs in determining satisfaction and purchase behaviors, (2) how value-in-use
perceptions of individuals affect collective decision making about supplier choice, and (3) whether value in use is
judged absolutely or relative to expectations at the moment
of purchase. The relative role of collective value-in-use
constructs versus individual ones in determining behavioral
outcomes forms a particularly worthwhile research direction. Research is also needed into whether, when selecting
suppliers, customers distinguish between value-in-use failures that arise from supplier processes versus those that arise
from their own customer processes or the joint resource
integration process. These questions ideally require data
combining quality and value-in-use perceptions with behaviors, using longitudinal approaches, if possible. Longitudinal
data might also aid in exploration of the dynamics of value in
use, extending work on the dynamics of service quality
(Sivakumar, Li, and Dong 2014). Our literature review
(summarized in Table 1) suggests that these research
questions are just as relevant in consumer markets as in
business relationships.
Appendix: Method for Eliciting
Quality and Value in Use
For each step, instructions synthesized from the literature are
followed by one paragraph giving specific details for this study.
Data Collection: Repertory Grid Interviews with
Means-End Chaining
1. Element elicitation: Elicit elements (supplier firms) for the
repertory grid analysis.
Each interviewee was asked to name six solutions providers
(“elements” in repertory grid terminology) with which they are
familiar. Each supplier name was written onto a small piece of
paper for use in the interview.
2. Construct elicitation: Elicit constructs using the triadic method
(Kelly 1963) in which the interviewer presents three elements at
a time and asks, “In what way are two of these similar to each
other and different from the third?”
The interviewee presented three supplier names and asked, “In
what way are two of these similar to each other and different
from the third in terms of the outcomes you get?” The resulting
discussion led to elicitation of dyadic constructs that the
interviewer wrote on a form called a repertory grid (illustrated
in Figure 1). Each construct has a construct pole (e.g.,
“commercial benefit”) and a contrast pole (e.g., “not commercial benefit”).
3. Element rating: Rate elements on bipolar constructs (Goffin
and Koners 2011).
The interviewee was then asked to rate all six suppliers on each
construct, using a five-point Likert scale. These ratings were
recorded on the grid. The interviewee’s talk while completing
this task further illuminated construct meaning.
4. Laddering to higher-order constructs: The higher, more
abstract levels of a goal hierarchy tend to be more tacit than the
lower, more concrete levels (Peterman 1997; Woodruff 1997).
Therefore, laddering questions using a means-end chaining
approach (Gutman 1982) are needed to elicit the higher-order
value constructs (Barsalou 1991; Zeithaml 1988).
Value in use is more abstract and tacit than the more concrete
construct of quality. This meant that that the “outcomes you
get” question was likely to elicit quality constructs, rather than
value-in-use constructs, despite the careful wording. The
interviewer used laddering questions to elicit the value-in-use
constructs that corresponded to each solution quality construct.
Laddering questions include “Why do you care about that?”
“Why is that important to you?” and “How does that make you
feel?” This resulted in “ladders” (see, e.g., Figure 1, Panel B).
5. Repeated construct elicitation: Repeat steps 2–4 for further
triads of elements to elicit additional constructs.
After completing the discussion around the first triad of supplier
names, the interviewer then presented another triad and repeated
the “outcomes you get” question, asking the interviewee not to
repeat a construct that had already been given. In Figure 1, Panel
A, for example, the interviewee identified “focused on our
organization’s needs” as a result of viewing the second triad.
Steps 2–4 were repeated until no further constructs were elicited. In the example grid in Figure 1, Panel A, six constructs
were elicited.
Analysis Stage 1: Construct Categorization
6. Raw construct identification: Interviews are transcribed.
Analysis of transcripts follows Goffin, Lemke, and
Szwejczewski’s (2006) method, in which raw constructs are
transferred onto numbered cards.
How Business Customers Judge Solutions / 117
Interviews were transcribed into 875 pages of text. The
researchers reviewed each transcript, identifying chunks of
meaning relating to evaluation of the solution and transferring
each raw construct onto a separate card.
7. Initial construct categorization: The chunks of meaning from
the first case are categorized.
We used raw construct cards from the first customer firm to
develop an initial construct categorization. In a series of
workshop…
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