Week 3 Assignment- Doctorate Level Assignment

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 andmeans-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

Under pressure from market maturity and globaliza-tion, many manufacturing firms are looking to ser-vices 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 solu- tions, 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 guaran- teed 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 man- ufacturers understand what drives successful solutions. For

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: [email protected]). 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. [email protected]). 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 assis- tance 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 Journal of Marketing ISSN: 0022-2429 (print) Vol. 80 (May 2016), 96–120

1547-7185 (electronic) DOI: 10.1509/jm.15.010996

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, cus- tomers 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 re- sources 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 Associ- ation’s [2013] definition), practitioners continue to express difficulties in understanding the drivers of customer per- ceived 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) lit- erature 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 sol- ution 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. Accord- ingly, 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 pro- cesses and resources as well as joint processes—a significant extension of the quality concept (Golder, Mitra, andMoorman 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 con- structs as well as collective ones. This significantly extends the dominant view of value in business markets as a func- tion of organizational goals (Ulaga and Eggert 2006); equally, it contrasts in the opposite direction with the dom- inant 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, andGross 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 pre- determined 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 theo- retical contributions, including a refined definition of sol- utions, 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 man- ager 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 andGutman 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 out- come, 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 con- ception 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 sug- gestion 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 definitionmust 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

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 pro- cesses, 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 im- plications 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 inter- actions 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 em- pirical 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 pre- vious research has focused on a single informant—most commonly a purchasing manager—to represent each cus- tomer firm, exploration of value in use requires the per- spectives of multiple members of this usage center. Fourth, goal theory suggests that people have both their own indi- vidual 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 cus- tomer and supplier firms (Macdonald et al. 2011). For

98 / Journal of Marketing, May 2016

T A B L E 1

E m p ir ic al

S tu d ie s o f C u st o m er

V al u e in

B u si n es

s- to -C

o n su

m er

an d B u si n es

s- to -B

u si n es

s C o n te xt s

S tu d y

D efi

n it io n (o r

O p er at io n al iz at io n ) o f

Q u al it y

D efi

n it io n o f V al u e

Q u al it y P er ce

p ti o n s

V al u e A p p ra is al s

S am

p le

S u p p lie

r P ro ce

ss C u st o m er

P ro ce

ss M u lt i-

d im

en si o n al

a In d iv id u al

C o lle

ct iv e

B u ye

r U se

r M u lt ip le

b

B us

in es

s- to -C on

su m er

C on

te xt s

Z ei th am

l( 19

88 )

T he

co ns

um er ’s ju dg

em en

t ab

ou t a pr od

uc t’s

ov er al l

ex ce

lle nc

e or

su pe

rio rit y.

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ra ll as

se ss

m en

t of

th e

ut ili ty of

a pr od

uc tb

as ed

on pe

rc ep

tio ns

of w ha

t is

re ce

iv ed

an d w ha

ti s gi ve

n.

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— —

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— —

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—

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d D re w

(1 99

1) T he

cu st om

er ’s

as se

ss m en

t of

th e ov

er al l

ex ce

lle nc

e or

su pe

rio rit y of

a se

rv ic e.

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-o ff be

tw ee

n a

cu st om

er ’s

ev al ua

tio n of

th e be

ne fi ts

of us

in g a

se rv ic e an

d its

co st .

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— —

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— —

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—

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ne y (1 99

9) N ot

de fi ne

d. N et

va lu e of

be ne

fi ts

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co st

of a pr od

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d pr oc

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s of

fi nd

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— —

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ne y,

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ah er ,

an d Jo

hn so

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9)

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su re d

di m en

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in cl ud

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tio na

ls er vi ce

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ni ca

ls er vi ce

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nd pr od

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ua lit y.

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va lu e fo r

m on

ey — th e cu

st om

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as se

ss m en

to fn

et va

le nc

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lti ng

fr om

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d re tu rn

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k.

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— —

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— —

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, an

d H ul t (2 00

0) Im

pl ic it de

fi ni tio

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rv ic e

pe rf or m an

ce pe

rc ep

tio n.

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ra ll as

se ss

m en

t of

th e

ut ili ty of

a pr od

uc tb

as ed

on pe

rc ep

tio ns

of w ha

t is

re ce

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ti s gi ve

n

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— —

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— —

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—

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ne y an

d S ou

ta r

(2 00

1) Im

pl ic it de

fi ni tio

n: pe

rc ei ve

d pr od

uc t an

d se

rv ic e ex

ce lle nc

e or

su pe

rio rit y.

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fi ni tio

n: pr od

uc t

qu al ity

re la tiv e to

pr ic e.

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— —

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— Y es

— —

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ic k,

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tr a,

an d R ig do

n (2 00

1) A ffo

rd ab

le qu

al ity , or

ec on

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ex ch

an ge

en co

un te r

ef fi ci en

cy co

m pr is e

co ns

um er

re tu rn

on in ve

st m en

t.

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er ie nt ia lv

al ue

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s (c on

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fu ln es

s, an

d ae

st he

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es hm

uk h,

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d S ab

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2) D riv

er s of

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cl os

e to th e qu

al ity

co nc

ep t:

op er at io na

lc om

pe te nc

e, be

ne vo

le nc

e an

d pr ob

le m -

so lv in g or ie nt at io n.

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co ns

um er ’s

pe rc ep

tio n of

th e be

ne fi ts

m in us

th e co

st s of

m ai nt ai ni ng

an on

go in g

re la tio

ns hi p w ith

a se

rv ic e

pr ov

id er .

Y es

— —

Y es

— —

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—

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g an

d P et er so

n (2 00

4) N ot

ex pl ic it.

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m ea

su re

in cl ud

es se

rv ic e

pe rf or m an

ce an

d ea

se of

us e.

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ra tio

of th e co

ns um

er ’s

ou tc om

e/ in pu

tt o th at

of th e

se rv ic e pr ov

id er ’s

ou tc om

e/ in pu

t.

Y es

— —

Y es

— —

Y es

—

How Business Customers Judge Solutions / 99

T A B L E 1

C o n ti n u ed

S tu d y

D efi

n it io n (o r

O p er at io n al iz at io n ) o f

Q u al it y

D efi

n it io n o f V al u e

Q u al it y P er ce

p ti o n s

V al u e A p p ra is al s

S am

p le

S u p p lie

r P ro ce

ss C u st o m er

P ro ce

ss M u lt i-

d im

en si o n al

a In d iv id u al

C o lle

ct iv e

B u ye

r U se

r M u lt ip le

b

B u si n es

s- to -B

u si n es

s C o n te xt s

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d G em

ün de

n (2 00

1) N ot

de fi ne

d. S up

pl ie r- pe

rc ei ve

d va

lu e:

tr ad

e- of f be

tw ee

n be

ne fi ts

an d sa

cr ifi ce

s fr om

re la tio

ns hi p.

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— —

— Y es

— c

— —

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ar bo

, Je

di di , an

d S in ha

(2 00

1) T he

co ns

um er ’s ju dg

em en

t ab

ou t a pr od

uc t’s

ov er al l

ex ce

lle nc

e or

su pe

rio rit y.

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iv ed

va lu e is

a fu nc

tio n of

pe rc ei ve

d qu

al ity

an d pe

rc ei ve

d pr ic e.

Y es

— —

— Y es

— Y es

—

U la ga

(2 00

3) P ro du

ct qu

al ity : th e ex

te nt

to w hi ch

pr od

uc t m ee

ts cu

st om

er sp

ec ifi ca

tio ns

. K ey

as pe

ct s ar e

pe rf or m an

ce , re lia bi lit y,

an d co

ns is te nc

y.

T he

tr ad

e- of f be

tw ee

n th e

be ne

fi ts

(“ w ha

t yo

u ge

t” )

an d th e sa

cr ifi ce

s (“ w ha

t yo

u gi ve

”) in

a m ar ke

t ex

ch an

ge .

Y es

— Y es

— Y es

Y es

— —

La m

et al . (2 00

4) N ot

de fi ne

d. S er vi ce

qu al ity

ite m s in cl ud

e ea

se ,

tim el in es

s, an

d re lia bi lit y.

A co

m pa

ris on

of w ei gh

te d

“g et ” at tr ib ut es

to “g iv e”

at tr ib ut es

.

Y es

— —

— Y es

Y es

Y es

—

U la ga

an d E gg

er t

(2 00

6) T he

ex te nt

to w hi ch

th e

pr od

uc t m ee

ts cu

st om

er sp

ec ifi ca

tio ns

.K ey

as pe

ct s

ar e pe

rf or m an

ce ,r el ia bi lit y,

an d co

ns is te nc

y.

B en

efi ts

an d co

st s.

Y es

— —

— Y es

Y es

— —

F ar ou

gh ia n et

al .

(2 01

2) N ot

de fi ne

d. D im

en si on

s of

e- se

rv ic e qu

al ity

in cl ud

e ef fi ci en

cy , fu lfi llm

en t an

d av

ai la bi lit y.

B en

efi ts

an d sa

cr ifi ce

s (w

hi ch

va ry

in de

pe nd

en tly ).

Y es

— Y es

— Y es

Y es

— —

A ar ik ka

-S te nr oo

s an

d Ja

ak ko

la (2 01

2) Im

pl ic it de

fi ni tio

n: th e

pe rf or m an

ce of of fe rin

g an

d in te ra ct io n.

T he

tr ad

e- of f be

tw ee

n be

ne fi ts

an d sa

cr ifi ce

s em

er gi ng

th ro ug

h th e

cu st om

er ’s

va lu e-

ge ne

ra tin

g pr oc

es se

s.

— —

Y es

— Y es

Y es

Y es

—

T hi s st ud

y T he

pe rc ei ve

d ex

ce lle nc

e or

su pe

rio rit y of

an en

tit y—

in th is

ca se

, a

so lu tio

n.

A ll cu

st om

er -p er ce

iv ed

co ns

eq ue

nc es

ar is in g fr om

a so

lu tio

n th at

fa ci lit at e or

hi nd

er ac

hi ev

em en

t of

th e

cu st om

er ’s

go al s.

Y es

Y es

Y es

Y es

Y es

Y es

Y es

Y es

a A pp

lie s su

m m at iv e as

se ss m en

t of

va lu e,

un le ss

lis te d as

m ul tid

im en

si on

al .

b I nt er vi ew

s he

ld w ith

a si ng

le co

m pa

ny /h ou

se ho

ld in fo rm

an t, un

le ss

lis te d as

m ul tip

le .

c S am

pl e in cl ud

ed se

lle rs

ra th er

th an

bu ye

rs /u se

rs .

100 / Journal of Marketing, May 2016

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 com- parison 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 an- swers 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 as- sumption as to whether customer goals are collective, indi- vidual, 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 de- vices (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 com- pany, totaling 36 interviewees. Interviews averaged 47 minutes in length (see Table 2).

Data Collection and Analysis

We synthesized literature on repertory grid technique, means- end 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 expe- rience quality (Lemke, Clark, andWilson 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 techniquewithmeans-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: abstract- ness is the average level of a construct in the ladder from concrete (approaching 0) to abstract (approaching 1); cen- trality 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 implica- tions 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 relation- ships (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 con- structs, 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 sol- ution 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 sup- plier 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 mon- itoring 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-in- use 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 en- hancements to the customer’s processes—is valued both in itself (centrality = .15, second only to low costs among value- in-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 cus- tomer’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 achieve- ment 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 tradi- tional 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 solu- tion provider] would recover this money as well” (P6-28). Conversely, dependence avoidance is expressed in the con- cern that through the transfer of some responsibilities to the supplier, the customer risks losing competencies such as

TABLE 2 Sample

Case

Role

Total InterviewsMaintenance Operations Purchasing

General Management

BuildCo Number of interviewees 6 1 1 1 9 Interviewee IDs B3, B4, B6, B7, B8, B9 B5 B2 B1

DeviceCo Number of interviewees 4 3 1 1 9 Interviewee IDs D5, D7, D8, D9 D1, D3, D6 D4 D2

PrintCo Number of interviewees 3 3 1 1 8 Interviewee IDs P4, P5, P7 P2, P3, P6 P8 P1

HealthCo Number of interviewees 5 2 1 2 10 Interviewee IDs H1, H2, H4, H5, H7 H6, H11 H9 H3, H10

Total 18 9 4 5 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

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 theymight 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 pro- duction line stores had a beneficial impact on the working life

of the stores manager: “I’m responsible overall for all pro- cedures 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 pres- sure reduction, or minimized pressure and stress in one’s daily job. An engineer at HealthCo provides a typical ex- ample 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 some- thing, you’re not under pressure, because you know that if you make an improvement, it’s a plus, whereas if a [pro- duction] 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 ap- preciated the control benefits of a solution that involved an on-site customer representative at DeviceCo: “They are on

FIGURE 1 Example of Repertory Grid and Laddering: Engineering Manager (D2), DeviceCo

A: Repertory Grid a

Construct Number

Construct Pole (1)

Supplier

1

Supplier

2

Supplier

3

Supplier

4

Supplier

5

Supplier

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: 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.”

Collective Value in Use: Avoiding Downtime "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."Resource Integration:

Asset Management Effectiveness “[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.”

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.”

aEach 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”).

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 uncer- tainty reduction, or minimized uncertainty related to the processes and decisions that make up one’s job. This con- struct 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 organ- ization: “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 ig- nored 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

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 col- lective 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 cus- tomer and supplier resources in solution design is exempli- fied 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 peo- ple 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 predom- inantly 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 sup- plier’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 main- tenance 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 perspec- tive 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).

104 / Journal of Marketing, May 2016

The quality of these supplier and customer resources in turn influences resource integration quality, providing em- pirical support for recent conceptual literature stating that value in use emerges from resource integration (Grönroos and Voima 2013; Vargo and Lusch 2016). Equally, how- ever, 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 col- lective value in use). As might be expected, resource in- tegration 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 cus- tomer 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, how- ever, that customers are aware that coordination requires involvement from two parties. For example, an engineer- ing 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, sup- plier 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 as- sets, 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 per- ceptions are formed and shared. This is an issue of instru- mental 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 ach- ieved: “[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 per- formance 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. Fur- thermore, 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 value- in-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 hetero- geneity in quality and value-in-use perceptions across em- ployee roles and customer firms. We reflected on differences between interviewees both in the qualitative data and in

How Business Customers Judge Solutions / 105

T A B L E 3

S o lu ti o n Q u al it y C o n st ru ct s

E n ti ty

o f E va

lu at io n /

C on

st ru ct

D efi

n it io n

Ill u st ra ti ve

Q u o ta ti o n

N u m b er

o f In te rv ie w s

% o f

In te rv ie w s

R o le

C o m p an

y

M a

O p

P u

G M

D H

B P

T o t

18 9

4 5

9 10

9 8

36

S u p p lie

r R es

o u rc es

O rg an

iz at io na

l co

m pe

te nc

es S up

pl ie r’s

or ga

ni za tio na

lc ap

ab ilit ie s

re la tin g to

pr oc es se s,

kn ow

le dg

e, an

d ph

ys ic al

as se ts

co nt rib

ut in g to

cu st om

er be

ne fi ts

“T he

y’ d m ac

hi ne

it fo r yo

u an

d m ak

e up

th e pa

rt s fo r yo

u to

tr y

it ou

t.” (H

2- 15

)

17 7

4 4

8 9

8 7

32 89

E m pl oy

ee co

m pe

te nc

e A va ila bi lit y, sk ills ,a

nd pr of es si on

al is m

of su pp

lie r pe

rs on

ne lc on

tri bu

tin g to

cu st om

er be

ne fi ts

“T he

re ’s

on e m an

an d he

do es

it al la

nd he

do es

a w on

de rf ul

jo b. ” (D

4- 24

)

13 6

4 4

7 8

8 4

27 75

C us

to m er

or ie nt at io n

A tti tu de

s an

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of su pp

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pe rs on

ne lr el at in g to

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pr io rit iz in g,

an d pr oa

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in di vi du

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er ne

ed s

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in gl y en

ou gh

, th es

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tim e in

th e tr ad

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d th ey

w ou

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t pe

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re qu

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d ne

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6- 4)

11 7

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6 7

8 5

26 72

S ou

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tw or k

co m pe

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ns hi ps

w ith

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th e be

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“W he

re [s up

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th ey

w ou

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to m an

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ou r su

pp lie rs , yo

u kn

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al ly

ou r

su pp

lie rs

on yo

ur be

ha lf. ” (D

2- 26

)

12 6

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7 7

6 5

25 69

C u st o m er

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o u rc es

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l co

m pe

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es C us

to m er ’s

or ga

ni za

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l ca

pa bi lit ie s re la tin

g to

pr oc

es se

s, kn

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e, an

d ph

ys ic al

as se

ts co

nt rib

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cu st om

er be

ne fi ts

“T hi s pl an

t w as

m ile s be

hi nd

m ai nt en

an ce

be st

pr ac

tic e.

W e

di dn

’t re al ly

un de

rs ta nd

th e va

lu e of

th e in ve

nt or y,

w e ha

d no

sy st em

s. ”

(H 10

-1 )

11 7

4 5

3 10

6 8

27 75

E m pl oy

ee co

m pe

te nc

e A va

ila b ili ty , sk

ill s a nd

p ro fe ss

io n al is m

of cu

st om

er p er so

nn el

co n tr ib u tin

g to

cu st om

er be

ne fi ts

“B ec

au se

w e do

ha ve

ou r ow

n sk

ill se

t, w e ap

pl y a fu ll- tim

e re lia bi lit y en

gi ne

er .” (H

10 -1 )

11 4

3 4

4 9

5 4

22 61

S ou

rc in g ne

tw or k

co m pe

te nc

e C ap

ab ili tie

s of

cu st om

er ’s

or ga

ni za

tio n an

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ne lt o

le ve

ra ge

th ei r kn

ow le dg

e of

an d

re la tio

ns hi ps

w ith

ot he

r fi rm

s fo r

th e be

ne fi t of

th e cu

st om

er

“B ef or e [c on

tr ac

tin g so

lu tio

n] ,w

e ha

d no

tr ac

ea bi lit y

th at

th e m ot or s w er e bo

ug ht

[fr om

an y pa

rt ic ul ar

su pp

lie r] so

yo u co

ul dn

’t se

nd it ba

ck .” (D

9- 13

)

11 5

2 4

7 6

5 4

22 61

R es

o u rc e In te g ra ti o n

C oo

rd in at io n

ef fe ct iv en

es s

T he

ex te nt

to w hi ch

th e pr oc

es se

s of

su pp

lie r– cu

st om

er in te ra ct io n

ac t to

in te gr at e re so

ur ce

s fo r th e

cu st om

er ’s

be ne

fi t

“W e w ou

ld n’ t se

e th es

e pe

op le

ro ut in el y on

si te

at al l; w e m ig ht

se e th em

on ce

a ye

ar ,p

os si bl y le ss

.… A s ne

ed ed

, ye

s. [S up

pl ie r] ar e he

re ev

er y m on

th .”

(H 5- 13

)

18 9

4 5

9 10

9 8

36 10

0

106 / Journal of Marketing, May 2016

T A B L E 3

C o n ti n u ed

E n ti ty

o f E va

lu at io n /

C on

st ru ct

D efi

n it io n

Ill u st ra ti ve

Q u o ta ti o n

N u m b er

o f In te rv ie w s

% o f

In te rv ie w s

R o le

C o m p an

y

M a

O p

P u

G M

D H

B P

T o t

18 9

4 5

9 10

9 8

36

A ss

et m an

ag em

en t

ef fe ct iv en

es s

T he

ex te nt

to w hi ch

th e re so

ur ce

in te gr at io n pr oc

es se

s fu lfi ll th e

ta sk

s of

pu rc ha

si ng

, m ai nt ai ni ng

, us

in g,

an d di sp

os in g of

ph ys

ic al

as se

ts fo r th e cu

st om

er ’s

be ne

fi t

“O ur

ha nd

s ar e tie

d be

ca us

e w e’ re

ph ar m ac

eu tic al .

T he

y kn

ow th e au

to cl av

es on

ou rfi

lli ng

lin es

th at

w e

w ou

ld ne

ed th ei r pa

rt s,

so it’ s di ffi cu

lt to

ne go

tia te

pr ic in g. ” (H

3- 28

)

14 5

4 5

8 8

7 5

27 75

V al u e- in -U

se A u d it in g b y

th e S u p p lie

r V al ue

-in -u se

m on

ito rin

g A ll su

pp lie r ac

tiv iti es

of id en

tif yi ng

an d re po

rt in g th e va

lu e in

us e

re su

lti ng

fr om

th e so

lu tio

n

“Y es

, th ey

’re [m

on ito

rin g]

ha rd

an d so

ft sa

vi ng

s fo r

th e m on

th an

d [th

ey pr ov

id e]

th e tr ac

ke r of

st oc

k lin es

an d to ta lv

al ue

of st oc

k gi vi ng

us a gu

id e. ”

(P 7- 10

)

4 5

3 5

5 4

3 5

17 47

V al ue

-in -u se

op tim

iz in g

A ll su

pp lie r ac

tiv iti es

of re fl ec

tin g

on an

d di ss

em in at in g

op po

rt un

iti es

fo r va

lu e- in -u se

en ha

nc em

en t

“T he

se gu

ys ha

ve m on

th ly

m an

ag em

en t re vi ew

s th at

I at te nd

.… T he

y pr es

en t to

m e on

a m on

th ly

ba si s in te rm

s of

th e co

st op

tio ns

an d th ey

… as

k fo r

fe ed

ba ck

fr om

m e in

te rm

s of

w he

re Iw

an tt he

m to

go .” (D

2- 44

)

2 2

2 3

2 4

1 2

9 25

V al u e- in -U

se A u d it in g b y

th e C u st o m er

V al ue

-in -u se

m on

ito rin

g A ll cu

st om

er ac

tiv iti es

of id en

tif yi ng

an d re po

rt in g th e

va lu e- in -u se

re su

lti ng

fr om

th e

so lu tio

n

“T he

on e ar ea

w e m ay

no tb

e as

go od

as w e’ d lik e to

be is

re po

rt in g ba

ck to

[o ur se

lv es

] on

ho w

th e

pe rf or m an

ce is

go in g. ” (P 8- 40

)

9 5

4 5

5 7

5 6

23 64

V al ue

-in -u se

op tim

iz in g

A ll cu

st om

er ac

tiv iti es

of re fl ec

tin g

on an

d di ss

em in at in g

op po

rt un

iti es

fo r va

lu e- in -u se

en ha

nc em

en t

“T he

di sc

us si on

s th at

ar e go

in g on

rig ht

no w

is ,

‘W ha

t ar e ou

r K P Is

[k ey

pe rf or m an

ce in di ca

to rs ]? ’

‘W ha

t is

it w e re al ly

w an

t fr om

th is ?, ’ an

d th en

se e

th at

th er e ’ s a pl an

th at

un de

rp in s it. ” (H

9- 5)

4 3

1 3

2 3

4 2

11 31

N ot es

: T he

nu m er ic

co lu m ns

co un

t th e nu

m be

r of

in te rv ie w s in

w hi ch

th e co

ns tr uc

t em

er ge

d. M a = M ai nt en

an ce

; O p = O pe

ra tio

ns ; P u = P ur ch

as in g;

G M

= G en

er al

M an

ag em

en t/F

ac to ry

M an

ag em

en t; D

= D ev

ic eC

o; H

= H ea

lth C o;

B = B ui ld C o;

P = P rin

tC o;

T ot

= to ta ln

um be

r of

in te rv ie w s in

w hi ch

th e co

ns tr uc

t em

er ge

d.

How Business Customers Judge Solutions / 107

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 re- sponsiveness 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 pur- chasing 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 sym- metrical view about the contribution of their own organization’s resources as well. For example, PrintCo’s procurement man- ager referred little to customer resources in his extensive dis- cussion 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]

based.… With a potential turnover of anything up to £5million a year, the main thing is howmuchmoney 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 pur- chasing 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 inte- gration 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; H10- 38). This element of outcome-based contracting lowered financial risk, lowered costs, andmotivated 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

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

T A B L E 4

V al u e- in -U

se C o n st ru ct s

E n ti ty

o f E va

lu at io n /

C on

st ru ct

D efi

n it io n

Ill u st ra ti ve

Q u o ta ti o n

N u m b er

o f In te rv ie w s

% o f

In te rv ie w s

R o le

C o m p an

y

M a

O p

P u

G M

D H

B P

T o t

18 9

4 5

9 10

9 8

36

C ol le ct iv e V al ue

in U se

F as

t pr ob

le m

so lv in g

R ap

id re so

lu tio

n of

op er at io na

l di ffi cu

lti es

“I w ou

ld ha

ve he

ar d a lo t, yo

u kn

ow , th e lin e is

do w n be

ca us

e th er e w as

a pa

rt m is si ng

or th er e

w as

st oc

k ou

t, an

d th at

ha s

re du

ce d dr am

at ic al ly .” (H

3- 10

)

18 8

3 5

9 9

9 7

34 94

Lo w

co st s

Lo w

op er at io na

lc os

ts fr om

lo w

pu rc ha

se pr ic es

or ot he

r op

er at io na

ls av

in gs

“T ha

ti s go

in g to

be be

tte rb

ec au

se th ey

ar e th er e to

so ur ce

th e pa

rt s

ch ea

pe r an

d sa

ve th e co

m pa

ny m on

ey .” (H

1- 47

)

16 7

3 5

9 9

7 6

31 86

P ro ce

ss im

pr ov

em en

t S im

pl ifi ca

tio n of

or ot he

r en

ha nc

em en

ts to

th e cu

st om

er ’s

pr oc

es se

s

“W e’ re

de al in g le ss

an d le ss

w ith

ve nd

or s. ” (H

1- 10

) 11

9 3

4 7

7 7

6 27

75

A vo

id in g do

w nt im

e M in im

iz in g no

np ro du

ct iv e tim

e in

th e fi rm

’s op

er at io ns

“I n a m an

uf ac

tu rin

g pl an

tl ik e th is ,

if a cr iti ca

lm ac

hi ne

go es

do w n,

pe op

le ha

ve to

be se

nt ho

m e,

it’ s

th at

se rio

us , pe

op le

ca n’ t w or k. ”

(D 6- 25

)

13 6

2 3

7 6

3 8

24 67

R ed

uc ed

fi na

nc ia l

ris k

M in im

iz ed

un ce

rt ai nt y w ith

re sp

ec t to

fi na

nc ia ll ia bi lit ie s

“S o th at

w e’ d ha

ve a w ar ra nt y of

a re pa

ir, w hi ch

w e di dn

’t ha

ve be

fo re

[s up

pl ie r] to ok

ov er .” (P 1- 4)

6 2

3 5

5 4

4 3

16 44

D ep

en de

nc e

av oi da

nc e

M in im

iz ed

de pe

nd en

ce on

th e

su pp

lie r

“Y ou

r su

pp lie rs

be in g so

en tw in ed

in yo

ur bu

si ne

ss .T

he re ’s pl us

es an

d m in us

es to

th at , it ca

n be

ex tre

m el y da

ng er ou

s be

ca us

e yo

u’ ll ne

ve rb

e ab

le to ge

tt he

m ou

t.” (D

4- 66

)

6 2

1 3

4 5

1 2

12 33

F ix ed

ca pi ta l

re du

ct io n

M in im

iz ed

us e of

th e cu

st om

er ’s

fi xe

d ca

pi ta l

“If th ey

’re pu

ti n th e w ro ng

pl ac

e, it’ s

po in tle ss . If I ca

n ge

ta pr od

uc t

w ith in

tw o da

ys [b ut ] it ta ke

s so

m eo

ne fo ur

da ys

to fi nd

it, yo

u’ ve

go tt o es

ta bl is h w ha

ts or t of

in ve

nt or y sy st em

yo u ha

ve an

d [g et ]

yo ur

ho us

ek ee

pi ng

do ne

.” (D 5- 22

)

5 3

2 2

6 4

0 2

12 33

In no

va tiv en

es s

G en

er at io n an

d us

e of

id ea

s fo r

bu si ne

ss im

pr ov

em en

t “I f th ey

se e an

y op

po rt un

ity th at

ca n ad

d va

lu e to

ou r bu

si ne

ss ,

ev en

if w e’ ve

go te

xi st in g co

nt ra ct s

in pl ac

e, I’v e to ld

th em

to co

m e to

us .” (D

1- 79

)

1 5

2 3

3 3

3 2

11 31

How Business Customers Judge Solutions / 109

T A B L E 4

C o n ti n u ed

E n ti ty

o f E va

lu at io n /

C on

st ru ct

D efi

n it io n

Ill u st ra ti ve

Q u o ta ti o n

N u m b er

o f In te rv ie w s

% o f

In te rv ie w s

R o le

C o m p an

y

M a

O p

P u

G M

D H

B P

T o t

18 9

4 5

9 10

9 8

36

C om

pe tit iv e

ad va

nt ag

e Im

pa ct

on th e fi rm

’s ow

n m ar ke

t po

si tio

n “[ C om

pa re d w ith

an ot he

r su

pp lie r] ,t he

se tw o gu

ys gi ve

us a

co m pe

tit iv e ad

va nt ag

e. ” (D

2- 33

)

2 2

1 1

3 0

2 1

6 17

In d iv id u al

V al u e in

U se

T as

k si m pl ic ity

S im

pl ic ity

an d tim

e ef fi ci en

cy of

th e pr oc

es se

s th at

m ak

e up

on e’ s jo b

“It w as

ch ao

s, bu

ti t’s

ve ry or ga

ni ze

d no

w . Ip

re fe r it lik e th is .” (H

2- 8)

16 7

3 3

5 7

9 8

29 81

“M ak

es m y jo b ea

si er

in th at

Id on

’t ha

ve to

de al

w ith

an y of

th es

e pe

op le ,I ju st gi ve

it to [s up

pl ie r] an

d th at ’s

it. ” (P 4- 13

)

P er ce

iv ed

co nt ro l

P er ce

pt io n of

co nt ro lo

ve r

pr oc

es se

s an

d re so

ur ce

s th at

m ak

e up

on e’ s jo b

[W ith

th is su

pp lie r] ,“ Ik no

w w he

re I

am , bu

t if th ey

co m e to

m e an

d it’ s so

m et hi ng

th at

I’v e

se nt

ou tt hr ou

gh [o th er

su pp

lie r] ,I

ha ve

no co

nt ro l.”

(P 5- 28

)

14 6

2 2

7 8

4 5

24 67

P re ss

ur e re du

ct io n

M in im

iz ed

pr es

su re

an d st re ss

in on

e’ s da

ily jo b

“I t’s

ju st a bi g im

pr ov

em en

tf or

m e,

I’m no

ts tr es

se d tr yi ng

to fi nd

pa rt s;

I kn

ow w he

re to

fi nd

th em

no w .”

(H 1- 57

)

12 7

2 3

6 7

5 6

24 67

U nc

er ta in ty

re du

ct io n

M in im

iz ed

un ce

rt ai nt y re la te d to

pr oc

es se

s an

d de

ci si on

s in vo

lv ed

in on

e’ s jo b

“I w ou

ld ra th er

kn ow

to da

y th an

fi nd

ou t to m or ro w

it is

go in g to

be th re e da

ys . N ow

an d ag

ai n th ey

w an

tt o pl ea

se m e an

d sa

y ye

s, bu

t th at

is ac

tu al ly

w or se

th an

if th ey

sa id , ‘S or ry , I ca

n’ t ge

t it un

til T hu

rs da

y. ’” (B 3- 27

)

11 5

2 1

5 4

5 5

19 53

S oc

ia lc

om fo rt

F ee

lin g co

m fo rt ab

le w ith

ot he

r pe

op le

at w or k

“I t’s

ni ce

to co

m e in to

w or k an

d be

re la xe

d w ith

pe op

le w he

n th ey

co m e up

to yo

u ra th er

th an

pe op

le th at

yo u do

n’ t tr us

t” (D

7- 25

)

10 4

2 1

4 5

4 4

17 47

P er so

na lr ep

ut at io n

B ei ng

vi ew

ed as

a pe

rs on

w ith

hi gh

jo b co

m pe

te nc

e “U

lti m at el y,

it w ill co

m e ba

ck to

m e. …

It’ s m uc

k in

yo ur

fa ce

…

fr om

m an

ag em

en t: ‘W

hy ar en

’t yo

u de

liv er in g w ha

t w e re qu

ire ?’ ”

(D 3- 25

)

7 3

0 0

4 2

2 2

10 28

N ot es

: T he

nu m er ic

co lu m ns

co un

t th e nu

m be

r of

in te rv ie w ee

s in

w hi ch

th e co

ns tr uc

t em

er ge

d. M a = M ai nt en

an ce

; O p = O pe

ra tio

ns ; P u = P ur ch

as in g;

G M

= G en

er al

M an

ag em

en t/F

ac to ry

M an

ag em

en t; D

= D ev

ic eC

o; H

= H ea

lth C o;

B = B ui ld C o;

P = P rin

tC o;

T ot

= to ta ln

um be

r of

in te rv ie w s in

w hi ch

th e co

ns tr uc

t em

er ge

d.

110 / Journal of Marketing, May 2016

T A B L E 5

Im p lic

at io n s M at ri x (T o ta l S am

p le )

C o n st ru ct

E n tit ie s o f E va

lu at io n a

In d ic es

b

S o lu ti o n Q u al ity

C o n st ru ct s (N

u m b er

o f Im

p lic

at io n s)

V al u e- in -U

se C o n st ru ct s

(N u m b er

o f Im

p lic

at io n s)

S u p p lie

r R es

o u rc es

C u st o m er

R es

o u rc es

R es

o u rc e

In te g ra tio

n

V al u e

A u d iti n g b y

th e S u p p lie

r

V al u e

A u d iti n g b y

th e C u st o m er

C o lle

ct iv e

V al u e in

U se

In d iv id u al

V al u e in

U se

T o ta l

(N u m b er

o f

Im p lic

at io n s)

A b st ra ct n es

s C en

tr al it y

P re st ig e

D ir ec

t In d ir ec

t D ir ec

t In d ir ec

t D ir ec

t In d ir ec

t D ir ec

t In d ir ec

t D ir ec

t In d ir ec

t D ir ec

t In d ir ec

t D ir ec

t In d ir ec

t D ir ec

t D ir ec

t D ir ec

t D ir ec

t

S up

pl ie r

re so

ur ce

s 24

25 9

9 73

78 3

4 5

6 11

0 22

3 51

11 5

27 2

.1 2

.3 1

.0 4

C us

to m er

re so

ur ce

s 4

4 9

9 41

48 3

4 3

6 60

13 3

33 62

15 4

.1 4

.1 7

.0 2

R es

ou rc e

in te gr at io n

10 10

4 4

13 13

8 8

5 6

17 2

26 6

10 7

14 6

32 7

.3 1

.4 5

.1 4

V al ue au di tin

g by

th e

su pp

lie r

1 1

5 6

8 8

32 46

7 9

52 .2 8

.0 7

.0 2

V al ue au di tin

g by

th e

cu st om

er

2 2

10 13

7 7

3 3

26 50

5 11

53 .3 1

.0 8

.0 2

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How Business Customers Judge Solutions / 111

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. Funda- mentally, [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 pro- cesses provided a barrier to the realization of value in use. For

example, outsourcing of some parts purchasing to a com- petent 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 real- ization 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 inves- tigate 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 2 Hierarchical Value Map (Total Sample)

GF = .89

Pa1 = .33

Pa2 = .44

Supplier Resources

Customer Resources

Resource Integration

Collective Value in Use

Value-in-Use Auditing by Supplier

Value-in-Use Auditing by Customer

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 propor- tional 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.

112 / Journal of Marketing, May 2016

FIGURE 3 How Solution Quality Leads to Value in Use

A: Quality–Value Relationship

P3

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P5

P5

P6

P6

P5

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P4

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Value-in-use auditing by the

supplier

Resource integration

Value-in-use auditing by the

customerSupplier resources

Customer resources

Collective value in use

Individual value in use

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 sup- plier’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 opti- mized 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 co- production 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 over- whelmingly 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 or- ganizational boundaries within the resource integration pro- cess creates profound changes to theworking 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, depend- ence 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 hetero- geneity 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

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 pre- defined 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 value- auditing 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 con- text) 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, regu- latory 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 bet- ter market rates (Neste Corporation 2016). Such boundary

114 / Journal of Marketing, May 2016

FIGURE 4 Hierarchical Value Maps (Subsamples)

SR

RI

CR

VAC

GF = .94

Pa1 = .33

Pa2 = .53

V-C

V-I

SR

RI

CR

VAC

GF = .92

Pa1 = .33

Pa2 = .53

V-C

V-I

VAS

SR

RI

GF = .68

Pa1 = .14

Pa2 = .29

V-C

VAS

V-I

SR

RI

CR

VAS

VAC

GF = .78

Pa1 = .22

Pa2 = .33

V-C

V-I

SR

RI

CR

VAS

VAC

GF = . 87

Pa1 = .33

Pa2 = .50

V-C

V-I

SR

RI

CR

VAS

VAC

GF = . 91

Pa1 = .35

Pa2 = .41

V-C

V-I

A: Maintenance (Implications = 469) B: Operations (Implications = 262)

C: Purchasing (Implications = 100) D: General Managers (Implications = 109)

E: PrintCo (Implications = 254) F: HealthCo/DeviceCo/BuildCo (Implications = 767)

PrintCo Versus Other Companies

Job Role

Notes: GF = goodness-of-fit (% of all implications); Pa1 =Parsimony1 (% of all squares in thematrix); Pa2 =Parsimony2 (%of all nonzero squares in thematrix); 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, Rolls- Royce’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 cus- tomer’s premises. DHL’s successful Customer4Life initiative takes this integration logic further thanmost: 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 com- petence 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

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-in- use 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 manage- ment. 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 brain- stormed. 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 dif- ferent members of the usage center revealed by our moder- ator 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 indi- vidual 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, how- ever; it is the service and operations staff involved in the various processes of resource integration who are in a posi- tion 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.

116 / Journal of Marketing, May 2016

A final management implication relates to market re- search. 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 as- sessment 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 qual- itative 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 sol- ution 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 exami- nation include (1) how customers trade off or otherwise combine value-in-use constructs in determining sat- isfaction and purchase behaviors, (2) how value-in-use perceptions of individuals affect collective decision mak- ing 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 direc- tion. Research is also needed into whether, when selecting suppliers, customers distinguish between value-in-use fail- ures 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 behav- iors, 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 com- mercial 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 eli- cited. 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 workshops, the three researchers sorted the cards into common themes or standardized constructs. For example, interviewees talked about the supplier’s sourcing network competence in such differing language as “sourcing ability,” “negotiation skills with next-tier supplier,” “ability to cross-trade,” and “back-up net- work”; we grouped these and identified and defined a stand- ardized construct name, “sourcing network competence.”

8.Construct definition: The process of naming and defining constructs follows the approach of Gioia, Corley, and Hamilton (2012), in which literature is examined to establish where an existing term accurately represents the data. We examined the literature to identify where an existing term matches the data (e.g., “customer orientation”); otherwise, we derived an appropriate term from the data (e.g., “value-in-use monitoring”). We further grouped constructs into entities of evaluation, shown in bold in Tables 3 and 4, as follows. We examined quality constructs (Table 3) to determine the object of the evaluation, such as a supplier process or a supplier resource. For example, we coded sourcing network competence as an evaluation of supplier resources. We examined value-in-use constructs (Table 4) to consider whether they related to goals of the individual or to collective goals of the organization.

9. Standardized construct validation: Independent judges are asked to allocate raw constructs to standardized constructs. The researchers compare these categorizations with each other and with the researchers’ own categorization to calculate the pro- portional reduction in loss (PRL; Rust and Cooil 1994). Rust and Cooil’s (1994) recommend that PRL should exceed .7. We asked two independent scholars to allocate raw construct cards from the first customer firm to a list of standardized construct names and definitions. The PRL statistic for value- in-use cards was .82, well above the cutoff of .7, so the value- in-use categorization was accepted and is reported in Table 5. The solution quality categorization resulted in a somewhat lower PRL of .75; although this value is above the .7 level, we decided to review the categorization. To remove ambiguities, we agreed on amendments to construct definitions and to the allocation of cards to constructs. The intercoder reliability check was repeated with two additional independent scholars, resulting in a revised PRL statistic for solution quality of .80. Table 3 reports the resulting categorization. As another reli- ability check, two further independent scholars sorted the combined card set into solution quality and value in use; this resulted in a PRL statistic of .85.

10. Further construct identification and categorization: Constructs are identified and categorized from remaining cases, allowing for new constructs to emerge or existing constructs to be redefined. In further workshops involving the authors, cards from the remaining three customer firmswere allocated to the standardized constructs. Only one new construct emerged (process improve- ment) during analysis of the second case; the researchers agreed on this new construct’s definition and allocation of cards to it.

Analysis Stage 2: Means-End Chain Analysis

11. Ladder identification: Having classified raw constructs into a limited number of standardized constructs, the next step is to

record ladders of constructs from the transcripts through examination of the sequence of cards and their adjoining text (Reynolds and Gutman 1988). From the 36 interviews, we identified 609 ladders, with an average of 17 ladders per interview (range: 10–26 ladders). Means-ends chain research often uses a three-level a priori classification of constructs into attributes, consequences, and values; by contrast, we have an a priori classification into two levels, quality and value in use. We allowed the data to dictate that two or more quality constructs or two or more value-in-use constructs might appear in the same ladder. Thus, each ladder comprised one or more quality constructs and one or more value-in-use constructs, with average ladder length being 2.67.

12. Implications matrix tabulation: Links between constructs in a ladder, known as implications, are tabulated in an implications matrix (Reynolds and Gutman 1988). Links in a ladder can be direct (whereby one construct is adjacent to another) or indirect (whereby two constructs are in the same ladder but not adjacent). We drew up an implications matrix including all direct and indirect implications between 13 quality constructs and 15 value constructs (see Web Appendix). This was summarized in a 7 · 7 implications matrix (Table 5) that included the five entities of quality evaluation and two entities of value-in-use evaluation. Each nonempty cell shows the number of times a row construct is followed by a column construct within ladders.

13. Index calculation: Indices summarizing the importance and role of constructs are calculated from the implications matrix fol- lowing Pieters, Baumgartner, and Allen (1995): 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. Table 5 reports these indices. Each index ranges from 0 (low) to 1 (high).

14.Hierarchical value map visualization: The implications matrix that emerges from means-end chaining is visualized in a hier- archical value map. Decisions need to be made about “cutoff” levels for the number of implications below which no line between constructs will be depicted on the map; this is a balance between completeness and parsimony inmuch the sameway as in multidimensional scaling (Gengler andReynolds 1995; Reynolds and Gutman 1988). Another decision to be made is whether to include indirect implications (in which A links to B but through C) or only direct implications. We use direct implications only for ease of interpretability. Our cutoff was a cell that contains less than 1% of all implications in the matrix. In Figure 2, the horizontal axis represents the con- struct’s abstractness (0–1), the circle area is proportional to construct centrality, and the line thickness is proportional to the number of implications between two constructs. We similarly drew up maps for subsamples in Figure 4.

15.Goodness-of-fit and parsimony calculation: To determine how well the hierarchical value map fits the data, it is useful to calculate goodness-of-fit, the percentage of implications that are represented in the map, and how parsimoniously this is achieved (Pieters, Baumgartner, and Allen 1995). The map in Figure 2 resulted in 89% of implications being represented in the map; this was achieved parsimoniously through 33% of all cells in the implications matrix and 44% of nonzero cells being represented in the map. For equivalents for subsamples by job role and sector, see Figure 4.

118 / Journal of Marketing, May 2016

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120 / Journal of Marketing, May 2016

How Business Customers Judge Solutions: Solution Quality and Value-in-Use

Emma K. Macdonald, Michael Kleinaltenkamp, & Hugh N. Wilson

WEB APPENDIX: Implications Matrix How Business Customers Judge Solutions: Solution Quality and Value-in-Use

EC OC SNC CO EC OC SNC CE EAM VMS VOS VMC VOC AD FPS LC FCR PI IN CATE RFR DA TS PR PC UR PER SC 111 112 113 114 121 122 123 131 132 141 142 151 152 211 212 213 214 215 216 217 218 219 221 222 223 224 225 226 Out-D AbstracCentralPrestige Freq.

EC 111 0 1 1 2 0 0 1 16 6 1 0 0 0 1 5 3 0 6 1 0 0 0 4 3 2 2 1 2 58 0.194 0.071 0.014 58 OC 112 4 0 2 4 0 2 4 19 12 0 0 3 0 9 22 8 2 10 2 1 1 0 12 1 4 3 0 0 125 0.067 0.131 0.009 124 SNC 113 2 1 0 1 0 0 2 5 4 0 1 1 0 0 7 12 1 2 0 1 2 2 4 0 1 2 1 1 53 0.117 0.059 0.007 50 CO 114 4 2 0 0 0 0 0 8 3 1 0 1 0 0 1 3 1 2 3 0 1 1 2 0 1 1 1 3 39 0.188 0.047 0.009 40 EC 121 0 0 0 0 0 2 4 5 7 0 0 1 0 2 3 0 0 5 0 0 0 1 2 2 1 0 1 1 37 0.098 0.040 0.004 37 OC 122 0 2 0 0 2 0 1 8 9 1 0 0 0 2 6 0 1 9 0 0 2 1 4 4 2 1 2 0 57 0.109 0.063 0.007 58 SNC 123 0 1 1 0 0 0 0 5 7 2 0 2 0 2 11 11 0 1 1 0 0 2 4 1 5 1 2 0 59 0.181 0.071 0.013 59 CE 131 4 0 1 2 1 2 0 0 10 5 1 2 1 6 26 13 2 33 1 1 1 0 30 10 16 5 7 11 191 0.285 0.262 0.074 196

EAM 132 0 2 1 0 0 1 0 3 0 0 2 2 0 13 16 21 10 22 1 0 6 0 8 6 6 7 1 0 128 0.340 0.190 0.065 131 VMS 141 0 0 1 0 0 0 0 1 3 0 0 5 3 2 0 10 0 5 2 1 2 0 1 0 3 1 0 2 42 0.236 0.054 0.013 41 VOS 142 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 5 1 3 0 0 1 0 0 0 0 0 0 0 11 0.421 0.019 0.008 11 VMC 151 0 0 0 0 1 0 1 6 2 3 3 0 3 3 0 15 0 2 0 0 2 0 1 1 0 0 0 0 43 0.283 0.059 0.017 43 VOC 152 0 0 0 0 0 0 0 0 2 0 1 0 0 1 0 2 0 1 0 0 0 0 1 0 1 0 1 0 10 0.412 0.017 0.007 10 AD 211 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 7 0 0 0 0 0 0 0 3 0 0 2 0 13 0.806 0.066 0.053 55 FPS 212 0 0 0 0 0 0 0 0 0 0 0 0 0 4 0 6 1 0 0 0 1 0 2 5 3 1 0 1 24 0.837 0.144 0.120 122 LC 213 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 0 0 0 0 2 3 0 1 0 0 0 0 0 10 0.936 0.154 0.144 147

FCR 214 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4 0 0 0 0 0 0 0 0 0 0 0 0 4 0.857 0.027 0.024 22 PI 215 0 0 0 0 0 0 0 0 0 0 0 0 0 6 6 13 3 0 1 0 2 0 5 4 4 3 1 0 48 0.688 0.151 0.104 107 IN 216 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 2 0 0 0 0 0 0 0 0 0 0 3 0.824 0.017 0.014 14

CATE 217 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.000 0.008 0.008 8 RFR 218 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 0 1 0 0 0 0 1 0 0 0 4 0.857 0.027 0.024 24 DA 219 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0.875 0.008 0.007 7 TS 221 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9 3 0 2 0 1 0 0 0 2 4 1 0 0 22 0.798 0.107 0.085 88 PR 222 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 0 0 0 0 0 1 0 0 0 0 0 4 0.920 0.049 0.045 47 PC 223 0 0 0 0 0 0 0 0 0 0 0 0 0 1 6 3 0 0 1 0 0 0 2 1 0 2 2 1 19 0.743 0.072 0.054 54 UR 224 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 1 0 2 0.939 0.032 0.030 31 PER 225 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 2 0 0 0 0 4 0.852 0.026 0.023 23 SC 226 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 2 0 1 1 0 0 0 2 1 1 1 0 0 10 0.688 0.031 0.022 22

In-Degr 14 9 7 9 4 7 13 76 66 13 8 17 7 54 123 147 24 106 14 8 24 7 87 46 55 31 23 22 1021

Quality Value SR CR RI VAS VAC V-C V-I

Quality

SR

CR

RI

VAS

VAC

Value

V-C

V-I

Acronyms in implications matrix SR CR RI VAS VAC V-C V-I The implications matrix in the paper

(Table 6) is aggregated at this level. Supplier resources

Customer resources

Resource integration

Value-in-use auditing by supplier

Value-in-use auditing customer

Collective value-in-use

Individual value-in-use

EC OC SNC CO CE EAM VMS VOS VMC VOC Employee competence

Organizational competences

Sourcing network competence

Customer orientation

Coordination effectiveness

Asset management effectiveness

VIU monitoring by supplier

VIU optimizing by supplier

VIU monitoring by customer

VIU optimizing by customer

AD FPS LC FCR PI IN CATE RFR DA Avoiding downtime

Fast problem solving

Low costs Fixed capital reduction

Process improvement

Innovativeness Competitive advantage

Reduced financial risk

Dependence avoidance

TS PR PC UR PER SC Task simplicity Pressure reduction Perceived control Uncertainty

reduction Personal reputation Social

comfort

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