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Abstract

Inspired by Vargo & Lusch’s Service-Dominant Logic (SDL) and relying on the Austrian School’s individualism and subjectivism, we use knowledge from economics to better support the discussion of the primary topic of Marketing: that of value creation. Specifically, we draft a Value-Dominant Logic. We provide ten foundational premises stemming from the recognition that value is subjective and, consequently, cannot be created by entrepreneurs or firms. Entrepreneurs and firms propose value, but subjective value can only be perceived, created and thus experienced in the individual consumer’s mind. By adopting the perspective that logically follows from this understanding, the disciplines of management and marketing will be better able to narrow the uncertainties of the market process, and entrepreneurs can make better decisions about how to help consumers overcome felt uneasiness by adopting their proposed solutions.
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www.misesjournal.org.br
MISES: Interdisciplinary Journal of Philosophy Law and Economics
São Paulo, 2019; 7(3) Set-Dez
e-ISSN 2594-9187
1 de 23
Towards a Value-Dominant Logic for Marketing
Hunter HastingI
Mises Institute, Auburn, AL, United States
Fernando Antonio Monteiro Christoph D´AndreaII
Universidade Federal do Rio Grande do Sul, Porto Alegre, RS, Brasil
Per BylundIII
Oklahoma State University, Stillwater, Oklahoma, United States
Abstract: Inspired by Vargo & Lusch’s Service-Dominant Logic (SDL) and relying on the Austrian School’s
individualism and subjectivism, we use knowledge from economics to beer support the discussion of the
primary topic of Marketing: that of value creation. Specically, we draft a Value-Dominant Logic. We provide
ten foundational premises stemming from the recognition that value is subjective and, consequently, cannot
be created by entrepreneurs or rms. Entrepreneurs and rms propose value, but subjective value can only be
perceived, created and thus experienced in the individual consumer’s mind. By adopting the perspective that
logically follows from this understanding, the disciplines of management and marketing will be beer able
to narrow the uncertainties of the market process, and entrepreneurs can make beer decisions about how to
help consumers overcome felt uneasiness by adopting their proposed solutions.
Keywords: Value-Dominant Logic, Value, Subjectivism, Marketing, Austrian Economics, Strategic Marketing,
Service-Dominant Logic.
DOI: https://doi.org/10.30800/mises.2019.v7.1240T67
I Hunter Hastings is an economist (MA, Cantab), a managing partner with Bialla Venture Partners VC funds,
and a Mises Institute Ambassador. host of the “Economics to entrepreneurs” podcast (mises.org/e4e).
Email: hunterhasting@me.com
II Industrial Engineer, MSc in Management Engineering, PhD Candidate in Marketing at Universidade Federal do Rio
Grande do Sul, Brasil. Email: dodandrea@gmail.com
III
Per L. Bylund is Assistant Professor of Entrepreneurship and Records-Johnston Professor of Free Enterprise at Oklahoma
State University. He is Associate Editor for the Quarterly Journal of Austrian Economics, author of two books, and edits
a book series published by Agenda Publishing. Email: per.bylund@okstate.edu
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TOWARDS A VALUE-DOMINANT LOGIC FOR MARKETING
2 de 23 | MISES: Interdisciplinary Journal of Philosophy Law and Economics, São Paulo, 2019; 7(3) Set-Dez
Em busca de uma Lógica de Valor Dominante
para o Marketing
Resumo: Inspirados na Lógica Dominante do Serviço (LDS) de Vargo & Lusch e acreditando no individualismo
e subjetivismo da Escola Austríaca, usamos o conhecimento da economia para melhor sustentar a discussão
do tópico principal do Marketing: o de criação de valor. Especicamente, nós esboçamos uma Lógica de Valor
Dominante. Fornecemos dez premissas fundamentais, provenientes do reconhecimento de que o valor é
subjetivo e, consequentemente, não pode ser criado por empreendedores ou empresas. Empresários e empresas
propõem valor, mas o valor subjetivo só pode ser considerado, criado e, então, experimentado na mente do
consumidor individual. Ao adotar a perspectiva que, logicamente, se origina desse entendimento, as disciplinas
de gerenciamento e marketing serão mais capazes de reduzir as incertezas do processo de mercado, e os
empreendedores poderão tomar melhores decisões sobre como ajudar os consumidores a superar o desconforto,
adotando soluções propostas por eles.
Palavras-chave: Lógica de Valor Dominante, Valor, Subjetivismo, Marketing, Economia Austríaca, Marketing
Estratégico, Lógica Dominante do Serviço.
En busca de una Lógica de Valor Dominante
para el Marketing
Resumen: Inspirados en la lógica de servicio dominante (LDS) de Vargo & Lusch y creyendo en el individualismo
y el subjetivismo de la escuela austriaca, utilizamos el conocimiento de la economía para respaldar mejor la
discusión del tema principal: de la creación de valor del marketing. Especícamente, hemos delineado una lógica
de valor dominante. Hemos proporcionado diez supuestos fundamentales, provenientes del reconocimiento de
que el valor es subjetivo y, por lo tanto, no puede ser creado por empresarios o empresas. Los empresarios y las
empresas proponen valor, pero el valor subjetivo solo puede considerarse, crearse y luego experimentarse en
la mente del consumidor individual. Al adoptar la perspectiva que se deriva lógicamente de esta comprensión,
las disciplinas de gestión y marketing podrán reducir mejor las incertidumbres del proceso de mercado, y los
empresarios podrán tomar mejores decisiones sobre cómo ayudar a los consumidores a superar las molestias
mediante la adopción de soluciones. propuesto por ellos.
Palavras-clave: Lógica de valor dominante, valor, subjetivismo, marketing, economía austriaca, marketing
estratégico, lógica de servicio dominante.
Hunter Hasting, Fernando Antonio Monteiro Christoph D´Andrea & Per Bylund
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Introduction
In the January, 2004 issue of The Journal Of Marketing, Stephen L. Vargo and Robert
F. Lusch published Evolving To A New Dominant Logic For Marketing (VARGO; LUSCH, 2004)
which was subsequently developed in many dierent works, including two complementary
papers by the same authors (VARGO; LUSCH, 2008; 2016). The theory outlined in those papers
makes the case that marketing was grounded in goods-dominant logic, and the concept of
exchange of goods for money. The seminal paper, and the works that followed, argued for
the replacement of this logic with Service-Dominant Logic (SDL), and a substitution: instead
of a goods-for-money exchange, a service-for-service exchange.
In the present paper, we argue that the SDL can and should evolve further, to a Value-
Dominant Logic. In this thinking, the theory of subjective value from the Austrian School
(MENGER, 2007; MISES, 1998; TAYLOR, 1980) supports an economy based on value facilitation
rather than on exchange, which requires signicant changes to, and advancements beyond,
the Service-Dominant Logic.
In what follows, we compare the key elements of Service-Dominant Logic (SDL) and
Value-Dominant Logic (VDL), develop the ideas of VDL’s foundational premises, identify the
dierences between the two approaches, indicate the implications and actionable insights of
VDL for entrepreneurs and business - especially the marketing function -, and conclude by
suggesting areas for further research.
1. Service-Dominant Logic
Vargo and Lusch’s (2004) paper proposed eight foundational premises for Service-Dominant
Logic. They have been slightly modied in the subsequent works and three other premises were
added (VARGO; LUSCH, 2008; 2016). The core ideas, however, remain the same: by focusing
on the reciprocal nature of service-for-service, the S-DL approach is capable of solving most
of the issues related to why people consume A’ instead of ‘B’ or ‘X’ instead of ‘Y’. We list here
the 11 premises in headline form, as they appear in the last paper of the series. We do so in
preparation to contrasting them with the core concepts of Value-Dominant Logic:
FP1: Service is the fundamental basis of exchange;
FP2: Indirect exchange masks the fundamental basis of exchange;
FP3: Goods are distribution mechanisms for service provision;
FP4: Operant resources are the fundamental source of strategic benet;
FP5: All economies are service economies;
FP6: Value is cocreated by multiple actors, always including the beneciary;
FP7: Actors cannot deliver value but can participate in the creation and oering of value
propositions;
FP8: A service-centered view is inherently beneciary oriented and relational;
FP9: All social and economic actors are resource integrators;
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FP10: Value is always uniquely and phenomenologically determined by the beneciary;
FP11: Value cocreation is coordinated through actor-generated institutions and institutional
arrangements.
We surmise that the aim of Vargo and Lusch’s eorts was to create a new focus on the
service economy rather than the marketing of physical goods. Services were claiming a dominant
role in the production of customer value, and yet much economic analysis, as well as business
and especially marketing strategy, appeared to apply more to a goods-dominant economy (or
at least use the language and metaphors appropriate to goods-dominant processes). There
has been some movement towards a more subjectivist direction in marketing1, but the vast
majority of discussions are still centered on a mathematizable, objective, approach.
Vargo and Lusch’s emphasis that goods are desired not for their own sake, but for the
services they are able to deliver, was not original – economists have articulated this since at
least Carl Mengers (2007) Principles Of Economics, published for the rst time in the late 1800’s.
Vargo and Lusch’s contribution was more centered on:
the design method (i.e. that services are designed with customer feedback, a process that
the authors called co-creation);
that, as a consequence, services marketing has a special intensied focus on the consumer,
or consumer centricity;
and that customer relationship management therefore assumes greater importance for services
marketing relationship management than for traditionally product-based businesses/brands.
S-DL proved relevant also because it was able to convey the information in an easy,
straightforward and, especially, entrepreneur/business-oriented fashion. The authors minimized
jargon and tried to communicate not only with fellow academicians, but also, and probably
most importantly, with practitioners, as, unfortunately, much of the research in business
administration has mostly failed to do in the recent decades. This has allowed the S-DL to be
adopted much more generally and by practitioners, rather than being conned to academic
research. Christensen et al. (2016) and Hastings and Saperstein (2014) provide illustrative
examples of such broad, non-academic, adoption: the rst proposes the theory of ‘jobs to be
done’, which is nothing more than a SDL translation to the everyday business jargon, the
laer suggests that using a service oriented mentality facilitates the discovering of innovative
opportunities.
This essay aims to take this logic one step further by providing a framework for a Value-
Dominant Logic with similar properties. Not only will it be formulated in such a way that it
can easily be adopted and applied by business practitioners and academics alike, but it also
presents a logically consistent and theoretically grounded argument that thereby brings the
1
See, for instance, the various works by Hunt and colleagues on the Resource-Advantage Theory, more specically
Premise #3 (HUNT, 2000; HUNT; MORGAN, 1997) and, more recently a paper by D’Andrea (2019b).
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power of theory to the hands of practitioners. We proceed by presenting the ten foundational
premises (FP’s) of V-DL, and then outline its key implications for organizations and businesses
in particular. Finally, we oer conclusions and suggestions for further developments.
2. The Foundational Premises of Value-Dominant Logic
In homage to Vargo and Lusch’s original contributions, which were a seismic shift in
the world of marketing and in business more broadly, we propose to outline the evolution of
the Value-Dominant Logic (V-DL) utilizing a similar presentation format. The tectonic plates
of strategic marketing still have quite a lot of movement in them and the subjective value
foundations given by the Austrian School of Economics are the starting point of a second
large shift in (1) the understanding of how value is created and (2) the role of entrepreneurs
and organizations in that process. We thus take a vanguard position in this development,
seeking to bring clarity to the eld while indicating what types of powerful tools this new
framework – and the coming shift – will make available.
To do so, we propose the following 10 foundational premises of VDL:
FP1: Value is a subjective experience of the consumer. This is the singular foundation of
V-DL (in the parlance of Vargo and Lusch, it is axiomatic for our theory), from which all
other premises follow (MENGER, 2007, Chapter III).
FP2: Only consumers can subjectively recognize their own wants, needs, and desires
2
. They
express this recognition through the notion of uneasiness with respect to specic aspects
of their own situation (MISES, 1998, pt. I).
FP3: Only those individuals who ultimately consume create value (MENGER, 2007).
FP4: To realize value, consumers exchange services for experiences with perceived value.
FP5: Entrepreneurs prot3 (make money) by facilitating value to consumers.
FP6: The purpose of entrepreneurship is the facilitation of value, from which it captures
revenue (SMITH, 1776, p. 1). (This is a corollary of FP1 as seen from the point of view of
the value proposer, the entrepreneur).
FP7: Empathy is the key to unlocking understanding of a consumer’s felt uneasiness.
FP8: Value facilitation is a combination of understanding consumers’ uneasiness and
technical knowledge joined in a value proposition.
FP9: There will always be producer uncertainty because there is value uncertainty in the
consumer’s mind.
FP10: Consumers rank their value experiences, but value itself is not quantiable.
2 We here use the word consumer, but that is not to say that the ideas are only applicable to B2C organizations.
Quite the contrary. B2B arrangements, products and services will be judged by the clients based on the value
that clients experience. In some cases, this value is easier to quantify in B2B than in B2C, but this is not to say
that the logic is somehow dierent for B2B.
3 Entrepreneurs might accept other kind of compensation in (partial) substitution to money prot, for example,
fame, building an empire, helping the poor, etc.
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2.1 Foundational Premises In Detail
FP1: Value is a subjective experience of the consumer.
Since 1871, the year of the publication of Carl Menger’s Principles of Economics (MENGER,
2007), economists have known that consumers value goods only for the service that those
goods embody (this includes all goods that we usually use as money, such as at currency
or gold). Vargo and Lusch (2004; 2008; 2016) captured this principle in their series of papers;
Chistensen et al. (2016) and Hastings and Saperstein (2014) did the same for practitioners.
However, Menger’s insight runs deeper, and provides the reader with an understanding
that goes beyond service, and discusses the value itself that the service provides. Menger’s
(and consequently, Austrian Economics’) approach sees value from a pure subjective logic,
i.e., value is an experience that only the individual interacting with the particular product,
service or bundle can have. It is a feeling, an emotional state that cannot be fully and perfectly
replicated/ repeated. It occurs when the consumer, coming from a baseline of a feeling of
uneasiness with current circumstances, aempts a change in circumstances by consuming a
(possibly, but not necessarily, dierent) product or service that he or she evaluates as potentially
delivering the value and consequent improvement in their state of satisfaction that they desire
and are looking for. Value is experienced when the consumer’s expectation is met or exceeded;
consequently, as Menger (MENGER, 2007; STIGLER, 1937) recognized, value is subjective. It
happens when the consumer feels more satised than in the previous state.
This concept must be installed as the singular foundation for marketing, which can be
dened as the commercial science of consumer value
4
. Value is an individual (and consequently
subjective) notion, as opposed to socially constructed demand or the motivation of large
segments of the population with supposedly shared or common wants, needs or desires. Value
is personal, tacit, and dependent upon the individual’s state of mind and the environment in
which s/he is inserted in that particular time.
Thus, while it is common terminology to say that entrepreneurs or rms / organizations
create value, such a use of language is misleading. The logic of value means that it cannot be
created by an external force, and so-called value creation is a misnomer and a chimera. The
producer can only propose value based on his/her understanding of what is causing consumers
unease and his/her skill to technically develop possible solutions; on the other hand, value
will only be actually perceived/created by the consumer himself.
FP2: Only consumers can subjectively recognize their own wants, needs, and desires.
4
Here we refer to marketing in the understanding of Varadarajan (2010, p. 126): “Strateg ic Marketing encompasses
the study of organizational, inter-organizational and environmental phenomena concerned with (1) the behavior
of organizations in the marketplace in their interactions with consumers, customers, competitors and other
external constituencies, in the context of the creation, communication and delivery of products that oer value
to customers in exchanges with organizations”. And very important: marketing should not be misunderstood
as marketing management nor with any of its tactics that belong to marketing, but are not marketing per se.
See also Hunt (2015; 2018).
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It is common in marketing training and the marketing process literature to talk of
“identifying consumer needs / wants / desires” (see Kotler and Keller (2012, Chapter 1)).
However, when taking the Value-Dominant Logic standpoint, one can recognize that the
aempt to objectively identify those is futile. Needs – or perhaps the more appropriate word is
wants, a broader, but more action-directed term: we are in the economy considering consumers’
desires over and above what they need for survival – cannot be objectively identied by an
external observer.
Wants are subjectively felt by consumers as a corollary of felt uneasiness: that there is
something in the current situation that is lacking for them. Or, put dierently, that the person
does not feel fully content as-is – there is always some way a person can make their situation
more satisfactory. Consumers’ personal circumstances could be improved, they feel, and
their feeling tacitly translates into a need/want/desire. This may initially be quite inarticulate
– as in a vague feeling that “things could be beer” – and may later result in the individual
forming a hypothesis regarding what kind of new consumption experience might address
their felt unease5. Sometimes consumers are unable to diagnose their own problems and
rely on the entrepreneur to exercise the role of diagnostic entrepreneur (GODLEY; CASSON,
2015) instead, rely on the entrepreneur to diagnose them. Although it is widely recognized
that consumers face information asymmetries over price comparison and quality assessment,
lile aention has been given to Customer’s information asymmetries regarding individual
customers’ needs. This has led to the economic contribution of the diagnostic entrepreneur
being overlooked. Entrepreneurial diagnosis is a cognitive skill possessed by the entrepreneur.
It is a subset of entrepreneurial judgment and can be modeled. The model shows that in order
to exploit opportunities it is often necessary for entrepreneurs to invest in market-making
activities, such as customer-focused diagnostic services, backed up by credible reputations
for competence and integrity. While diagnostic entrepreneurship is particularly important in
knowledge-intensive service industries (such as medicine.
Individuals will feel unease in many (probably all) circumstances of their life (an exception
would be the Nirvana state that Packard (2019) suggests in this same volume). It is this
continuous, wide-ranging desire for improvement in one’s own life condition that pushes
entrepreneurs to go beyond what is immediately doable under present market conditions –
what Bylund (2016) calls the ‘specialization deadlock’ – thereby driving innovation, economic
growth and the overall advance of civilization. Consequently, consumers organize a plethora
of wants in a subjective ordinal ranking that they change and rearrange subconsciously at all
times and according to their individual circumstances (see Stigler (1937), for an explanation).
All of this subjective complexity means that objective observers, including entrepreneurs
and marketers, cannot expect to perfectly identify individuals’ needs or wants, nor measure
the rankings that those individuals are allocating to their wants at any point in time or in
any particular context.
FP3: Only those individuals who ultimately consume create value.
5 The consumer buying process (KOTLER; ARMSTRONG, 2014) follows a very similar logic.
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It follows, then, that consumers, the individuals that will end up using the proposed solution,
are the creators of value. They do so in a multi-stage process that combines emotion, search
for possible solutions, judgment and action. Having identied an uneasiness to address, they
evaluate available options for consumption on the basis of their perceived relative potential
to solve the felt problem6. Evaluation is a subjective process of answering the question “is it
worth it?” – is the expenditure of scarce resources (including, but not limited to time, money,
and more generally, eort) likely to yield a benet that is greater than the cost? In other words,
is the action to relieve uneasiness worth the opportunity cost: is the action worth more than
the next best benet to which the consumer could direct their time, money and eort in their
search for an improvement in satisfaction and well-being?
It is an important insight – usually not given the necessary aention – that the “next
best” could be either a direct substitute for addressing the current want, or the use of one’s
own resources to address the uneasiness with a non-direct substitute7. The consumer also
has the alternative of deferring the expenditure to a later date and accepting the uneasiness
for the current time period. The evaluation process is, therefore, quite a complex – and
inherently individual and subjective – economic calculation, even though it might be conducted
unconsciously or sub-consciously.
Note also that the individual’s denition of benet will probably include emotional as well
as more functional (and consequently more ‘measurable’) benets. Their search for a psychic
prot (ROTHBARD, 1957) will most probably be multi-faceted.
Once the evaluation is completed, the consumer’s next step in the value creation process
is to make the exchange with the party oering the solution. Such exchanges can take many
forms – a nancial transaction, a service agreement, or a tacit acceptance of another party’s
conditions or preferences – and many durations – one-time / immediate, multiple times/ long
term, and so on.
The value experience per se occurs only through an act of consumption, by which is
meant the direct use of some means – a good or service – to satisfy the lacking want (MENGER,
2007), sometimes immediately after purchase (as in, for example, buying an ice cream from a
street vendor or in buying a very high piece of apparel that will be forever in the wardrobe)
or after a delay (as in buying packaged ice cream at the store for later consumption, or in
buying vacation time at some resort to be enjoyed somewhere in the future). The individual
creates a subjective value expectation before the acquisition, and then, to judge the value of
the solution, compares the actual experience with the expected experience. Satisfaction occurs
when the experience is equal to or beer than the expectation. Learning occurs, which is
6 Again, here it is important to stress that this is valid for both B2C and B2B, since individuals will be making
choices in the name of the companies in B2B seings, for an explanation of that see D’Andrea et al. (2019).
Menger (2007) suggests that the value of non-consumable products (higher order goods) is derived from the
value that the nal product will have for the consumer (see also Stigler (1937) for an explanation).
7
This becomes trivial if uses the VDL, for example, one could decide to go to the movies or to a bar for the
same reason: diminishing the sensation of uneasiness by looking for entertainment, notice that, in a more
mainstream approach, movies and bars would not be ‘substitutes’ as they are in VDL. The same could be said
for many other situations.
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factored in to future evaluations and future purchase decisions8. In that way, all experiences
will have impact in future transactions, because they will, in some way, shift the consumer’s
expectations.
FP4: To realize value, consumers exchange services for experiences with perceived value.
In order to be the recipient of experiential satisfaction, consumers must rst make an
exchange with the product/service provider who has the resources and capability that the
consumers believe are able to deliver the solution that the consumer aims at transforming into
an experience. The currency for the exchange is usually money, but it also necessarily involves
a time dimension and, in some cases, other forms of non-money consideration (for example,
emotional considerations might trigger some kinds of behaviors). In any case, the consumer
must rst possess the exchange currency; that currency is, in the case of money, usually earned
by rendering services to others in the same market. In this process of oering a service and
having the value of this service judged by his customer, the consumer (the former producer)
learns the importance of customer experience and delivering on experience expectations. If
their own customers do not experience satisfaction from services rendered, the provider will
be unable to continue to earn money for exchange from that specic consumer. This market
process is also important because it conveys to the provider the importance of managing
expectations, e.g. of trying to capture the aention of the potential buyer and convincing him
or her to full a commercial agreement without seing the expectations bar too high.
Individuals (including entrepreneurs who will provide solutions in their role as producers)
become aware of the value of experience to themselves and, by consequence, to others through
their own commercial experience in the market, through observing others’ experiences and
the derived satisfaction, and based on the communications eorts that the organization aiming
at closing a deal puts in place. The capability to deliver valuable experience is learned, which
also informs consumers about the appropriate level of their own expectations when receiving
services. Exchanging services that are evaluated based on experiences becomes a societal
practice that can be continuously improved and elevated.
FP5: Entrepreneurs prot (make money) by facilitating value to consumers.
Entrepreneurs are facilitators of the value that consumers create. Without the solutions
that entrepreneurs oer – the intermediating product/service - consumers will not be able to
create the value that they foresee. Therefore, entrepreneurs do not actually create value – they
create a value proposition for their potential consumers; they present these consumers with
possible solutions to overcome their uneasiness. The consumer is the one who will create the
value and who will feel (or not) the experience of satisfaction. The entrepreneur is the one
who makes available to the consumer the choice of a good or service that, when consumed,
will ideally deliver that experience and relieve the uneasiness.
8 This process is very similar to the one identied by Parasuraman, Zeithaml and Berry (1985) that developed a
way to measure quality in services. Actually, Quality and Marketing – in spite of rarely being discussed together
- have may similarities, since they both try to understand how to full client’s expectations as best as possible.
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Entrepreneurs receive payment in return for the value that consumers expect to create
– a payment that the consumer has decided to forego and thus represents his willingness
to pay for the satisfaction anticipated in that particular transaction. If the entrepreneur has
assumed costs that are properly chosen, if production is properly managed, and the market
being supplied is suciently large, the entrepreneur is likely to earn a (money) prot because
he is providing the consumer with a viable solution to overcome uneasiness.
Consumers are consequently central to the entrepreneurial process. If they do not adopt the
solutions proposed by the entrepreneur, e.g. if they do not nd value in them and express that
in not buying/adopting the proposed solution, i.e., action that is positive for the entrepreneur,
then there is no innovation whatsoever, and no value is created out of that particular solution.
Therefore, consumers are the ones capable of making entrepreneurs successful.
To deliver goods and services to facilitate consumers’ value experience, the entrepreneur
needs information from the market. It is the accuracy and comprehensiveness in gathering
this information, and the expertise in processing it in the action of producing desired goods
and services, that constitute the special capability of the entrepreneur. This capability can be
called ‘entrepreneurial judgment’ (FOSS; KLEIN, 2012; 2015; FOSS; KLEIN; BJØRBSKOV, 2018;
KLEIN, 2017) and will be the main tool that the entrepreneurs will use to face the underlaying
Knightian uncertainty.
FP6: The purpose of entrepreneurship is the facilitation of value, from which it captures revenue
Entrepreneurship as a function in the market economy derives its value from the degree
to which it, through the actions of individual entrepreneurs, economizingly provides proper
means for consumers to create value. While individual entrepreneurs undertake enterprising
to satisfy some wants of their own, what makes entrepreneurship successful is the provision
of appropriate tools for the consumer to create value.
At the same time, entrepreneurs are central to the development of society as a whole
(HOLCOMBE, 2007; POWELL, 2007); their social contribution, achieved in concert through
the means of competitive discovery, is indisputable. Entrepreneurship, when not misdirected
through inappropriate institutions (BAUMOL, 1990), is genuinely productive and therefore
makes the world a beer place.
Under the wrong circumstances, entrepreneurship can arguably destroy wealth by seeking
short-term gain at the expense of long-term benets or redistributing valuable resources to
lesser, but perhaps politically preferred, uses. Also, without a prot motive (or without knowing
whether the organization is protable), one could be wasting society’s scarce resources (that
could be used in more productive uses) and, consequently, diminishing the total amount of
welfare available to the individuals.
The entrepreneur seeks to make available goods and services that are valued by the
consumer. Th is is facilitated by the oering of value propositions / solutions / products / services
that consumers nd valuable in their own subjective value scale, and therefore consumers are
willing to pay a price. In that way, FP6 is a corollary of FP1 as seen from the point of view of
value proposer, the entrepreneur, who also seeks to create value, and consequent subjective
well-being, with his actions.
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A satisfactory experience produces a feeling of well-being and thus greater satisfaction.
When it is suciently valued, the consumer will seek to repeat and reproduce, and sometimes
exceed, this level of satisfactory experience - leading him to a repurchase of the facilitating
solution or a search for an even beer alternative.
Entrepreneurs are mediators of this experience. They seek to earn protable revenue
ows from delivering services that generate satisfactory experiences and feelings of well-being
in consumers. Therefore, the true consequence of successful entrepreneurship is increased
well-being for the entrepreneur and the individual customers, adding to the overall wealth
of society. The true role played by entrepreneurs in the economy is augmenting productivity
and providing solutions that can help consumers create more value with less, consequently,
successful entrepreneurs facilitate the well-being of society overall.
In a free-market system, all exchanges are necessarily mutually benecial in the eyes
of the participants of the transactions
9
. The value-facilitation capacity of entrepreneurship
drives societal well-being and civilizational advance, and could be potentially measured as
economic growth (not to be confounded with GDP growth). Consumers are the well-spring of
that growth, not because they spend, but because they exchange something that they consider
less valuable (usually money) for something that they expect will help them create more value,
the product/service/solution, they do so in their search for overcoming uneasiness10.
FP7: Empathy is the key to unlocking understanding of a consumer’s felt uneasiness.
The talent displayed by the entrepreneur to arrive at some level of understanding of a
consumer’s felt uneasiness, and to frame and initiate the design of a solution to (continue to)
address it, is empathy. Empathy is the capacity of the entrepreneur to feel or understand the
emotions felt by another person from the perspective of that person. It is best regarded as a
talent rather than a skill. Clifton and Badal (2018, Chapter 24) dene talent as a composite of
personality traits and cognitive abilities / thinking styles, resulting in a paern of “thought,
feeling and behavior that are enduring and stable over time and across situations”.
It is probable, therefore, that empathy cannot be learned or taught, although it can be
nurtured and culturally encouraged, similar to an art form. It is a predisposition that is helpful
in making entrepreneurs successful, and those entrepreneurs who seek success are likely to
emulate models where empathy is demonstrated to be a contributor to success. Certainly,
entrepreneurs can practice empathic diagnosis (GODLEY; CASSON, 2015) instead, rely on
the entrepreneur to diagnose them. Although it is widely recognized that consumers face
information asymmetries over price comparison and quality assessment, lile aention has
been given to information asymmetries regarding individual customers’ needs. This has led
to the economic contribution of the diagnostic entrepreneur being overlooked. Entrepreneurial
9 This is not to say that individuals cannot make wrong choices and regret later on, the point is that, in the case
of an unhampered market, all transactions will be mutually benecial, as has been stated by Menger (2007)
when dening the subjective theory of value.
10
By taking this stand one can include all organizations, not only rms, but also NGO and, of course the
organizations started by the so called social entrepreneurs’ in the same analysis, since, by denition, all of
them will be based on the subjective valuation and judgment of the entrepreneurs.
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diagnosis is a cognitive skill possessed by the entrepreneur. It is a subset of entrepreneurial
judgment and can be modeled. The model shows that in order to exploit opportunities it is
often necessary for entrepreneurs to invest in market-making activities, such as customer-
focused diagnostic services, backed up by credible reputations for competence and integrity.
While diagnostic entrepreneurship is particularly important in knowledge-intensive service
industries (such as medicine: the act of asking questions about how the consumer feels and
interactively translating responses into a description of uneasiness that can become the basis
for a designed solution to eliminate it.
The practice of empathic diagnosis is a critical step in the process of entrepreneurs
facilitating value and contributing to consumer well-being.
FP8: Value facilitation is a combination of understanding consumer’s uneasiness and technical
knowledge joined in a value proposition.
Value facilitation is the creation of new knowledge (primarily as new ideas) produced by
combining knowledge of wants (knowing what customers might use to overcome uneasiness)
and technical knowledge (knowing how to deliver the idealized solution) that will take form
and be presented in a value proposition of a product, a service, or some sort of a bundle of
the two.
Entrepreneurs act upon their empathic diagnostic understanding of consumers’ uneasiness.
They advance from this emot ional knowledge of an addressable condit ion through the design
process (formal or informal) of conceiving, articulating and specifying a new solution. This
activity could conclude with a designed product or service, a consumer research or testing
program, a business plan or an actual product / service launch into the market.
In all of these cases, the entrepreneur is creating new, usually tacit, knowledge which
did not exist before and many times, does not exist outside the entrepreneur’s (and / or his
or her team’s) own mind
11
. This is achieved by combining previously existing knowledge,
with newly-mined knowledge from empathic diagnosis, with existing (or possibly recently-
discovered) technical knowledge of how to create a new structure of production to assemble
the new solution. Technical knowledge can refer not only to the use of technology, but also
to practical ways to produce a product, deliver a service, build a supply chain and logistics
system, process and fulll orders, manage a payments system, communicate to the target
audience the availability of the solution, and all the other technical components required to
go to market and fulll new consumer expectations that are about to be generated.
Aempting to generate insights about what solutions might be needed by the public
from simple observation and introspection has also proven successful. Some entrepreneurs
develop solutions to t their own needs and end up commercializing them12 . In many cases,
however, entrepreneurs, especially disruptive ones, must imagine a future state and act as
if they know that their solution will be needed in the future; to do so, they organize all the
11
This conrms once again the Hayekian statement about the variety and dispersed knowledge in society
(HAYEK, 1945; 2008)
12 See the examples of the iPhone (JAIN, 2017), AirBnB (AYDIN, 2016) and Elizabeth Suzann (ROBERTS; PAPE,
2017) among many others.
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production process beforehand, in advance of consumer evaluation, and work to change their
future consumers’ expectations. This is the typical example of entrepreneurs who launch ‘new
to the world’ solutions such as the rst car, rst airplane, the iPhone, radio broadcasting or
the Sony Walkman.
This knowledge organized by the entrepreneur reaches the consumer as a value proposition.
The proposition, if communication is correctly implemented, tells the potential consumer that
their felt uneasiness can be resolved by adopting the proposed solution, and that the resultant
experience will be subjectively felt as more valuable than opting for no action, since it will
take the user from a state of less satisfaction to a state of greater satisfaction.
In essence, the value proposition is a promise of a feeling of improved well-being made
by the entrepreneur to the consumer. The entrepreneur undertakes to keep the promise by
activating the production, communication, and delivery system.
FP9: There will always be producer uncertainty because there is value uncertainty in the consumer’s
mind.
Will a new solution meet expectations and conrm expectations when consumed? Will
it lead to the value experience that the consumer was expecting? Consumers determine the
outcome of entrepreneurship, and this outcome cannot be fully predicted before consumers
experience the solution, so entrepreneurs must be carriers of Knightian uncertainty.
The consumer is optimistic (that his/her uneasiness will be solved), but still uncertain
during the consideration of a purchase - and even after a purchase decision - as to whether a
new solution will conrm expectations when consumed (i.e. will the service generate a value
experience correspondent to the anticipation that was generated in the consumers mind by the
communications that the entrepreneur controls and other ways in which the consumer has
received information about the solution and formed his expectations). Consumers determine
the outcome of entrepreneurship when they evaluate an entrepreneurial oering, and when
they assess their value experience, usually after the consumption itself13.
Therefore, the system of entrepreneurial value facilitation must always be governed by the
inherent uncertainty of the market process. Entrepreneurs make the best empathic diagnosis
of which they are capable and add to it the best available technical expertise. This is entirely
dependent on subjective variables, including the entrepreneur’s talent, the level of information
(how complete or incomplete) to which they have access, and the consumer’s willingness or
ability to communicate feelings of dissatisfaction, among others14. The design process to reach
a possible value proposition is also imprecise – a process of experimentation rather than xed
13
In some cases, probably pathological, the consumption itself could be considered the joyful act, so the passing
from a less satised to a more satised state might happen by the time the product is bought, not, as it is much
more common, by the time it is used and its services are delivered.
14 Perhaps the most famous quote aributed to Henry Ford was: “If I had asked people what they wanted, they
would have said faster horses”. Meaning that many times, people do not know about the solutions that they
might adopt before they actually have the option to chose them. Steve Jobs’s history with the creation of the
rst ever iPhone is similar. Both are examples of Godley and Casson’s (2015) diagnostic entrepreneur.
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progressions – and usually there are many entrepreneurs working on nding a (sometimes
very similar) solution to the same or similar consumers’ perceived uneasiness15, 16.
In all instances, the consumer’s emotional, idiosyncratic and inconsistent feelings govern
the subjective appeal of the solution proposed by the entrepreneur. The consumer develops
value expectations as a result of being exposed to the value proposition17, and these expectations
may be favorable or unfavorable to purchase. The entrepreneur is challenged to make the
best proposition for the price at which he/she is aiming at selling, and to assess what kinds
of expectations have been subjectively created in the consumer’s mind, and whether or not
these expectations are stable.
The producer-entrepreneur is challenged to create value expectations at four basic levels
(BYLUND, 2018).
Absolute value: The value proposition must produce a feeling in the consumer’s mind that
the oering is “worth it” in some absolute sense: the consumer feels that their circumstances
would be improved by accepting it, and they would rather have that experience than the
money and/or other consideration that they must give in exchange.
Value relative to direct competitors: The consumer may be presented with alternative value
propositions that are direct alternatives for geing the same job done (such as two brands
of credit card or dishwashing liquid). In this case, the consumer must decide on one or the
other, and the entrepreneur is challenged to make an oer that is subjectively deemed to
be beer.
Value relative to indirect competitors: The consumer may have multiple pathways towards the
consumption experience they seek. They may feel that a checking account with an overdraft
facility can do the same job as a credit card, for example. In this case, the entrepreneur
is challenged to generate consumer preference for a value proposition that is not just
functionally and emotionally beer, but also rewards a change in behavior. Understanding
the consumer’s feelings about indirect competitors is important part of entrepreneurial
diagnosis.
Value relative to non-usage: The consumer always has the option of not purchasing the
solution, and foregoing the proposed experience, either in the absolute or in deferring it to
a future time. The entrepreneur is further challenged, therefore, to persuade the consumer
15 Evidence of that can be seen on patents, usually very similar patents are deposited with days or months of
dierence by completely dierent and unrelated producers, two of the most well-know cases are the aviation
one that confronted the Wright Brothers and Santos Dummont and, more recently, the home-video one which
confronted the VHS against Betamax. Or as Johnson (2010) says, it is common for people to come up with
similar ideas at the same time despite no connections to each other.
16 In spite of the many eorts to nd ways to control and predict the innovation process (there is a very large
literature on innovation management), the very core of it remains on entrepreneurial judgment that, per se,
cannot be formalized (FOSS; KLEIN, 2015; 2018).
17 That exposition is not all under the control of the entrepreneur, he can control some of it via the marketing
management and tactics eorts, however, things such as the word-of-mouth and more recently the social
networks + ecommerce phenomena lead to the reviews sections in websites and even to some outlets that are
fully dedicated to reviewing products by consumers.
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to take current action rather than future action – i.e. to increase their time preference in
relation to the value proposition.18
Subsequently, if the consumer acts on the value proposition on the basis of their expectations,
their subjective feeling may be that the consumption experience met, exceeded or fell short
of their expectation. Again, the entrepreneur is challenged to measure and understand the
consumer’s experience valuation, and to react accordingly in aempting to nurture it further,
maintain it, or x it if it is negative towards the value proposition19.
All of these factors in combination render it impossible to be certain about the outcomes
of the entrepreneurial value-proposing process. Outcome uncertainty is an unavoidable
condition for entrepreneurs.
FP10: Consumers rank their value experiences, but value itself is not quantiable.
Metrics and quantication are not part of consumer experience. Consumers have no
mechanism and no process for computing value quantitatively. Value is a felt experience,
embedded in a multitude of felt experiences accumulating in every minute, hour, day, week,
year and decade of the consumer’s life. Value is inherently qualitative and dicult (maybe
impossible) to be awlessly translated to numbers
20
. Context and circumstances are continually
changing and consumers hardly aempt to quantify experience. Certainly, the consumer is
unable to quantitatively compare the satisfaction of owning and using an automobile to the
satisfaction of owning and using, say, fashionable clothes or household furniture.
There may be some facility for ordinal ranking – e.g. a preference for a vacation experience
over a job experience in a specic time period where the two are mutually exclusive – but
this is really just an instance of relative value rather than quantication of felt experience
(MENGER, 2007, Chapter 3; ROTHBARD, 2004, Chapter 1).
One way to assess the value that a consumer expects from a product is to substitute the
price paid for it. Prices serve as proxy expressions of value for the marginal good in the mind
of consumers: proposed value in the case of the seller and expected value in the case of the
buyer. Consequently, rolling back a purchase completely, without either of the parties changing
their value ranking, would suggest a loss. This includes the “money back guarantee,” which
18
Those values emphasize the importance of brands, by having a brand and properly communicating it to
the target audience, creating in it a specic sensation of stable delivery of the service provided, a company
can drastically reduce its eorts (and costs) of communication every time a modication in a product is done.
From the consumer’s point of view, the brand itself can convey value in many ways, which is especially true
for luxury goods.
19
There are actually many dierent ways of trying to measure satisfaction in the marketing literature (GRUCA;
REGO, 2005; MORGAN; REGO, 2006), one that is actually very straightforward, but considered unreliable by
many scholars is the Net-Promoter Score (NPS).
20 Hubbard (2014) says that everything is measurable, not maer if it is qualitative. He proposes that words
should dene what it is that we would like to measure, why is it important, and what are its consequences
if it increases or decreases. If something can increase or decrease, it can be measured, possibly by the eects
that the increase/decrease have. In that sense, measurement should be viewed as narrowing of uncertainty to
facilitate judgment, and does not have to exact.
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would under such circumstances undo the transaction, but not make the consumer whole
because as s/he values the product more highly than the price paid (BYLUND, 2019).
The entrepreneur is left with the task of measuring the feelings and emotions of consumers
with non-quantitative tools, such as sentiment analysis and deductions of motivation from
behavior. Empathic diagnosis is a continuous activity of the entrepreneur, and not just a
starting point for product or service design.
3. Key Implications And Actionable Insights For Business And Marketing
3.1 Discard the language of value creation and adopt the language of value facilitation
It is common to use the language of value creation when describing the activity of an
entrepreneur or a rm. This use of language implies objectivity and a controlled process;
it implies that some may be “beer” or “poorer” at the task of value creation. But such a
perspective is inappropriate and can lead to misguided decision-making.
Value facilitation is a portfolio activity in which entrepreneurial rms allocate resources
to a range of initiatives, without certainty as to outcomes – this is why one cannot invest in
innovation, buy only in trying to innovate. Each activity is a learning project, both individually
and across the range of initiatives. It is possible that a rm may build up a paern of knowledge
from multiple initiatives, but the ever-changing consumer, market and competitive activity
(HUNT, 1997; 2000) set makes today’s knowledge paern less than fully reliable for completely
accurate predictive purposes.
3.2 Analyze the sources of consumers’ felt uneasiness, not their wants, needs or desires
“Wants”, “needs”, and “desires” are common terms in the marketing lexicon, used when
referring to the origins of demand from consumers. But this language can tend to induce a
mechanistic view of the process of designing solutions to felt needs (why that mechanistic
approach exists in marketing is not to be discussed on this paper, but a hint can be on the
widespread positivism seen in business schools). Consumers have no language and no feelings
corresponding to “wants”, “needs” or desires”. They have the experience of a felt uneasiness,
often quite vague and non-specic. Marketers err when assigning a specic identication to
this feeling, such as “a need for self-esteem” or “wanting” or “preferring” a particular model
of car or washing machine, or “desiring” a particular brand. Consumers address their own
felt uneasiness via a non-specic process of mentally (and imprecisely) evaluating oerings
that are available in the marketplace and assessing them for potential value (i.e. for their
potential to facilitate a future value experience following consumption), compared to direct
and indirect substitutes and to non-consumption. The consumer’s valuation process may be
urgent or non-urgent, and may or may not arrive at a conclusion (i.e. purchase).
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3.3 The task of the marketer is to create valuable experiences for consumers,
and to orchestrate their production
A successful value proposition must enable a consumer experience, i.e. a feeling. It is
unlikely that a consumer’s experience is isolatable to the specic value proposition made
by one marketer. For example, consuming a food brand is integrated into the experience of
shopping for it, preparing it, and consuming it along with other items of food and beverage
(and, in most cases, enjoying the company of other people as well). The consumer evaluates
an experience that includes more components than the single food brand item. Positive or
negative implications of other components of the total integrated experience may aect the
consumer’s evaluation of the individual food item.
Value-facilitating marketers must consider the total experience, map it out to the best of
their capabilities considering the cost-benets, and then seek to do what they can to orchestrate
it positively for the consumer, even while supplying only one component of it. The art of
orchestration is highly inuential in value facilitation.
Facilitation of value is necessarily an inexact, imprecise and uncertain activity for
entrepreneurs. The raw material available to them is innite and renewable – i.e. consumers’
felt unease and knowledge, both existing and to be created – but processing it into eective
marketplace value propositions is not an easy task. It requires the skill to organize a (potentially
very) complex set of steps and coordinate those with everything else that comes from the
previously existing production processes. This is, in essence, the task of the entrepreneur
(BYLUND, 2016; D’ANDREA, 2019a; FOSS; KLEIN, 2012).
3.4 Consumer well-being is necessary for the entrepreneurial rm to be successful
– nd ways to measure and monitor it and create a dashboard
Since it is the consumer who is responsible for creating value, and since they do so in
their never-ending search for beerment and greater well-being for themselves, it follows that
consumer well-being is, always, the successful entrepreneur’s productive output. To achieve
prot–because without a prot, the entrepreneur cannot continue to reinvest in continuously
nding new ways to facilitate value and in new oerings that potentially do so – it is necessary
to continuously please the consumer.
The entrepreneur is engaged in a process of identifying consumer unease and devising
experiments to relieve it with new oerings that the consumer will evaluate positively, experience
feelings of value in consumption, and achieve a state of greater well-being. The entrepreneur’s
immediate mission is fullled when this state is realized. Rolled up across many entrepreneurs,
consumers and experiences, the well-being of society is enhanced. Entrepreneurship generates
social benet. Contrary to many claims, (productive) entrepreneurship (BAUMOL, 1990) is
benecial to the society as a whole and the most just societies are the ones that best oer
opportunities for their entrepreneurs to unleash their creativity (DE SOTO, 1999, p. 154; 2010).
A great challenge to the entrepreneur is to design a dashboard of (ideally qualitative)
metrics to capture this experience and the result of well-being. There are no numerical or
quantitative measures, but proxies such as Net Promoter Score (where the consumer reports
on their willingness to recommend the entrepreneurs service to friends) may prove to have
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some predictive value. A fertile eld of future research lies in exploring the most applicable
metrics for the successful measurement of felt well-being as an output of entrepreneurship.
It is likely that the best measurement solution for the entrepreneur is subjective: how
much well-being do they believe that they have facilitated for the customer? How do they
bring evidence to bear to support their belief?
3.5 Empathy as a skill
Ever since Adam Smith (1759), economists have recognized the role of empathy in the
facilitation of consumer value. To be successful, the entrepreneur must empathize with the
consumer – sense how he or she is feeling, as if in the consumer’s mind – in order to conceive
of the nature of the uneasiness and begin the design process of conceiving a solution that the
consumer will evaluate positively. It is logical to assume that those entrepreneurs who are
beer at empathy will have a greater likelihood of success in value facilitation.
Is empathy a skill that can be learned and mastered by entrepreneurs? This also might
be a maer where research could deliver some insight. Perhaps empathy is in-born, or a
personality trait that is nurtured in early upbringing; but it could also be a business skill
acquired through case study and trial and error. Certainly marketing as a business function
implies the empathic collection of data from consumers so that it can be used as input in the
design of new products and services, communications and improved experiences.
3.6 Entrepreneurs and rms are charged with managing inevitable uncertainty
Designing the facilitation of valuable experiences for consumers is necessarily an inexact
and imprecise science, and success or failure is unpredictable. Some rms and entrepreneurs
may be able to build superior track records of marketplace success due to eective resource
allocation decisions and an ex post superiority in portfolio resource allocation decisions.
However, this superiority can emerge only in hindsight, and, as a consequence of market
dynamism, may not extend into the long-term future (KNIGHT, 1921). Consumers and
competitors are always learning and changing, and making new decisions about new choices
under new circumstances; the world will change and entrepreneurs must cope with that in
their ventures. We should abandon the pretense of full predictability of a company’s future
success – for example in stock market forecasts – when unpredictability is the prevailing
condition (SARASVATHY, 2001). Examples such as the ones provided by Nokia before the
launch of the iPhone, by Nintendo, before the tsunami of new consoles and mobile gaming,
by small grocery stores before Walmart started to compete on their businesses, and many
others could be given to prove that point.
3.7 Sustainability And Social Responsibility Are By-Products Of Individual
Entrepreneurial Value Facilitation
There has been a sustained aack on the mission of the entrepreneur to create value for the
customer, in the form of pressures towards so-called sustainability and social responsibility.
Sustainability refers to the responsible and repeatable uses of resources. In Value-Dominant
Logic, the customers send signals to the entrepreneur, through the prot-and-loss mechanism,
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as to whether they believe that the entrepreneur is using environmental resources in a way
that the customer approves of. With prot, the entrepreneur’s activity is, at least for the time
being, sustainable, and without it, it is not and will cease. Customers are sovereign (MISES,
1998, p. 270); they decide sustainability and entrepreneurs must be aware that this is yet
another part of the value that is proposed by the rms and created by consumers as they try
to overcome consumers’ felt unease.
Social responsibility is simply the roll-up of individual customer decisions regarding the
use of resources. Often, centralized decision-making for corporate social responsibility aims
to override the individual consumer’s decision in favor of dierent “social” indicators. In
Value-Dominant Logic, entrepreneurial prot - in a broader sense, not only the nancial one,
after all entrepreneur’s well-being is formed be a combination of monetary and non-monetary
satisfactions - is the applicable social signal.
Conclusions
Economics and marketing relations are deep (BARTELS, 1951; CONVERSE, 1945; KUMAR,
2015); marketers have always used economics to beer understand how companies should do
business (SHAW; JONES; MCLEAN, 2011), and important marketing authors, such as Philip
Kotler and Michael Porter, are economists. This paper follows that tradition and continues
the eorts of Hunt and Hunt and Madhavaran (2006) and D’Andrea (2019b) to beer explain
marketing concepts using a sounder economic approach.
The Service-Dominant Logic has proven successful in conveying some very important
messages to business practitioners. Its natural evolution, the Value-Dominant Logic which
we outlined here, goes even further. It points to the fact that value cannot be created by an
external agent, an entrepreneur and an associated organization; value has to be built by the
consumer, in his/her mind, during the various steps of the buying process (KOTLER; KELLER,
2012, p. 189). Entrepreneurs are necessary in this process because they are the ones that will
provide the means necessary (the products or services) for the value to be created.
Understanding the V-DL will have deep impacts on how entrepreneurs see their own
businesses and, as a consequence, will change the way the entrepreneur deals with (potential)
consumers. The adoption of an empathic way of thinking, and by seeing his/her own busi ness
as the supplier of a tool (a product or service) that aims at facilitating the creation of value
by the consumer has the capacity to completely change the way the business is seen by the
entrepreneur.
V-DL is a powerful idea. It is founded in solid economic thinking and can be applied to
any kind of business. It requires eorts from the business community to understand the kind
of value that is to be created and the technical knowledge to transform the idea into a tool
suitable to do the consumer’s job of creating value.
Because it is a very new application of some strong ideas to marketing, V-DL still
needs development and discussion; we urge scholars interested in marketing, strategy,
entrepreneurship, innovation and the interface between business and economics to think
about issues, developments and other possible applications of the ideas outlined here. Only
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TOWARDS A VALUE-DOMINANT LOGIC FOR MARKETING
20 de 23 | MISES: Interdisciplinary Journal of Philosophy Law and Economics, São Paulo, 2019; 7(3) Set-Dez
by looking at how the principles are (will be) applied in real business situations will we be
capable of further understanding the real-life consequences of its adoption.
One of the much-needed practical developments is to try to nd ways to assess value, e.g.
to measure subjective value experience. Marketing’s solutions to that are usually quantitative,
but based on the V-DL, a more modern dashboard could be developed; some ideas are starting
to circulate, but, to the best of our knowledge, there is nothing documented yet.
Economics and marketing are about people and their subjective valuation of the dierent
solutions entrepreneurs have to oer. By adopting that as the core principle of the Value-Dominant
Logic, we correct a mechanistic view of individuals, both consumers and entrepreneurs, and
help beer understanding of the market process phenomenon as a whole.
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Recebido em: Aug 4 2019
Aprovado em: Sep 25 2019
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Chapter
The very evolution of social science rests on the innate creative capacity of human beings and on the theoretical study of the dynamic processes of social coordination which arise from entrepreneurship. Each human being possesses an innate creative capacity that enables him to perceive and discover the profit opportunities that emerge in his environment and to act accordingly to take advantage of them. If we see the economy as a dynamic entrepreneurial process, the ethical principle which must govern social interactions rests on the view that the most just society is that which most energetically encourages the entrepreneurial creativity of all the people that comprise it. The dynamic view of the market as a spontaneous order which emerges from human interaction driven by entrepreneurship makes it easier to take an ethical position and reinforces the idea that free markets fueled by entrepreneurship are not only the most efficient from a dynamic standpoint, but also they constitute the only just economic system as the encyclical Centesimus Annus has stressed.
Chapter
The very evolution of social science rests on the innate creative capacity of human beings and on the theoretical study of the dynamic processes of social coordination which arise from entrepreneurship. Each human being possesses an innate creative capacity that enables him to perceive and discover the profit opportunities that emerge in his environment and to act accordingly to take advantage of them. If we see the economy as a dynamic entrepreneurial process, the ethical principle which must govern social interactions rests on the view that the most just society is that which most energetically encourages the entrepreneurial creativity of all the people that comprise it. The dynamic view of the market as a spontaneous order which emerges from human interaction driven by entrepreneurship makes it easier to take an ethical position and reinforces the idea that free markets fueled by entrepreneurship are not only the most efficient from a dynamic standpoint, but also they constitute the only just economic system as the encyclical Centesimus Annus has stressed.