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JOSM
27,4
Systems, networks, and
ecosystems in service research
Sergio Barile
652 Department of Management, Sapienza University of Rome, Rome, Italy
Robert Lusch
Received 8 September 2015 Eller College of Management, University of Arizona, Tucson, Arizona, USA
Revised 3 February 2016
Accepted 15 February 2016 Javier Reynoso
EGADE Business School, Tecnologico de Monterrey,
San Pedro Garza García, Mexico
Marialuisa Saviano
Department of Management and Information Technology,
University of Salerno, Salerno, Italy, and
James Spohrer
IBM Research-Almaden, San Jose, California, USA

Abstract
Purpose – The purpose of this paper is to create awareness on the need for lifting up the level of
analysis in service research by focusing on systems, networks, and ecosystems to contribute to the
research expansion of the traditionally narrow view of service.
Design/methodology/approach – This conceptual paper is built upon three blocks. First, the viable
systems approach is revised to highlight the survival, viability, and complexity of service systems.
Second, the dynamics of service networks is discussed using an ecological view of service with a
nested, networked configuration. Third, these two previous perspectives are integrated using the
fundamentals of ecosystems thinking.
Findings – This paper outlines a novel, tri-level approach reorienting and reframing our thinking
around systems, networks, and ecosystems. Some research challenges and directions that could
expand the body of knowledge in service research are also discussed.
Research limitations/implications – The tri-level approach proposed in this conceptual paper
could be enriched with other theoretical perspectives and empirical explorations.
Practical implications – Lifting the level of analysis by focussing on service systems, service
networks, and service ecosystems would allow practitioners to expand their business perspective to better
face the challenges of complex business settings, enabling them to co-create value for all their stakeholders.
Originality/value – The paper contributes to set the foundation for the next stage of service research
by going beyond dyadic interactions to address dynamic systems, networks, and ecosystems across
different interaction patterns in complex business configurations.
Keywords Systems thinking, Service ecosystems, Service systems, Service networks,
Viable systems approach
Paper type Conceptual paper

Introduction
Consider parallel trends that mark modernity. First, global flows of materials, energy,
information, money, and people are interconnected. In such a setting, complex, urgent
Journal of Service Management issues cannot be solved in isolation or from a single disciplinary perspective.
Vol. 27 No. 4, 2016
pp. 652-674
© Emerald Group Publishing Limited
1757-5818
Javier Reynoso would like to acknowledge the collaboration of senior researcher Karla Cabrera in
DOI 10.1108/JOSM-09-2015-0268 the preparation of this manuscript.
Challenges ranging from climate change to national-level competitiveness to business Systems,
growth require a more comprehensive, systems perspective, in which the focus shifts networks, and
from structural parts to dynamic wholes.
Second, the emerging service research domain continues to move beyond dyadic,
ecosystems
business-to-consumer interactions to embrace networks of interacting customers,
businesses, citizens, and governments. For example, smartphones, big data in the
cloud, and the ever growing internet of things represent elements of an evolving 653
complex infrastructure. In this context, adopting a service ecosystem view allows both
scholars and practitioners to capture business and its environment more realistically,
with less focus on analysis, planning, or control and more consideration of emergent
strategies, adaptation, and learning from feedback. That is, rather than treating the
individual (customer or employee), dyad (employee-customer interaction), or group
(service organization) as the unit of analysis, the time has come to expand service
research to understand the development of service systems, service networks, and
service ecosystems. As Ostrom et al. (2015, p. 136) assert, the “complexity of service
systems and networks requires input from disciplines and expertise outside the
traditional service research arena.”
The relevance of this paper is threefold. First, we aim to create awareness of the
need to lift up the level of analysis in service research. So, in arguing for a
generalizable view of business and social organizations as rapidly evolving service
systems, we focus on systems, networks, and ecosystems as three threads of an
emerging, deeply intertwined story. Second, in so doing, we seek and encourage
researchers to expand the narrow view of service that has developed over time
providing future research directions relevant to complex business and government
configurations. Third, we thereby aim to enable managers to navigate turbulent
conditions in ways that enable them to help co-create value for customers, suppliers,
employees, and other stakeholders.
This intertwined story is outlined as follows. First, to address service systems,
we rely on the body of knowledge of systems thinking represented here by the viable
systems approach (VSA) (Barile et al., 2012a; Golinelli, 2010), which highlights the
intrinsically systemic, dynamic nature of service in terms of the survival, viability, and
complexity of service systems. Second, by conceptualizing of the service system as a
basic abstraction, discuss the formation and change of service networks. In this view,
service ecology has a nested, networked configuration, and rules work to constrain
actor-to-actor or entity-to-entity interactions. Third, we propose that service
ecosystems integrate the two previous perspectives. In this sense, a service
ecosystem is a relatively self-contained, self-adjusting system of resource-integrating
actors or entities, connected by shared institutional logics and mutual value creation
through the service exchange (Vargo and Lusch, 2011). After outlining our novel,
tri-level approach (shown in Figure 1), we delineate and discuss some research
challenges and directions that could expand the body of knowledge in service research.

Toward a systems understanding of service

In the last decades, firm managers have focussed their attention on improving firms’
performance by relying on very specialized models and standardized techniques and
tools (Mitroff and Linstone, 1993), ending up adopting a problem-solving perspective
also when facing more complex decision making. Anticipating this problem, Checkland
(1981) wondered whether the systems engineering approach, which proved to be highly
successful in solving technical problems, could be effectively used by managers facing
JOSM Characterized by

27,4 Self-
adjusting

Relatively for Value co-creation Institutional

self-contained in real time contexts configurations
Service Ecosystems
Resource
integrating
654
Evolving through
Advancing Integrating
Technology

Culture Knowledge
Networked Service Systems
Business and Society

Dynamic configurations of resources

determined by
Figure 1.
Beyond Dyads: Giving rise to new Viability Forming
systems, networks Survival Complexity
and ecosystems in Service Systems
service research

the complexities of organizational life. Indeed, a management approach excessively

focussed on problem solving progressively weakens the capability of decision makers
to achieve a holistic view of business dynamics, and their interconnections, which
are essential in a globalized and fast changing environment. Yet multiple emerging
socio-economic and business trends – including dematerialization, socialization,
networking, and servitization, to name a few – together suggest to shift focus from
the technical elements of the businesses’ structures to their systems dynamics
(Porter, 1991; Spender, 1996).
In compliance with this need for a more holistic and dynamic view of business
and social phenomena, we re-explore the contribution of systems thinking as a
methodology of both investigation and management of service systems, networks, and
ecosystems.
Systems thinking is nothing but new in management. We commonly use the term
“system” in management talking about business system, production system, marketing
system, channel system, and so on. There is a long tradition of systems thinking
contributions to social sciences and business management (Barnard, 1938; Buckley,
1967, 1968, 2008; Emery, 1969; Jackson, 2000). Interestingly, the first areas of enquiry of
systems thinking were the structure and operations of living systems and their
relationship with environment. Over time these areas of enquiry have been enriched
with the contribution of biologists (Maturana and Varela, 1975), ecologists (Hannan and
Freeman, 1977), sociologists, and psychologists (Clark, 1993). With the work of von
Bertalanffy (1968), a general systems theory has been developed as new
epistemological and methodological approach of science. Later, the studies of
Stafford Beer (1975) enriched the body of knowledge of systems with the contribution
of cybernetics. The viable system model of Beer is still a reference in management
studies and a basis for a systems approach (Espejo and Harnden, 1989; Yolles, 1999).
After an initial burst of enthusiasm for systems theory, however, many thinkers Systems,
gradually lost interest, as they considered it too abstract to offer a reliable networks, and
representation of the specificities of phenomena, and proposed contingency views “as a
step toward less abstraction, more explicit patterns of relationships, and more
ecosystems
applicable theory” (Kast and Rosenzweig, 1972, p. 447).
With the aim of re-exploring the contribution of systems thinking to management,
and specifically to the study of service systems, the VSA has been developed in the last 655
decades trying to address the need of integrating “various ideas into a systematic
whole” (Kast and Rosenzweig, 1972, p. 449). By embracing a constructivist view
(von Glasersfeld, 2001), the VSA focusses on the role of decision makers as constructors
of the observed reality. In the VSA, any observed phenomenon (a problem or entity) can
be investigated by adopting a double perspective: on the one hand, by objectively
analyzing the parts and relations that configure the “structure “of the investigated
phenomenon (how it is made); on the other hand, by interpreting its interaction
dynamics as an open system living in its context (how it behaves). Accordingly, focus
shifts between the parts and the whole of the system, and the internal and the external
inter-systems contexts, at the multiple systems levels of integration of reality (from
individuals to organizations to networks of organizations up to the whole ecosystem)
(Redfield, 2009).
In an ever more complex and globalized world, a systems approach grants decision
makers a wider and more dynamic view of observed phenomena, capable of capturing
the rules that explain how systems behave in context, beyond structural boundaries.
In the context of service theory, in particular, the VSA highlights the concepts of: service
as a system; survival and viability; and complexity as they relate to service systems.

Service as a system and service systems

Service is intrinsically systemic and dynamic, and systems thinking supports an
understanding of systemic and dynamic phenomena. In this respect, the VSA proposes
the structure-system paradigm (Barile and Saviano, 2011), which emphasizes that a
distinction between structure and system implies a shift from a static to a dynamic
view. A structure-based perspective on retailing might primarily address the design of
the space and describe how the store is (physically) made. A system view instead
regards the store mainly as a dynamic process in which goods, equipment, and people
are harmonically integrated and interact co-creating value. The structure-system
distinction also confirms the solution of the traditional product/service dichotomist
view: a product can be viewed as a service process “collapsed” in its structure; a static
view of service and service system sees their structure. Accordingly, strategies to
improve the service system’s performance do not only suggest to make tangible what is
intangible; rather they suggest to better explore and exploit the “intangible” part of the
service process. Moreover, customers that are external to the structure, are internal to
the system and have a key role in the process of value creation. In such a relational
context, harmonic, hence effective interaction emerges if all actors “see” and “play” the
same system or if all emerging systems are complementary (or at least not conflictive):
owners’ interests should complement the customers’ or employees’ expectations.
As a form of systems thinking, the VSA can help to address critical questions in this
multi-actor, multi perspective, multi stakeholder setting, such as, how many systems
can emerge from the same structure? Is it possible to ensure that actors’ different
purposes converge toward synergistic goals, and if so, how? That is, because it
provides a framework indicating fundamental principles and rules to explain how
JOSM systems behave and recognizes service as a logic for describing the interaction of viable
27,4 systems, VSA provides a means to generalize views of business and social organizations
as service systems (Demirkan et al., 2011; Maglio et al., 2010; Vargo and Lusch, 2011).

Survival and viability of service systems

In such dynamic scenarios, systems strive to remain viable. A viable system, embedded
656 in a specific context, has survival as its primary purpose (Beer, 1985; Golinelli, 2010).
The viability of a system depends on its ability to adapt to a changing environment by
identifying a role to play in each context – that is how to “serve” a need – then
satisfying the expectations of other viable systems such as suppliers, customers, and
other stakeholders. To understand the behavior of a system, it thus is necessary to
identify the other relevant systems and the influence they can exert on the focal system.
Customers of any service system reflect in their behaviors the multiple influences that
derive from systems of higher order in their contexts; for example, in a retail bank
service relationship, the local branch teller exerts some power over customers as a
member of the national or multinational bank, which in turn is a component of the
global financial system, subject to top-down regulations.
These dynamics affect the outcomes of service-for-service relationships (Vargo and
Lusch, 2006) and make it difficult to achieve harmony in interests and results.
According to the VSA, for consonance, i.e., relational harmony – or at least perceptions
of it – is necessary to achieve effective service interactions and thus value co-creation.
It acknowledges the relevance of information sharing across interacting systems
(Lee et al., 2000; Maglio and Spohrer, 2008; Vargo and Akaka, 2009), but the VSA also
highlights the potentially greater relevance of reciprocal understanding and aligned
values (Barile et al., 2014a), thus shifting the focus from technology to people.
Furthermore, in multi-actor service contexts, multiple interactions give rise to
network configurations. Networks are not merely aggregations of relationships; they
are created to function as unitary systems (e.g. a service innovation consortium) that
aggregate a variety of actors with different aims, interests, and values. If the network is
not effectively managed as a whole, the service system can result in fragmented,
multiple systems with conflicting goals, which might weaken the potential for
synergistic functioning in the network. Network organizations also tend to reveal an
opportunistic logic that compromises their holistic, systemic functioning. For example,
in franchising networks, franchisors often seek to enjoy the advantages of entering new
markets while transferring all the risk of this market expansion to new franchisees.
These dynamics are particularly complicated in nested and networked service systems,
where multiple interconnections emerge dynamically, thus giving rise to complexity
and divergence (Shostack, 1987).

Complexity in service systems

Service systems are often linked to complexity in prior research (Basole and Rouse,
2008; Maglio et al., 2006; Vargo et al., 2008; Spohrer and Maglio, 2010), most of which
takes an objective or quantitative view of complexity trying to measure it (Tainter,
1988). In contrast, complexity does not deal with quantities and measures (Atlan, 1972;
Gell-Mann, 1992, 1995; Mitchell, 2009; Waldrop, 1992). It would not be necessary to
recall the Heisenberg’s quote stating that “What we observe is not nature itself, but
nature exposed to our method of questioning” (Heisenberg, 1958, p. 57) to agree that
complexity is a subjective condition that arises when the decision maker fails to
understand the emerging, unfamiliar dynamics (Simon, 1972, 1991).Thus, a systems Systems,
view of complexity suggests a shift in focus, from object to subject (i.e. decision maker). networks, and
It also indicates that resolving complexity is more than a matter of collecting or more
effectively processing more information and data. More information even can increase
ecosystems
complexity if the decision maker cannot understand how the problem are related and
interact (Badinelli et al., 2012). For example, modern retailers have access to vast
amounts of customer data, but few of them can exploit that information really 657
effectively. New consumer behaviors might be evident in loyalty card information, but
the reasons for those new behaviors might reflect emotional or subjective dynamics
that lack any linear relation to marketing efforts. Therefore, these behaviors cannot be
understood unless the retailer focusses on the specific case by investigating its
systemic context. Complexity in service systems essentially refers to the emergence of
nonlinear dynamics (Anderson et al., 1988). With its focus on the dynamics of
interaction, emergent properties, and adaptation, the VSA embraces a view of service
as complex adaptive systems (Buckley, 1998; Karwowski, 2012; Maglio et al., 2009;
Mele et al., 2010).
Overall then, this first step in our proposed framework, at the system level,
acknowledges that service implies systemic processes; the most recent service views,
such as the service-dominant logic (SDL; Vargo and Lusch, 2004), appear intrinsically
oriented toward systems thinking. The VSA makes this orientation explicit and builds
on its implications, highlighting implications for service research.
In addition, we propose that service systems themselves form interconnected,
complex networks that also are evolutionary and dynamic. Service systems are
dynamic configurations of resources (people, technology, information, organizations)
connected internally and externally through value propositions (Maglio et al., 2006;
Spohrer and Kwan, 2009). Tapping into dynamic service systems might provide the
human, technology, and cultural resources needed to accelerate the formation of new
service networks.

The evolving ecology of nested, networked service systems

Service research as the study of an evolving ecology of nested, networked service
system entities, from people to families to businesses to nations is the perspective we
adopt in this paper. These complex, adaptive, socio-technical systems each possess
their own capabilities, constraints, rights, responsibilities (Demirkan et al., 2011;
Gebauer et al., 2012), and patterns of interactions. For example, nations, states, cities,
universities, hotels, hospitals, cruise ships, businesses, families, and people are all
service system entities (Tracy and Lyons, 2013). These service system entities in turn
form interconnected networks that give rise, over time, to new entities and innovative
interaction dynamics. For example, the collaborative economy and companies like
AirBnB that compete with hotels but own no buildings, and companies like Uber that
compete with taxis but own no cars. In the processes of formation and change of service
networks, the key factors are new mechanisms for value co-creation based on:
knowledge; technology; culture; and sharing risk, rewards, and governance across
business and society.
Preliminary mapping and categorization of diverse service systems has begun.
For example, a useful illustration involves technology platforms that contribute to the
formation of networks of service systems (Spohrer et al., 2012b). From a sustainability
and knowledge creation perspective, understanding the networks that interconnect
cities and universities as global service systems may become as important as
JOSM understanding the global supply chains that link businesses. But as we pursue new or
27,4 revised service networks, the rate of adoption ultimately must depend on human,
technology, and cultural factors, which highlights the need to study service system
entities, their ecology, and their evolution from a SDL perspective (Lusch et al., 2008;
Maglio and Spohrer, 2008; Spohrer and Maglio, 2008).

658 Knowledge
Knowledge-intensive service networks demand skills of various levels and types, held
by a population of employees or the population at large. In this regard, the
modularization of knowledge according to academic disciplines has a relevant
influence on the way service networks form and change, as well as the rise of T-shaped
professionals with boundary spanning communication breadth as well as problem
solving depth. Universities constitute especially interesting and interconnected
members of the global network; for example, their reputations correlate strongly with
their national gross domestic product, they provide a primary source of start-up
companies, and they concentrate diverse, active, disciplinary knowledge in a relatively
small space (Lella et al., 2012; Spohrer et al., 2013). Similar to other members of service
systems, universities both cooperate and compete, striving to balance consonance and
competitiveness (Golinelli, 2010). That is, their value co-creation processes (similar to
those studied in coordination theory; Malone and Crowston, 1994) include cooperation
but also well-structured competition to explore, motivate, and reward the best dynamic
configuration of resources. These configurations stem from the interactions of the
universities’ entities in context, as they seek to create both repeatable and novel
outcomes (Arnould, 2008; Morgan and Hunt, 1994; Wieland et al., 2012). These diverse
service systems thus interact with their environment and one another as they co-evolve
(Metcalfe, 2010).

Technology
Technology is a key source of capabilities for service systems; it also provides a
network infrastructure for connecting service systems and scaling up services, rapidly
and profitably (Hsu and Spohrer, 2009). Technology platforms, web service
ecosystems, servitization, technology-enabled peer production networks, and social
media all exemplify technology as a pervasive driver of service innovations (Barros
and Dumas, 2006; Barrett and Davidson, 2008; Ostrom et al., 2010).Telephone networks
were among the first networks modeled as stochastic service systems (Riordan, 1962),
though networks of people (Adam Smith’s division of labor) and nations (Ricardo’s
comparative advantage) arguably were modeled even earlier. More recent modeling
efforts focus on supply chains and service profit chains as networks (Heskett and
Sasser, 2010). Although economically efficient flows of materials, energy, information,
people, and money have been modeled, the flows of knowledge and governance rules
have not been. The efficient, complex structures that currently exist, designed to
facilitate problem solving, do not ensure effective or sustainable systemic functioning,
which requires more complex decision-making processes.

Culture
Culture – such as language, relation, and family structures – can accelerate or inhibit
the spread of ideas and influence the rate at which service networks form and change.
Addressing service systems from diverse cultural perspectives is essential to their
viability, survival, and expansion. Studies of service networks span many regions and Systems,
cultures, including Japan (Abe, 2005), Taiwan (Tung and Yuan, 2008), China (Liu et al., networks, and
2009), Germany (Riedl et al., 2009), Italy (Barile et al., 2012b), and the Nordic regions
(Edvardsson et al., 2011). The Nordic School of Service Research was among the first to
ecosystems
investigate service networks in the context of relational marketing and many-to-many
marketing, thus moving beyond a narrow context of direct, dyadic, customer-led
interactions (Gummesson, 2010; Spohrer and Maglio, 2010). The Italian School also is 659
working to connect the concept of service networks to systems theory, through the VSA
we introduced in the previous section (Mele et al., 2010; Wieland et al., 2012).

Business and society

Finally, business and government leaders regularly develop ideas about new value
propositions, value co-creation mechanisms, and ways to link service system entities to
share risks, rewards, and governance in ways that influence the formation and change
of service networks. Depending on the industry or social sector, they also might predict
how quickly change can occur. Business and societal sectors reflect the nature of their
service networks and the speed at which innovations propagate through different types
of networks. For example, service innovations travel faster in the retail sector than in
education, for various reasons: the levels of standardized technology, business
platforms, investments, governance, and regulations (Basole and Rouse, 2008), as well
as institutional barriers to change. Well-established, relevant institutional barriers to
the process of rethinking education programs thus hinder the inclusion of, say, a
sustainability or service management orientation and contents in classrooms, which
instead reflect the still prevalent, traditional disciplinary schemes (e.g. Ford and Bowen,
2008; Reynoso, 2008; Golinelli et al., 2015). Mapping service networks and deriving
better formal representations, to understand how value flows and highlight differences
across sectors, thus remains a substantial challenge, despite some promising early
work (Allee, 2000; Schramm and Baumol, 2010).
Traditional reductionist views that focus on distinct parts to resolve problems are not
sufficient tools in the complex, dynamic environments that characterize modern, deeply
interconnected business, and social organizations. Furthermore, viewing all economic
interactions as dyads of buyers and sellers – where sellers rationally set prices to
maximize profits and buyers perform rational calculations to maximize their utility – is a
mechanistic metaphor and an outdated carryover from the approach to business adopted
following the industrial revolution. As is becoming increasingly evident, a complex,
adaptive systems perspective is needed. In addition, an ecosystem perspective, drawn
from biology and ecology (Mars et al., 2012), might be helpful for advancing this process,
so in the next section, we introduce the fundamentals of ecosystem thinking inspired by
the emerging multidisciplinary service research literature.

Ecosystem thinking
The rise of technology networks is prompting a shift, supplementing the concept of
markets with notions of trust networks (Pentland, 2014) and sharing economies (Sacks,
2011). In this setting, an ecological perspective can be informative, because biological
ecosystems consist of interdependent organisms, both generalists and specialists that
participate in flows of information and resources, during which they experience both
positive and negative interactions. However, unlike social or organizational
ecosystems, biological ecosystems are not designed or planned. They are amazingly
JOSM complex and intricate but arise without forethought; they emerge from interactions of
27,4 individual organisms with one another and their environment, resulting in the rise and
fall of populations of diverse species. There is no perfect organism or species – just
ongoing change and adaptation (Sagarin, 2011). Learning also occurs at multiple scales.
In the biological world, failure means death, and though individuals cannot learn much
from their own death, the species can adapt to dynamic environments over time.
660 Likewise, when a business or government fails, those specific entities may not learn
much of value, but the broader ecology of organizations and institutions gets shaped
by their failures over time. Following this logic, perhaps human efforts to plan and
design their ecosystems, based on the pursuit of certainty and control, have gone too
far. We need new approaches. We might gain a better understanding of the social and
economic dynamics in markets, as well as the formation and change of service
networks that we discussed in the previous section, with an ecosystem perspective that
allows service system entities (e.g. firms) to move away from a traditional analysis,
planning, and control mentality; develop a keener ability to observe (sense); permit
strategies to emerge; and use feedback to learn how to adapt better in the future.
The SDL embraces such ecosystem thinking, through the service ecosystem concept
(Lusch et al., 2010b; Vargo and Lusch, 2011). A service ecosystem is a relatively self-
contained, self-adjusting system of resource-integrating actors, connected by shared
institutional logics and mutual value creation through their service exchanges
(Vargo and Lusch, 2011). In addition, the SDL definition of a service (Vargo and Lusch,
2004) entails the application of resources (knowledge and skills) for the benefit of
another or oneself (e.g. self-service). In this sense, it aligns well with the networked
service systems.
The service ecosystem concept also has been well received by industry groups,
especially those that operate in the digital, dematerialized world or the digital
ecosystem of the internet (e.g. Apple’s, Google’s, or ALIBABA’s ecosystems).
As traditional manufacturers also increasingly produce products that include
embedded systems with digital sensors or signal processors, as well as with the
emergence of the IOT, the service ecosystem concept is expanding quickly though. In
this expansion, resource-integrating actors are not just humans but also things, such as
features that are born smart and can sense, respond, or adapt to changing
circumstances (Lusch et al., 2010b). A house or factory then can serve as an ecosystem
platform that supports the integration of many resources, often connected through
information technology.
Executives and industry groups that seek a more contemporary managerial
framework also are receptive to the ecosystem view, because it enables them to see
beyond the enterprise and perceive multiple tiers of suppliers, customers, and
stakeholders that directly and indirectly provide information and resource flows. Such
actors simply cannot be managed with an outdated manufacturing or industrial logic of
command and control that aims solely to maximize firm wealth and ignores issues of
community and social welfare. Accordingly, universities and research organizations
have begun to challenge traditional education approaches and call for a profound
rethinking of the appropriate education of future managers. A key topic, arising from
the service research community, is the education of “T-shaped” professionals, who are
endowed with both vertical competences in specific disciplines and the horizontal
capabilities to deal with various, extended, multisector, dynamic contexts effectively
(IBM, 2014; Barile et al., 2014b). A T-shaped manager should be able to develop an
ecosystems view of service (Hansen and von Oetinger, 2001) and, with this frame of
reference, readily adopt digital platforms that enable further sensing, responding, Systems,
resource integration, service exchanges, and innovation (Lusch and Nambisan, 2015). networks, and
Such digital service platforms are rapidly proliferating in the form of unified
communication, cloud computing, mobility, and collaboration platforms, leading to a
ecosystems
concomitant breakdown and integration of industry structure. For example, firms such
as Ford, Toyota, Hyundai, and Mercedes are collaborating far more closely with
information technology enterprises as the automobile becomes a platform for the 661
communication and coordination of human actors and providing the service of
affordable personal mobility.
Ultimately, the importance to study networked service systems has emerged
because engineering, economics, psychology, sociology, and a host of other disciplines
cannot address human-technology interactions or their co-creation activities
adequately. These features characterize service systems and their dynamic and
complex ecological evolution in service networks. To achieve this understanding,
we need a systems perspective, as presented by the VSA and informed by a service
ecosystems approach. In that regard, many research pathways are open, as we detail in
the rest of this paper.

Future research directions

We imagine three broad sets of directions for service research, each of which comprises
subthemes that researchers can attempt to tackle. In doing so, the following discussion
aims to provide guidance to what is next as an effort for lifting up the level of analysis
in service research in the years to come, seeking researchers to expand the narrow view
of service providing future avenues relevant to the reality of increasingly complex
social and business configurations (Ostrom et al., 2015).

Toward a service systems theory

Applying a systems view to service research reveals several theoretical and practical
gaps that need to be filled. As highlighted, despite widespread recognition of the
systemic nature of organizations, the implications of this feature are poorly captured
and often practically ignored in management. The theoretical contributions of service
research that relies on a systems thinking foundation would be highly relevant
(Gummesson et al., 2010). Because any business or social organization can be regarded
as a service system, a service systems theory should have a far wider impact on
business management research and practice. Thus to fill the current gaps associated
with a systems view of service, we propose several specific research avenues.
First, an analytical-reductionist approach still dominates management studies of
service systems, failing to go beyond the structural boundaries of enterprises or
perceive the multiple interaction tiers that emerge. A systems approach instead can
combine reductionism and holism in a unitary framework and thereby avoid an
unbalanced approach to the study of structural features. For example, service retailers
often paradoxically reveal the application of a goods-dominant logic (Vargo and Lusch,
2008) when they focus excessively on the goods to sell, equipment, displays, or layouts,
without considering the interactive dynamics among internal and external components
(Barile and Saviano, 2014). Service innovation in retail, especially that derived from
information and communication technology, benefits significantly from
dematerialization, which enables decision makers to perceive dynamics beyond the
physical structure of stores and thus assess their performance impact.
JOSM Second, service research is inducing a paradigmatic change in business
27,4 management and marketing; a systems perspective can help advance this change by
exploiting the contributions of systems thinking. For example, in a retail context,
redesigning store structures is a necessary but not sufficient condition for inducing
effective service changes. A systems management approach in service research could
address the relevant systemic processes that characterize service, especially for value
662 co-creation (Vargo et al., 2008). Value co-creation is central in the service research
agenda, yet the conditions of its effectiveness remain inadequately investigated
(Edvardsson et al., 2011). In this realm, the VSA could encourage a greater effort to study
the dynamics of co-creation, as it emerges concretely, and the drivers of synergistic
interactions in multi-actor contexts (Mele and Polese, 2011).
Third, a systems view of service might shed light on revised methodological
approaches for investigating service systems. Researchers should develop an
interdisciplinary body of knowledge to underpin the study of service systems,
especially by integrating engineering and management (IfM and IBM, 2008). Such
interdisciplinary views might foster a process of integration in structural and systems
approaches to the study of service systems. Currently though, disciplinary
fragmentation persists in the study of service systems, creating redundancies, if not
divergences, and limiting the insights that might be gained from a synergistic research
effort. Most scholars continue to investigate service topics with a sectoral view, losing
significant opportunities to integrate various theoretical perspectives. An integrated
research agenda and strong scientific collaboration among systems and service
scholars should help cross disciplinary boundaries and advance service systems
theory. The education of T-shaped innovators may be fundamental to such boundary-
crossing research (Wenger, 2000).
Fourth, an ecosystems view of viability indicates several specific issues that service
systems need to be ready to face in the near future. A true adoption of the SDL makes
decision makers responsible for sustainable development issues (Ostrom, 2009), which
are particularly relevant in resource integration and value co-creation contexts. These
globally urgent topics are central in the global government agenda (Vandemoortele,
2012) and similarly should be recognized by service system managers and researchers
as top priorities. On a smarter planet[1], an inclusive ecosystems perspective can
identify and exploit multiple interconnections in the environment and establish more
effective, sustainable relationships (Pels et al., 2014). This view goes well beyond a
corporate social responsibility perspective (Bhattacharya et al., 2011; Carroll, 1991); it
directs the development of business models that result in not only more sustainable but
also more inclusive outcomes. The long-term viability of service systems increasingly
depends on their ability to ensure the well-being of large numbers of people. Thus, the
sustainability of service systems (Spohrer et al., 2010; Teece, 2007) and inclusive
business innovations (Reynoso et al., 2015; Pels et al., 2014) are highly relevant
trajectories for service research.
Fifth, complexity must attract more attention from scholars engaged in service
research. Service research has increasingly noted complex service systems (Briscoe
et al., 2012) and complex engineering service systems (Ng et al., 2010), yet complexity
continues to be investigated mainly as an objective and structural characteristic of
service systems. Thus smart cities are regarded as complex systems whose
management relies on information technology, yet emerging incoherencies,
inconsistencies, and divergences in service systems threaten these enterprises’
viability, such that they cannot rely solely on technological solutions. Technology deals
with the functioning of structures and infrastructure; it can improve efficiency and Systems,
ensure the operationalization of new ideas and innovative solutions. It cannot replace networks, and
human decision making, based on values and worldviews. Even human decision
makers face challenges they are not ready for, including thresholds and trade-offs that
ecosystems
hide the key to the problem and nonlinear links among events ( Juarrero, 2002; Morin,
2005). This is complexity (Simon 1972, 1991): a subjective condition that leaves decision
makers unable to understand what and where the problem is. Therefore, complexity 663
needs to be investigated not only in terms of complicated system structures (problem
solving, engineering, design) but also and mainly according to the system’s (decision
maker’s) capabilities to deal with changing scenarios (decision making, adaptation,
emergence, thresholds, trade-offs). In turn, the view of service systems as complex
adaptive systems (Maglio et al., 2009; Mele and Polese, 2011; Miller and Page, 2007)
should be developed, in parallel with the study of the human side of service engineering
(Freund and Spohrer, 2013).

Unlocking the secrets of the ecology of service networks

Practice informs theory development, and theory development is beginning to inform
practice. The preceding discussion to work toward a service systems theory aims to
motivate the study of service as systems. Furthermore, according to SDL, service is the
fundamental basis of exchange and entity interactions. With its open source approach
to science and theory construction, SDL continues to refine its fundamental premises
and axioms with input from hundreds of scholars worldwide, thus moving toward
unlocking the secrets of the ecology of service networks. Some key points of departure
for further research are suggested below.
Service networks and biology. Service phenomena have resonance with life (biological
phenomena). For example, in biology, Linnaeus first described the diversity of types of
living entities (descriptive theory), followed by Darwin, who explained the mechanisms
that generate the diversity and how new species arise from older species (explanatory
theory), and finally Watson and Crick provided the foundation for the design of new life
forms and predictions of their outcomes through the manipulation of DNA (predictive
theory). That is, the starting point is a descriptive theory, here of the types of service
systems and how they have changed over time. With enough data, this descriptive
theory can provide a foundation for an explanatory theory of the mechanisms that
underlie the observed changes. With even more data, a predictive theory also can
generate alternative possible futures and describe the costs associated with each
pathway and set of outcomes. Descriptive (Linnaeus), explanatory (Darwin), and
predictive (Watson and Crick) theories are beginning to take shape in service research.
Predictive theories help business and government leaders make informed decisions and
shape future outcomes, for example. Although both service system entities and
biological organisms exist in nested, networked configurations (Allen et al., 2013;
Spohrer et al., 2012b), unlike biology, the service system ecology is also shaped by
strategy, learning, and elements of game theory as multiple stakeholders compete to
shape the future. Furthermore, unlike biology, the service-related academic disciplines
are a quite new (Chesbrough and Spohrer, 2006).
Service networks and hostile environments. Examples of service systems that can
exist in extreme environments will help facilitate the development of descriptive,
explanatory, and predictive theories, just as extremophile (e.g. bacteria that evolved to
live in harsh environments) have done for biology. Perhaps with increasing measures
JOSM of the economic and non-economic value of nature or ecosystem service (Costanza et al.,
27,4 1997), the fundamental criteria for a general theory of service will come into focus
(Lusch and Vargo, 2006). The term “nature’s service” (or ecosystem service) refers to
the ways nature benefits people, such that quality of life depends on nature’s service,
though it is often taken for granted. As people build service systems in increasingly
hostile domains (e.g. the Arctic, under seas, in space), the real costs and benefits come
664 into clearer focus. These extreme cases for building, maintaining, and rebuilding
service systems that can improve people’s quality of life require detailed planning and
next-generation means to manage design complexity. Therefore, they provide a true
test of a general theory of service. Global climate change also invokes a reconsideration
of nature’s service. As people depend increasingly on a digital infrastructure for their
quality of life, cyber security threats also need to be factored into service ecosystem
thinking in new, more explicit ways. Our environment, whether natural or
technological, should be part of ecosystem thinking, used to inform fundamental
measures that matter to people’s view of the quality of life and progress (Wright, 2001).
Service networks and big data. New sources of big data should help inform the
development of descriptive, explanatory, and predictive theories, as well as a general
theory of service. Big data analytics and cognitive computing systems can both
accelerate the evolution of smart service systems interconnected by platform
technologies and provide the data and modeling tools required to advance the study of
nested, networked service systems (Kelly and Hamm, 2013). For example, universities
embody cooperative and competitive global networks, technology-driven disruptions
(e.g. massively open online courses), and the critical importance of global flows of
people, knowledge, and value; therefore, they likely represent a key “species” for
achieving a general theory of service (Bitner et al., 2012; Ng and Forbes, 2009; Spohrer
et al., 2012a, 2013). Universities are like miniature cities; cities are another important
focal service system for scientists to study, especially as the sustainability of complex,
human-made systems becomes a growing societal concern (Lusch and Spohrer, 2012).
Cities are particularly challenging from a service quality perspective, especially in fast
growing, rapidly evolving, less developed, emerging market regions (Agus et al., 2007;
Gebauer and Reynoso, 2013).
Service networks are constantly evolving, and business and government leaders are
shaping and guiding this evolution. Service researchers working to inform and improve
the practice of forming and changing service networks, thus have three main questions
to address:
(1) How can we describe and map the diversity of service system entities?
(descriptive theory);
(2) What mechanisms can explain the diversity of service system entities, as well
as how new types arise from older types of entities? (explanatory theory); and
(3) What changes can we make, to which entity resources, to induce new types of
service system entities with new structures, functions, and behaviors?
(predictive theory).
These three sets of questions parallel questions asked by biologists and scientists at
large. Multidisciplinary service research is much more recent in academic circles than
biology though, so we need to continue changing and expanding our research focus
and scope to unlock the secrets of the ecology of service networks.
Characteristics, context, and real time in service ecosystems Systems,
As we emphasized in our discussion of research opportunities for service systems, a networks, and
service ecosystem suggests a way to unify different aspects of service systems theory
and move toward a general theory of service. Considerable research thus needs to be
ecosystems
conducted in and around service ecosystems. We discuss several promising
opportunities, reflecting five distinguishing characteristics of service ecosystems.
In addition, we suggest research that addresses the influence of context. Finally, 665
we identify some opportunities associated with real-time, big data for understanding
and analyzing ecosystems.
Characteristics of service ecosystems. Five distinctive characteristics of service
ecosystems suggest clear new research paths. First, service ecosystems are relatively
self-contained and thus have fuzzy boundaries. In this case, how do actors assemble to
form ecosystems? Then how do nested service ecosystems assemble and disassemble?
Does the process change when the actors are things (software, robots) that interact with
human actors? Researchers should seek to model the emergence of industries
(e.g. biotechnology) to discover how potential network partners begin to collaborate
and form new ecosystem structures.
Second, actors are relatively self-adjusting, which manifests itself in adaptive
behavior. However, we know little about adaptation. How does it occur in highly
uncertain, turbulent systems? How do communities of actors coevolve in such systems?
What roles do exploitation versus exploration have? Does adaptation influence the
resilience of these systems? From this perspective, the study of adaptation is essentially
the study of innovation; more research thus is needed on service innovation.
Third, actors are resource integrators. Enterprises are almost always myopic and
focussed on their internal resources and what applied resources (service) they offer to
the market. However, the beneficiary of this service integrates it with a host of other
resources, which might be market based, private, or public. How do they acquire and
integrate these other resources, to enhance the viability of the relevant system of
actors? Do novel forms of resource integration lead to innovation? How does the
unbundling or disintegration and reconfiguration of resources lead to the development
of innovations, including new business models?
Fourth, actors are connected by shared institutional logics. Service researchers
thus far have paid limited attention to governance mechanisms and institutional
factors, but humans create institutions to coordinate their behaviors and free up time
that otherwise would be dedicated to finding ways to coordinate. However, some
institutions outlive their usefulness, such that they become barriers to the viability of
a service system. The transportation infrastructure of a nation, focussed solely
around the automobile, thus may limit the viability of mass transit or novel forms of
transit, such as electric vehicles that need a recharging infrastructure to be viable.
This research opportunity promises a particularly high potential payoff, by
investigating how institutional entrepreneurs alter institutions and succeed and
shape service ecosystems.
Fifth, service exchange in service ecosystems results in mutual value creation. But
how equitable or balanced are the benefits of mutual value creation? What externalities
arise in relation to this mutual value creation, and for which other actors in the system?
How does cooperation versus competition affect mutual value creation? What
processes of creative destruction arise, and do they pave the way for new service
ecosystems? What does creative destruction mean for future jobs and training or
JOSM retraining of employees? Do value co-destructive interactions also arise among service
27,4 system entities?
The role of context. In addition to distinctive ecosystems characteristics, we need
research into how contexts influence the performance of actors in service ecosystems.
From biology, we know that a species can do well in one ecosystem or context but not
in another. This sustainability likely applies to actors and communities of actors in
666 service ecosystems too. For this research question, studies might consider the effects of
how the communities are nested. The answers would have implications for the
generalizability of service ecosystem research, as well as immediate practical
implications, especially for international business, in which transferring a service
ecosystem from one nation to another may fail without well-informed adjustments.
Revealing service ecosystems in real-time. Worldwide, a new species of adaptive
enterprises uses data and algorithms to manage themselves (Lusch et al., 2010a). This
new organizational species embodies co-creation around all aspects of the enterprise,
including co-created brands, value propositions, and strategies. The separations between
a focal enterprise, other enterprises, and the environment are fading, as are historical
distinctions of design, production, and consumption. As web technologies continue to
evolve and proliferate, this trend will continue. We anticipate continuous cycles of sense –
respond – adapt and ground-up interconnectivity (Zeng and Lusch, 2013). Big data need
to be viewed as a service, providing a lens for seeing the market and a channel to listen to
its voice. As a service, big data also can reveal service ecosystems in real time, enabling
us to see and hear the sounds of the assembly and disassembly of service ecosystems.
Google appears to be gathering the system components and interconnections to make
this ability viable. Developing big data methodology and techniques thus can benefit the
viability of service systems, the creation and change of service networks, and thus, our
understanding of service ecosystems.

Conclusion
Businesses, governments, and scientists seek new tools and methods for making better
decisions and aligning stakeholders in an increasingly interconnected world with
numerous, complex, urgent problems. To supply these tools and methods, the service
research community can leverage its unprecedented access to massive amounts of open
data about service system entities, their interactions, and outcomes, globally across
space, time, and organizational scales. Service research studies based on surveys of
hundreds or thousands of stakeholders involved in business-to-consumer interactions
have laid the foundation for the next stage of service research, going beyond dyadic
interactions to address dynamic systems, networks, and ecosystems, across various
interaction patterns (e.g. business-to-business-to-customer, business-to-government-to-
citizen, customer-to-customer-to-crowd). A pertinent challenge will be for the service
research community to organize and compile open data sets that support the ready
development of descriptive, explanatory, and predictive theories.
The development of economic, management, and marketing science has created an
impressive body of thought, some of which has been translated successfully into
practice. Overall though, approaches in the past have focussed on isolated problem
solving. Reorienting and reframing our thinking around systems, networks, and
ecosystems offers a much needed new perspective. As we move increasingly to a
perspective on the market, economy, business, and society as centered in the exchange
of service, an out-of-date industrial or manufacturing logic is not viable. Service
systems, networks, and ecosystems are far more difficult to model and understand, but Systems,
it is time for us to combine our efforts across disciplines to tackle these dynamic, networks, and
ambiguous, and uncertain environments. Much work is needed in terms of theory and
methodological innovations. This paper has provided a rich discussion about what is
ecosystems
next in service research lifting the level of analysis by focussing on systems, networks
and ecosystems. Opportunities thus abound.
667
Note
1. See www.ibm.com/smarterplanet/us/en/#/default

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About the authors

Sergio Barile is a Full Professor of Business Management at the Sapienza University of Rome.
He is a Member of the Board of Directors of the Italian Academy of Business Administration and
Management (AIDEA) and of the University Consortium of Industrial and Managerial Economics
(CUEIM). He is also a Member of the Scientific Committee of the SiMasLab at the University of
Salerno. His areas of research range from business management to systems, decision and
complexity theories. He funded the Association for research on Viable Systems (ASVSA) and is
one of the main references for the studies on the Viable Systems Approach (VSA, https://en.
wikipedia.org/wiki/Viable_systems_approach). He is a Member of the Editorial Board of
significant journals dealing with business management and economics science and author of
numerous books and articles in national and international journals, among which the European
Management Journal, Managing Service Quality, Journal of Service Management, Service Science
(Informs). He was awarded the Evert Gummesson Outstanding Research Award in 2015.
Robert Lusch is a Professor of Marketing and the Muzzy Chair in Entrepreneurship at the
University of Arizona where he also holds appointments in Philosophy and Sociology. Professor
Lusch is an active Scholar in the field of marketing strategy, services marketing, and marketing
theory. He is a past Editor of the Journal of Marketing. Robert is the past Chairperson of the
American Marketing Association. In 2013 the AMA awarded him with its most prestigious
award for marketing scholars: The AMA/Irwin Distinguished Educator Award. Previously the
JOSM Academy of Marketing Science awarded him their Distinguished Marketing Educator Award
(1997). His current research is focussed on service-dominant logic and service ecosystems.
27,4 Cambridge University Press recently published his book (with Steve Vargo), Service-Dominant
Logic: Premises, Prospects and Promises, in 2014. Cengage Learning published in 2014 the
8th edition of Retailing (with Patrick Dunne and James Carver).
Javier Reynoso is a Professor of Service Management and holds the Chair of Service Research
at EGADE Business School, Monterrey Institute of Technology (ITESM) in Monterrey, Mexico.
674 His main interest is to promote and develop research and academic activities on the service field
in Mexico and Latin America. Javier is Co-author of the first text book on Service Management
written in Spanish, used in 20 countries. Listed in the Top 15 MBA Professors in Latin America,
by Revista America Economia in 2012, he has received on three occasions, 1999, 2005 and 2013,
the ITESM’s Teaching and Research Faculty Award for his contributions to the service sector.
In May 2013, Javier became the first Latin American researcher to join the Global Faculty
Network, invited by the Center for Services Leadership (CSL), Arizona State University.
He received the prestigious Christian Grönroos Service Research Award 2013 in recognition of
his career achievements and significant originality in service research. Javier Reynoso is the
corresponding author and can be contacted at: jreynoso@itesm.mx
Marialuisa Saviano, PhD, is an Associate Professor of Business Management at the
University of Salerno, Italy, where she is the Vice Director of the Pharma_nomics and a Member
of the Board of Directors of the SiMasLab. She is also the President of the Association for
research on Viable Systems (ASVSA), the Vice President of the Italian Association for
Sustainability Science (IASS) and a Member of the Italian Academy of Business Administration
and Management (AIDEA). Her main research interests include the Viable Systems Approach
(VSA), Service and Retail Marketing, Sustainability Science, Cultural Heritage Management, and
Healthcare Management. She has published several books and articles in national and
international journals, among which the European Management Journal, Managing Service
Quality, Journal of Service Management, Service Science (Informs). She received two Best Paper
Awards (2011 Naples Forum on Service Conference and 2012 XXIV Sinergie Annual Conference)
and was finalist at the 2012/2013 Emerald/EMRBI Business Research Award.
Dr James Spohrer is the Director IBM Global University Programs and Leads IBM’s Cognitive
Systems Institute. The Cognitive Systems Institute works to align cognitive systems researchers
in academics, government, and industry globally to improve productivity and creativity of
problem-solving professionals, transforming learning, discovery, and sustainable development.
IBM University Programs works to align IBM and universities globally for innovation
amplification and T-shaped skills. Jim co-founded IBM’s first Service Research group, ISSIP
Service Science community, and was founding CTO of IBM’s Venture Capital Relations Group in
Silicon Valley. He was awarded Apple Computers’ Distinguished Engineer Scientist and
Technology title for his work on next generation learning platforms. Jim has a Yale PhD in
Computer Science/Artificial Intelligence and MIT BS in Physics. His research priorities include
service science, cognitive systems for smart holistic service systems, especially universities and
cities. With over 90 publications and nine patents, he is also a PICMET Fellow and a winner of
the S-D Logic award.

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