Marketing’s intellectual health requires indigenous theory development. However, marketing is a discipline that, almost exclusively, imports its concepts and theories from other disciplines and applies them to marketing issues. Articles that either develop indigenous marketing theory or use such theory as a foundation for empirical research are notably absent from marketing journals. A major reason for the absence of indigenous marketing theory is the lack of well-developed procedures and approaches for developing theories and writing conceptual articles. This article proposes, explicates, and illustrates with a concrete example (i.e., service-dominant (S-D) logic) an approach to theory development in marketing that is labeled the “foundational premises, inductive realist approach.” Although this approach is not an algorithmic procedure for theory development, it can provide a valuable conceptual framework for furthering the development of indigenous marketing theory.
As MacInnis (2011, p. 151) has cogently observed, an “astounding number of fundamental and interesting constructs, theories, domains, and procedures were introduced to the marketing field from 1952 to 1977.” Much of the “fundamental and interesting” work that MacInnis identified had its direct, theoretical/conceptual origins in the marketing discipline. That is, it was “organic” (Frazier 2011) or “indigenous” (Rust 2006) to marketing, rather than being imported from other disciplines. Because of the indigenous theory that was developed in the 1952–1977 time-period, marketing became a thought-leader among the business disciplines.
However, scores of marketers have lamented the fact that marketing has evolved in recent decades into a discipline that, almost exclusively, imports its concepts and theories from other disciplines (e.g., Clark et al. 2014; Hunt 2018; Lehmann et al. 2011; Piercy 2002; Vargo and Lusch 2008; Yadav 2010; Zeithaml et al. 2020). Indeed, articles that either develop indigenous marketing theory or use such theory as a foundation for empirical research are notably absent from marketing journals. Regrettably, this absence is especially evident in marketing’s most prominent journals (Yadav 2010). For example, a study of all the articles published in three prominent marketing journals over 10 years reveals that none of the principal theories used to motivate the research projects in these marketing journals was indigenous to or originated in these (or other) marketing journals (Merwe et al. 2010).
Many factors have contributed to marketing becoming almost exclusively a discipline that imports theories and concepts from other disciplines and then applies them to marketing issues. Five common explanations of the current state of affairs include (1) doctoral programs underemphasize marketing theory, (2) doctoral programs, by emphasizing data analysis, encourage researchers to search, ex post, for theories that fit the data, (3) authors, reviewers, and editors devalue the importance to the discipline of developing, using, and citing indigenous marketing theory, (4) many marketers actually define marketing as an “applied” discipline whose sole objective is to borrow theories from other, more basic, genuinely academic disciplines, (5) the sociology of the marketing discipline results in scholars who attempt to develop indigenous marketing theory being punished (instead of rewarded) for their efforts by editors and reviewers, and (6) marketers lack well-developed procedures and approaches for developing theories and writing conceptual articles (e.g., Hunt 2018; Varadarajan 2010; Yadav 2010; Zeithaml et al. 2020).
The objective of this article is to further the development of indigenous marketing theory by addressing the sixth explanation. Toward this end, I propose, explicate, and illustrate with a concrete example (i.e., service-dominant (S-D) logic) an approach to theory development in marketing that I label the “foundational premises approach.” Although it is not an algorithmic procedure for theory development, the foundational premises approach, I argue, can provide a valuable conceptual framework for furthering the development of indigenous marketing theory.
The essence of the foundational premises approach is to start from a well-defined marketing problem, as indicated by the inductive realist approach to theory generation (Hunt 2013). Then, rather than immediately attempting to develop a theory or model to address the problem, the researcher seeks to develop the foundational premises of a framework that (1) succinctly facilitates understanding the problem, (2) directly contributes to explaining aspects of the problem, and (3) potentially could result in a theory or theories that would further contribute to resolving the problem.
In many respects, the foundational premises, inductive realist approach is as old as the marketing discipline, itself. The very first volume of the Journal of Marketing included an article by Wroe Alderson that sounded the alarm that the economics discipline was focusing on a theory of competition, “perfect competition,” that was both descriptively inadequate and – much worse – societally undesirable. The article then posited thirteen foundational premises that constituted a starting point for developing a distinctively marketing theory of competition (Alderson 1937). Alderson then devoted decades of his work to developing the implications of the 1930s’ premises. As Hunt (2018) and Wooliscroft et al. (2006) discuss in detail, the culmination of Alderson’s efforts resulted in his dynamic “theory of market processes” (Alderson 1957, 1965). This theory was then partially formalized in Hunt et al. (1981) and later served as a key building block of resource-advantage theory (Hunt 2000; Hunt and Arnett 2006; Hunt and Madhavaram 2019). Readers should note Alderson’s theory-development sequence. He (1) identified an important problem, (2) developed the foundational premises of a proposed solution, and then (3) used the premises to develop a theory to address the original problem.
Since Alderson (1937, 1957, 1965), several marketing theorists have used versions of the foundational premises, inductive realist approach. In chronological order, Hunt and Morgan (1995, 1996, 1997) have focused on developing the foundational premises of what has come to be called the resource-advantage (R-A) theory of competition. Vargo and Lusch (2004) have emphasized the importance of foundational premises to the development of the service-dominant (S-D) logic framework. Varadarajan (2010) has stressed the key role of identifying the foundational premises that underlie the field of strategic marketing. Layton (2011) has put forth the beginnings of a theory of marketing systems by means of twelve foundational premises. And Palmatier and Crecelius (2019) have proposed the “first principles” of a parsimonious, organizing framework for marketing strategy decisions. This article will use my interpretation of the process that implicitly underlies these works to illustrate the foundational premises approach to indigenous marketing theory development.
Because the inductive realist (IR) model of theory generation (Hunt 2013)—a model indigenous to marketing—provides the background theory underlying the foundational premises approach, I first review the theory. Next, I note that (1) Zaltman et al.’s (1982) classic work on the theory-in-use approach to theory construction posited twelve specific steps for researchers to use, and (2) Zeithaml et al. (2020) extend the theory-in-use approach by proposing a specific series of steps for theory development (see their Fig. 1). Similar to these researchers, I propose seven specific steps for the foundational premises, inductive realist approach. Finally, I use the original article on service-dominant (S-D) logic (Vargo and Lusch 2004) and key subsequent publications (i.e., Vargo and Lusch 2008, 2016; Lusch and Vargo 2014) as a case study to illustrate in detail the seven steps of the foundational premises approach.
The inductive realist model of theory generation
The inductive realist (IR) model of theory generation, shown in Fig. 1, links theory generation (i.e., scientific “discovery”) with justification. The model proposes that the process of developing new theory begins with the recognition that some problem (shown as Box 2) exists within the theories (concepts, lawlike generalizations, models, etc.) that constitute current disciplinary knowledge (Box 1). Readers should note three things about Box 1. First, for scholars to recognize that a problem exists within the current disciplinary knowledge, they must first know the content of current knowledge. Therefore, in this sense (but not in the “triggering cue” sense), current disciplinary knowledge (Box 1) is modeled as preceding problem recognition (Box 2). Second, the theories, models, etc., that constitute “current disciplinary knowledge” (Box 1) and “new theory proposals” (Box 4) are to be interpreted as linguistic expressions that are labels for what is proposed to exist in the external world (Box 6). Third, the “entities,” “attributes,” and “relationships” in Boxes 1 and 4 refer to prototypical examples of the types of linguistic expressions found in theories and models. In contrast, the “entities,” “attributes,” and “relationships” in Box 6 (external world) refer to the actual, existing “furniture” of the world.
For example, with respect to resource-advantage (R-A) theory, the theory identifies several linguistic entities (e.g., the concepts “firms,” “customers,” and “resources”) that are posited to refer to actually existing entities in the real world of competition (Box 6). Furthermore, for R-A theory, firm resources are posited to have attributes, such as being significantly heterogeneous and imperfectly mobile (Hunt 2000). Moreover, firms are posited to have relationships with other entities, such as R-A theory positing that competition is “a constant struggle among firms for comparative advantages in resources that will yield marketplace positions of competitive advantage for some market segments(s) and, thereby, superior financial performance” (Hunt 2000, p. 138). Therefore, R-A theory’s “competition relationship” would be identified in Boxes 1 and 4 and would be posited to refer to actual competition in the real world (Box 6).
Returning to Fig. 1, as one link to the process of justification, the empirical successes (Box 9) and empirical failures (Box 10) of extant knowledge contribute to theory-development’s problem recognition. Problem recognition is guided and influenced by constraints (Box 7) that are idiosyncratic to the “problem-solution being sought” (Nickles 1980, p. 10). For example, in developing R-A theory, Robert Morgan and I believed it was important that the foundational premises of our theory be both succinct and descriptively accurate of real world competition. This belief constrained us in the type of theory that would be developed.
Problem recognition is also guided by reasoning processes (Box 8) that parallel those typically associated with the context of justification. Examples of such inference processes include deductive, inductive, and analogical reasoning (Schaffner 1974). The IR model posits that the process of discovery involves creative cognitive acts (Box 3) that follow problem recognition (Box 2) and precede new theory proposals (Box 4). But these creative cognitive acts by a scholar or group of scholars—though being creative—are not well described as being “irrational” (Popper 1959, p. 32), or “instinctive guessing” (Reichenbach 1938, p. 67), or algorithmic (Zytkow and Simon 1988). Rather, for the IR model, the creative cognitive acts are better described as resulting from insightful, constrained reasoning processes.
Consistent with the inductive realist model of theory status (Hunt 2011, 2012), Box 5 shows that theories are used to provide explanations and predictions, as well as to guide interventions in the world (e.g., to guide a firm’s choice of marketing strategy). The external world (Box 6) influences the outcomes that are deemed to be empirical successes (Box 9) and failures (Box 10) of the theories proposed, as well as the current state of disciplinary knowledge (Box 1). That is, the world of, for example, actual competitors and customers influences the successes and failures of interventions guided by the theories that are major components of current disciplinary knowledge.
The foundational premises, inductive realist approach to indigenous theory development
The IR model of theory generation points out several things that should be incorporated into or addressed by a process for indigenous theory development. These include (1) recognizing the problem and defining its nature (Box 2), (2) creatively exploring for foundational premises addressing the problem (Box 3), (3) creatively proposing specific foundational premises as implying theories, models, or frameworks that could potentially address the problem (Box 3), (4) identifying the constraints, both context-free and context-specific, that should be addressed (Box 7), and (5) explicating the reasoning that justifies the foundational premises proposed (Box 8).
Therefore, this article uses the IR model to develop seven specific steps that I propose would be useful across different research domains in marketing. These seven steps draw on (a) the implications of marketing’s inductive realist model of theory generation, (b) the “friends of discovery” literature (e.g., Nickles 1980), (c) the “steps” approach of Zaltman et al. (1982) and Zeithaml et al. (2020), and (d) an examination of the writings of those who have used the foundational premises approach. The seven steps are:
Identify the problem to be addressed.
Identify the characteristics, strengths, and deficiencies of the extant theories, models, frameworks, and empirical works that currently address the problem. (The deficiencies identify what is often referred to as a “gap” in the current literature).
Identify the characteristics, strengths, and deficiencies of alternative theories, models, frameworks, and empirical works that (a) have not been used to address the problem, but (b) might provide insights that contribute to addressing the problem.
Use the insights developed from steps one through three in a cognitively creative way to develop a preliminary set of foundational premises that (a) succinctly facilitates understanding the problem, (b) directly contributes to explaining aspects of the problem, and (c) potentially could result in a theory or theories that would further contribute to resolving the problem.
Evaluate the preliminary set of premises in terms of perceived constraints and, if necessary, develop a set of revised foundational premises.
Propose the resulting set of foundational premises in publications that show how the set (a) succinctly facilitates understanding the problem, (b) directly contributes to explaining aspects of the problem, and (c) potentially could result in a theory or theories that would further contribute to resolving the problem.
Revise the set of foundational premises through time as new constraints are introduced and propose the revisions in future publications.
Although the seven steps are presented in linear order, I hasten to add that in actual practice there are numerous feedback loops that make the process decidedly nonlinear.
A case study illustration
I now illustrate the seven steps approach by using a case study that has explicitly used the foundational premises approach: the development of service-dominant (S-D) logic in Vargo and Lusch (2004, 2008, 2016) and Lusch and Vargo (2014). This case is highly appropriate because the original, award-winning article and its successors have been cited thousands of times, which attests to S-D logic’s influence. Indeed, the original article is now one of the “top ten” most frequently cited articles ever published in the Journal of Marketing (Zeithaml et al. 2020). Furthermore, a Web of Science search will indicate that the article is extensively cited in not just other business disciplines’ journals, but in such disparate disciplines as engineering, computer science, sociology, ergonomics, ethics, and others. As such, it is argued that S-D logic is becoming “a transcending and unifying, meta-framework for organizing ideas from diverse disciplines and for thinking innovatively about marketing, business, and the economy in general” (Lusch and Vargo 2014, p. 203).
Readers should note that the purpose here is neither to provide a review of the literature related to S-D logic nor to critique S-D logic. Rather, our discussion of the development of service-dominant (S-D) logic is solely to use it as a case study that illustrates the foundational premises, inductive realist approach.
Step 1: Problem identification
The first step is to carefully identify the problem to be addressed. Disciplinary problems result from some deficiency in the current knowledge base. In order to identify the problem to be addressed, the alleged problem must be positioned within the discipline’s literature. The foundational premises of service-dominant logic were originally proposed in Vargo and Lusch (2004). Readers should note how the original Vargo and Lusch (2004) article positions the problem. Their approach, developed in the first six paragraphs of their article, is to trace the historical origins of the marketing discipline and how its conceptual/theoretical foundations have evolved.
In the first paragraph, Vargo and Lusch (2004) (hereafter “V&L”) trace the beginnings of the discipline to Shaw’s (1912) article, which (1) was grounded in neoclassical economics, (2) focused on the distribution and exchange of commodities and manufactured products (i.e., “goods’ marketing”), and (3) proposed what came to be called the “functional approach” to marketing. Second, the discipline’s functional approach transitioned in the 1950s into the marketing management school, which, though it continued to stress goods’ marketing, shifted toward how to maximize the marketing manager’s decision variables (e.g., the “four Ps”) through the lens of neoclassical economics. Third, new frames of reference that were independent of neoclassical economics emerged in the 1980s, including – very importantly for V&L’s argument – services marketing as a subdiscipline of marketing. Fourth, marketing’s reliance on microeconomic maximization, the “four Ps” framework, and the exchange of commodities was so sharply criticized in the 1990s that the marketing discipline appeared to be severely fragmented.
In the fifth paragraph, V&L argue that, rather than being fragmented, the marketing discipline in the 2000s is better described as evolving toward a new dominant logic. This logic moves away from the exchange of tangible goods (i.e., goods’ marketing) and toward the exchange of intangibles. Sixth, this new dominant logic would provide an integrative view that recognizes the fact that customers do not buy goods and services. Rather, they buy offerings that render services that create value. However, V&L argue, the fundamental nature and characteristics of this new, evolving logic have not been carefully articulated. This lack of articulation results in the problem (Box 2 in Fig. 1) that V&L are going to address: the “purpose of this article is to illuminate the evolution of marketing thought toward a new dominant logic” (Vargo and Lusch 2004, p. 2). A key aspect of how V&L “illuminate” the new dominant logic is to propose eight foundational premises that, they argue, underlie the logic.
Consider the constraints (Box 7 in Fig. 1) within which V&L are working and how they address them. Two important constraints are that the problem must be perceived (by reviewers, editors, and ultimately the discipline’s members) to be (1) within the discipline’s domain and (2) important for at least one of the discipline’s stakeholders. First, V&L show that the problem is within the discipline’s domain through their extensive historical discussion of marketing. Second, they argue that illuminating the evolution of marketing thought toward a new dominant logic is important because such an illumination would have significant implications for the entire discipline, not just a few stakeholders. Third, they detail many of the implications of the new dominant logic in the final two sections of the article. By these arguments, V&L address the two constraints.
Step 2: Extant, purported resolutions of the problem
The second step is to (1) identify the characteristics of the extant theories, models, frameworks, and empirical works that currently address the problem, and (2) show how these works are deficient in some significant way (i.e., identify a “gap” in the current literature). Not only do V&L show that the problem is unresolved by current disciplinary knowledge, but current disciplinary thought has actually contributed to the severity of the problem.
First, V&L argue that the current literature’s reliance on neoclassical economics is a major causal factor underlying the problem. That is, marketing inherited its focus on goods’ marketing from neoclassical economics. Second, they argue that the discipline’s view that services marketing is “a niche field characterized by arcane points of difference with the dominant goods management field” Rust (1998, p.107) has been another major factor that contributes to the problem. Therefore, the current literature does not address the problem.
Step 3: Unacknowledged, potential contributors to resolving the problem
The third step is to identify the characteristics, strengths, and deficiencies of alternative theories, models, frameworks, and empirical works that (a) have not been used to address the problem but (b) might provide insights that contribute to addressing the problem. For V&L, five streams of literature would contribute to addressing the problem.
First, the distinction between operand resources and operant resources, which they draw from Constantin and Lusch (1994), is crucial. Second, V&L credit the nineteenth century work of Frederic Bastiat (1860) for stressing that goods are not exchanged for goods. Rather, services are exchanged for services. Bastiat’s “services for services” perspective, V&L argue, should be incorporated. Third, the distinction between value-in-exchange and value-in-use that is highlighted in Dixon’s (1990) work is important for understanding the problem. Fourth, essential to understanding marketing as a series of social and economic processes is the realization that the core competences of the firm are “higher order resources” that result in competitive advantage, as stressed by Day (1994) and Hunt (2000). Fifth, the customer-centric perspective (Sheth et al. 2000), as well as viewing the firm as a market-oriented, learning organization (Slater and Narver 1995), are central to a service-centered view of marketing.
By integrating the preceding five streams of literature and then significantly adding to them, V&L argue in a highly creative way (Box 3 in the IR model) that one can identify and “illuminate” the characteristics of a service-dominant logic for marketing. Specifically, they argue that this new dominant logic has eight foundational premises.
Step 4: Develop a set of foundational premises
The fourth step is to use the insights developed from steps one through three in a cognitively creative (Box 3 in the IR model) way to develop a preliminary set of foundational premises that (a) succinctly facilitates understanding the problem, (b) directly contributes to explaining aspects of the problem, and (c) potentially could result in a theory or theories that would further contribute to resolving the problem. The foundational premises that are shown in Table 1 are the ones that were first published in Vargo and Lusch (2004) and then revised in Vargo and Lusch (2008, 2016) and Lusch and Vargo (2014).
Readers should note that it is unlikely that the eight premises published in the original, 2004 article are stated in the precise manner that V&L created them in the manuscript development phase of their research. Indeed, V&L’s first draft probably had different wordings for many of the premises. Also, they may have had either more than eight or fewer. V&L’s eight published premises had to satisfy not only the constraints that they, the authors, originally perceived, but also the constraints imposed/suggested by reviewers and editors.
Step 5: Evaluate the preliminary set
The fifth step is to evaluate the preliminary set of premises in terms of perceived constraints and, if necessary, develop a set of revised foundational premises. This revised set of foundational premises then becomes a major part of the manuscript that is submitted for publication. With respect to the constraints that V&L actually perceived and the nature of any subsequent revisions, this writer has no direct knowledge.
Step 6: Propose by means of publications the set of foundational premises
The sixth step is to propose (by means of publications) the resulting set of foundational premises and show how the set (a) succinctly facilitates understanding the problem, (b) directly contributes to explaining aspects of the problem, and (c) potentially could result in a theory or theories that would further contribute to resolving the problem. In the S-D logic case, the submitted manuscript was entitled “Evolving to a new dominant logic for marketing” (Vargo and Lusch 2004). The reviewers and editors of the Journal of Marketing then subjected the set of foundational premises (and other aspects of the manuscript) to their perceived disciplinary constraints. Although, some of the perceived constraints are idiosyncratic to the discipline, journal, reviewers, and editors, some constraints can be generalized across disciplines and their journals. These generalized constraints may be categorized as either context-specific or context-free.
The primary, context-specific constraints are that the set of foundational premises actually (a) succinctly, but accurately, facilitates understanding the fundamental nature of the specific problem, (b) directly contributes to explaining aspects of the problem, and (c) potentially could result in a theory or theories or frameworks that would further contribute to resolving the problem (and/or additional problems). That the overall reviewing process “extended over five years and five revisions” (Vargo and Lusch 2006, p. xxi) attests to the difficulty of satisfying the constraints and, therefore, publishing theoretical works that are “outside the box” (i.e., outside Box 7 in the IR model). That the reviewers and editors of the Journal of Marketing ultimately accepted the article for publication implies that they believed that the article had satisfied the primary, context-specific constraints. Indeed, one constraint that the JM editor reported 2 years later was that the original submission was “a monograph-length manuscript” and did not succinctly facilitate understanding the problem. Nonetheless, the editor retrospectively concluded that the revised, final article made “a remarkable contribution by synthesizing key aspects of marketing thought to develop a succinct framework that offers new and compelling insights for marketing” (Bolton 2006, p. x).
Also, the JM editor invited commentaries on the original article from eight marketing scholars. These commentaries immediately followed the Vargo and Lusch (2004) article. It is worth noting that none of the eight criticized the set of foundational premises as descriptively inaccurate of the evolving dominant logic or as not facilitating the understanding of the problem identified. Furthermore, none of the eight critiqued the article as inadequately explaining aspects of the problem. Moreover, none critiqued it on the basis that the article and its set of foundational premises might not result in additional theories and models that would further contribute to resolving the problem. Indeed, each of the eight commentaries used the article and its set of foundational premises to further expound on potential solutions to the problem. In short, the available evidence indicates that the foundational premises satisfied the three, primary, context-specific constraints.
Now consider the standard, context-free constraints. The philosophy of science literature (e.g., Hunt 2010; Popper 1959) suggests four major constraints: (1) free from contradiction, (2) necessary, (3) independent, and (4) sufficient. To be free from contradiction implies that the foundational premises are internally consistent in that mutually exclusive outcomes cannot be deduced from or implied by the set of premises. To be independent implies that no premise in the set can be deduced from or is implied by the other premises. (Referring to the premises as “foundational” implies that they are genuinely foundational.) To be sufficient implies that no additional premises are necessary for satisfactorily addressing aspects of the original problem identified.
Once again, we can turn to the eight written commentaries on the original article for an indication as to whether the original set of foundational premises that Vargo and Lusch (2004) proposed are deficient in satisfying the major context-free constraints. My reading of the commentaries leads me to conclude that the authors of the commentaries either found no context-free deficiencies or the deficiencies were so minor that they chose not to mention them. I invite readers to check my interpretation of the commentaries.
Step 7: Revise the original set through time by means of additional publications
The seventh step is to revise the set of premises through time as new constraints are introduced and propose the revisions in future publications. After the publication of Vargo and Lusch (2004), there were scores of publications by V&L and others that used, evaluated, critiqued, and extended S-D logic. Much of the work is reviewed, summarized, and reported in two articles (Vargo and Lusch 2008, 2016) and their monograph (Lusch and Vargo 2014). The latter seeks to develop “a more unifying and transcending view of business, and more broadly, economic and social organization” (Lusch and Vargo 2014, p. xxi). That is, the “primary purpose of the book is to contribute to the understanding of the world of economic and social exchange among human actors, both individually and in groups, by proposing an alternative view … to the traditional ‘goods-dominant’ logic (G-D logic)” (Lusch and Vargo 2014, p. 4).
Table 1 shows how V&L revised their foundational premises 4 years, 10 years, and 12 years after the original Vargo and Lusch (2004) article. The “final” (?) revised premises proposed in Lusch and Vargo (2016) reflect their responses to what the foundational premises approach to indigenous theory development calls the “new constraints” that V&L wish to address. Many of the new constraints imply changes that are context-specific, wording changes. As such, they represent V&L’s efforts to more accurately, in their view, “illuminate” the service-dominant logic. Other changes result from further reflection on the context-free constraints. We focus first on context-specific changes.
Changes that reflect context-specific constraints
As a first, context-specific change, because “service” is defined in S-D logic as “the application of specialized skills and knowledge,” the former replaces the latter in FP1 (Vargo and Lusch 2008, p. 6). Second, V&L note that “unit” in FP1 is “inherently goods-centric … because it suggests what is being exchanged is units of output” and “S-D logic revolves around processes.” Therefore, the word “unit” is replaced with “basis” (Vargo and Lusch 2008, p. 6). As a third, context-specific change, in FP5 the plural word “services” is changed to the singular word “service” in order “to more clearly reflect a process of using one’s resources for the benefit of another” (Vargo and Lusch 2008, p.7).
As a fourth change, “co-producer” in FP6 is changed to “co-creator of value” to emphasize that “value creation is interactional” (Vargo and Lusch 2008, p. 7). Fifth, because FP7 had often been “misinterpreted” as implying that the enterprise can “create and/or deliver value independently,” the premise is changed to state explicitly that the “enterprise cannot deliver value, but only offer value propositions” (Vargo and Lusch 2008, p.7). Sixth, the distinction between “producers” and “consumers” in the original eight premises is dropped in 2014 and 2016. Instead, all entities are referred to as “actors” because:
to the extent that “production” and “consumption” are appropriate and descriptive, they apply to all actors … Fundamentally, all actors (e.g., business firms, nonprofit and government organizations, individuals, and households) have a common purpose: value creation through resource integration and service-for-service exchange … An actor-centric versus a firm-, producer-, household-, customer-, or any other role-centric labeling is also less restrictive because it does not predispose differential, single activities, such as “production” and “consumption.” (Lusch and Vargo 2014, p. 9, 10).
Changes that reflect context-free constraints
Table 1 also illustrates how V&L have responded to the four context-free constraints. Specifically, the changes from 2004 to 2016 show that, on reflection, the foundational premises were free from contradiction. Also, because no foundational premise from 2004 was dropped, each is viewed as necessary for addressing the problem. However, by 2016, V&L acknowledged that the original eight premises needed to be supplemented (i.e., the eight premises, taken as a whole, were not sufficient). Also some of the premises could be derived from others (i.e., some of the eight premises were not independent).
As to the sufficiency constraint, between 2004 and 2016, V&L supplemented the original eight premises with three additional ones. FP9 argues that “all social and economic actors are resource integrators.” FP10 argues that “value is always uniquely and phenomenologically determined by the beneficiary.” Finally, FP11 argues “value creation is coordinated through actor-generated institutions and institutional arrangements.” Adopters of the foundational premises approach to theory development will find that it is often the case that the foundational premises in the original publication need, through time, to be supplemented by additional premises in order to more completely address the identified problem.
As to the constraint of independence, the evolution of V&L’s analysis has indicated that all of the foundational premises are not independent. Indeed, by 2014 V&L indicated that “there are four FPs in particular that capture the essence of S-D logic, and from these the other FPs could arguably be derived. Thus, these four might be considered axioms of S-D logic” (Lusch and Vargo 2014, p. 15; italics added). Two years later, Vargo and Lusch (2016) then added a fifth, final (?) foundational premise as an axiom.
In Table 1, the four axioms identified in 2014 are FP1, FP6, FP9, and FP10. For example, FP1 (Service is the fundamental basis of exchange) implies (1) FP2 (Indirect exchange masks the fundamental basis of exchange), (2) FP3 (Goods are a distribution mechanism for service provision), (3) FP4 (Operant resources are the source of strategic benefit), and (4) FP5 (All economies are service economies). Similarly, FP6 (Value is cocreated by multiple actors, always including the beneficiary) implies FP7 (Actors cannot deliver value but can participate in the creation and offering of value propositions) and FP8 (A service-centered view is inherently beneficiary oriented and relational).
Also, in Table 1, the final (?) new foundational premise that has axiomatic status is FP11 (Value cocreation is coordinated through actor-generated institutions and institutional arrangements). Although no other FPs are derived from FP11, V&L argue that it is required in order to incorporate the important concept of institutions into S-D logic:
Most important among the extensions [of S-D logic in this article] has been a general zooming out to allow a more holistic, dynamic, and realistic perspective of value creation, through exchange, among a wider, more comprehensive (than firm and customer) configuration of actors … Arguably, the most important feature of this structure consists of institutions—rules, norms, meanings, symbols, practices, and similar aides to collaboration—and more generally, institutional arrangements—interdependent assemblages of institutions. (Vargo and Lusch 2016, p. 5, 6; italics in original).
The “potentiality constraint”
Finally, with respect to constraints, readers should recall the third, generalized, context-specific constraint: the set of foundational premises should have the potential for resulting in new theories or frameworks that could further contribute to resolving the original problem and/or additional problems. In response to this constraint V&L ask, “Is S-D logic sufficiently broad to provide a foundation for a general theory of marketing?” (Vargo and Lusch 2006, p. 417). Although V&L acknowledge that S-D logic “is too early in its development to be sure,” they argue that “S-D logic goes further than the current goods-dominant logic [to explain] Hunt’s (1983) view of the fundamental explananda of marketing” (Vargo and Lusch 2016, p. 417). Therefore, “we believe that it provides the basis for a general theory [of marketing]” (Vargo and Lusch 2006, p. 419). Therefore, V&L recognize the “potentiality constraint” and point readers toward fruitful areas for satisfying it.
The marketing discipline has long-suffered from a lack of indigenous marketing. If marketing continues to remain a discipline that exclusively imports its concepts and theories from other disciplines, there will likely be a continuing decline in marketing’s intellectual health and academic influence. As many marketers have recommended, the discipline should (1) place greater emphasis on marketing theory in its doctoral programs, (2) discourage doctoral students from viewing research as sifting through data sets and then, ex post, searching for theories that fit the data, (3) encourage reviewers and editors to value more highly the importance of developing, using, and citing indigenous marketing theory, (4) cease defining marketing as an applied discipline whose sole objective is to borrow concepts and theories from other disciplines and apply them to marketing issues, (5) encourage reviewers and editors to reward (rather than punish) authors when they attempt to develop indigenous concepts and theories, and (6) explore for systematic procedures for developing indigenous marketing theory.
This article contributes to indigenous marketing theory development by (1) proposing the foundational premises, inductive realist approach to theory development, (2) explicating the seven specific steps of the approach, and (3) providing a detailed illustration of the approach through an analysis of the development of S-D logic. The foundational premises approach to theory development complements the theories-in-use approach articulated by Zeithaml et al. (2020). I encourage readers to consider seriously both approaches. The future of the marketing discipline depends significantly on indigenous theory development.
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Hunt, S.D. Indigenous theory development in marketing: the foundational premises approach. AMS Rev 10, 8–17 (2020). https://doi.org/10.1007/s13162-020-00165-w
- Developing marketing theory
- Inductive realism
- Service-dominant logic
- Foundational premises approach