Viewpoint: What S-D logic doesn’t say: value, labor, and the political economy of service under Neoliberalism

The Service-Dominant Logic (S-D Logic) framework (Vargo and Lusch, 2004) has helped marketing scholars shift their focus from tangible goods to relational, service-based exchanges (Gummesson et al., 2010). It redefines value as co-created through the reciprocal application of competencies – service for service – rather than being embedded in goods exchanged for money. While this shift has inspired significant developments in service research, it also presents rhetorical and ideological risks by framing service encounters as mutually co-productive and human-centered. S-D Logic implicitly draws on the moral structure of the gift economy as theorized by Marcel Mauss (1925/2002). Still, it does so without acknowledging the historically specific obligations, rituals and solidarities that distinguish gift exchange from capitalist transactions.

This article argues that although S-D Logic has enhanced our understanding of service, it neglects structural inequalities, techno-labor dynamics and the role of service as a governance tool under capitalism. It also calls for a critical reorientation within a political economy of service. While praised for shifting marketing thought from a goods-centric to a service-oriented approach, S-D Logic also serves an ideological purpose by obscuring the material, institutional and labor conditions involved in producing and consuming services. By naturalizing value co-creation and relational exchange, it risks depoliticizing service work and legitimizing unequal structures of value extraction. Therefore, this essay advocates for rearticulating S-D Logic within a materialist tradition that is attentive to labor, power and institutional embeddedness. We thus examine how service systems are shaped by profit motives, financialization and labor inequalities, using Maussian theory and critiques by Michéa (2008), Lazonick (2020), Mazzucato (2018) and others to expose the ideological gap between value co-creation and extraction.

S-D Logic marks a paradigm shift from a goods-centric to a service-oriented worldview. As a meta-theory, it defines service – the application of competencies for the benefit of others – as the core of value creation and exchange. Unlike Goods-Dominant Logic, which emphasizes tangible outputs, S-D Logic focuses on intangible, experiential and relational processes. Its rise coincided with the broader managerial turn toward the experience economy and narratives of consumer empowerment in the early 2000s, aligning with neoliberal discourses that recast individuals as entrepreneurial actors within co-productive value chains. More broadly, S-D Logic resonates with the neoliberal ideal of adaptive individuals who continuously invest in their own skills and resources, navigating markets framed as neutral arenas for value creation and exchange. As Harvey (2007) argued in A Brief History of Neoliberalism, this worldview positions market logics as the primary mechanism for organizing social life, naturalizing competition, inequality and responsibilization under the guise of freedom and efficiency.

Pioneering scholars positioned S-D Logic as an integrative framework across academic and practical domains, fostering interdisciplinary dialogue and holistic understandings of value. For example, Stead et al. (2025) argued that S-D Logic unites information systems, innovation, marketing and service research, offering actionable insights for digital transformation efforts. This illustrates the theory’s capacity to bridge disciplinary boundaries and inform evolving practices in the digital economy. In health care, Vespestad and Clancy (2019) showed how S-D Logic reframes care delivery as a collaborative value co-creation process. Embracing these principles helps health professionals view patients as partners in service ecosystems, supporting more integrated and person-centered approaches. Through such applications, S-D Logic reframes value creation as dynamic, processual and relational, laying the foundation for diverse research agendas across service systems. Yet, this broad appeal is precisely what calls for scrutiny: S-D Logic’s rise reflects not only theoretical innovation but also its alignment with dominant neoliberal narratives that transform service into a space of entrepreneurial self-investment and market discipline.

At the core of S-D Logic are fundamental ideas describing how service and value are created in modern economies: service ecosystems, resource integration, actor engagement and value co-creation. Service ecosystems are dynamic networks of interconnected actors involved in ongoing resource integration for mutual benefit. These ecosystems emphasize systemic and institutional contexts, where value is co-created through interactions rather than being embedded solely in outputs (Chatmi et al., 2023). Actor engagement – the active participation of individuals, firms and institutions – is crucial to this process. S-D Logic differentiates operand resources (tangible, acted upon) from operant resources (intangible, acting upon others, such as skills and knowledge), which are essential for innovation and gaining a competitive edge. Value is understood as phenomenologically determined by the beneficiary during use, shifting the focus from outputs to outcomes and lived experiences. For example, Baker and Weerakoon (2024) demonstrated how institutional arrangements shape value co-creation in social entrepreneurship. Neuhofer et al. (2021) described AI as a helpful resource within event ecosystems, emphasizing the complex, multiactor integration that defines service systems today. Although this architecture of co-creation is conceptually rich, it often overlooks the material and power-laden conditions in which resources are mobilized and value is claimed.

While widely adopted, S-D Logic continues to face critical evaluation. A key critique targets its neglect of service materiality – the tangible and sensory dimensions of service design. Secomandi (2024) challenged S-D Logic’s abstraction, advocating for a “formgiving” perspective rooted in industrial design to reintroduce physicality into service encounters. Even early contributors such as Gummesson et al. (2010) noted the difficulty of operationalizing S-D Logic without reifying managerial abstractions and overlooking service realities. Zwick et al. (2008) offered a more radical critique. They positioned S-D Logic and the co-creation discourse within a broader neoliberal project of consumer governmentality – a form of power that works through, rather than against, consumer freedom. By framing consumers as operant resources, firms extract unpaid affective, cognitive and social labor under the guise of empowerment. The logic of value-in-use, they argued, masks a deeper mode of exploitation wherein consumption itself becomes a site of production. Building on this, Darmody and Zwick (2020) said that in the era of hyperrelevance and algorithmic surveillance, S-D Logic risks legitimizing corporate control under the guise of personalization and empowerment. By conflating manipulation with empowerment, firms reframe intrusive data practices as value-enhancing, deepening asymmetries in the service relationship.

Another theoretical development addresses the co-creation and codestruction of value. Luo et al. (2019) demonstrated that customer-to-customer interactions can either enhance or damage perceived service value, highlighting the asymmetry and complexity of value formation. Debates also concern the theory’s practical applicability. Jayasinghe et al. (2022) examined firm-level resource integration and noted that S-D Logic’s meta-theoretical abstraction can limit the development of mid-range theories and their empirical utility. Together, these critiques and extensions reflect the evolving nature of S-D Logic and call for greater attention to materiality, adverse service outcomes and the translation of theory into practice in addressing complex service environments.

S-D Logic celebrates co-creation as a desirable form of market participation, often invoking the language of mutualism and shared benefit. Its relational ontology encourages firms and customers to be seen as co-contributors, “giving” and “receiving” value in a spirit akin to gift exchange. This framing loosely echoes the anthropological tradition associated with Marcel Mauss (1925/2002), who conceptualized the gift as a socially binding act of reciprocal obligation that sustained communal cohesion and moral economies. Cultural norms guide these acts – not contracts or prices – rooted in social responsibility. S-D Logic reflects this moral framework by stressing co-creation and mutual benefit. Yet, the symbolic depth of the gift is flattened.

Co-creation becomes a managerial tool, instrumentalized within transactional contexts where social reciprocity is subordinated to corporate strategy. Unlike the Maussian gift, which embedded actors in enduring social ties, co-creation in S-D Logic often occurs under asymmetrical conditions, where customers give time, data or labor while firms extract surplus value. The rhetoric of the gift thus operates within capitalist market economies where such reciprocity is neither neutral nor fair. Money is not just a placeholder in capitalist service systems; it controls access, adds conditions and encodes power. As philosopher Jean-Claude Michéa (2008) pointed out, even when market transactions are completed – such as paying to attend a concert – people still perform symbolic gestures, like applause. These actions suggest that humans often operate within a symbolic economy of recognition, rather than just a calculated exchange. Still, neoliberal capitalism systematically sidelines this symbolic layer. It replaces gift-like behavior with performance metrics, time-saving efforts and financial gain. S-D Logic’s unquestioning use of gift rhetoric thus obscures the deep-seated structural inequalities and commodification inherent in most modern service relationships. This ideological flattening of reciprocity shows how S-D Logic extracts relational ideas from their social origins, enabling managerial plans to reframe solidarity in market language.

In capitalist service environments, the ideal of co-creation is undermined by the pressures of cost-cutting, efficiency mandates and shareholder interests. Service companies are designed to maximize profitability, not foster relationships. A stark example is the crisis in long-term care facilities in France (EHPADs) (Torsoli and De Beaupuy, 2022). Investigations revealed that food rations were kept to legal limits, residents had less than 12 min for bathing (beyond that time, management considered it “no longer profitable”; Dussourt, 2022) and the number of daily diapers was limited to save costs. Staffing levels were cut to unsustainable levels, causing burnout and moral injury among caregivers. The management approach in these facilities, often driven by private equity interests, applies industrial principles of efficiency and throughput to deeply human services, such as eldercare.

This approach of extractive, metrics-focused service management is not unique to French EHPADs – it mirrors broader trends of increasing financialization in management across various sectors and regions, where profit often outweighs dignity and care; where service quality is measured not by social outcomes or human dignity, but by quarterly profits and shareholder returns. In such settings, the rhetoric of co-creation becomes increasingly disconnected from the service realities it seeks to describe. The relationship between providers and users is neither mutual nor equal; it is dictated by capital and measured through administrative metrics. This reality aligns with William Lazonick’s (2020) concept of “predatory value extraction” – corporate strategies that benefit shareholders while disinvesting in labor, infrastructure and genuine care. Such examples reveal how the co-creation ideal often serves as a rhetorical mask for extractive service models within financialized capitalism.

Meanwhile, digital platforms and self-service technologies have transformed consumers into “prosumers” – individuals who both use and create value in services. Through automated kiosks, apps and interfaces, companies shift labor onto customers while maintaining profit and control. This unpaid labor – such as scanning groceries, booking appointments and troubleshooting tech issues – is justified as empowerment or personalization, but it is, in reality, a form of value extraction. Zwick et al. (2008) argued that co-creation discourses function ideologically by enlisting consumers in unpaid productive labor while concealing asymmetrical power and control. This dynamic echoes George Ritzer’s (1996) McDonaldization thesis, which showed how service environments script and standardize user behavior to reduce unpredictability and maximize control, efficiency and calculability. Building on this, Darmody and Zwick (2020) showed how platforms amplify this logic through algorithmic personalization and surveillance infrastructures that manipulate consumer behavior under the guise of hyperrelevance. Instead of democratizing service, platforms reinforce surveillance, labor displacement and unequal value flows, undermining the core idea of co-creation that S-D Logic promotes (Vargo and Lusch, 2004). Consumers may seem to have agency, but in reality, they are guided through design, data and algorithmic cues, generating more value than they are paid for, often without realizing the labor they perform. This illusion of empowerment shows how S-D Logic can justify service models that control behavior, hide labor and increase inequalities of value and power.

S-D Logic emphasizes the co-creation of value among resource-integrating actors in service ecosystems. Yet, it remains largely agnostic about how automation is marketed and put into practice within these ecosystems. A growing body of evidence suggests that many “AI-powered” service innovations are built upon deceptive claims that obscure the central role of human labor, often hidden, underpaid and offshored. Rather than relying on autonomous systems, these services use clickworkers, annotators and contractors whose efforts are essential but usually concealed from users and clients. Antonio Casilli (2025) documented a European firm that claimed to use AI for consumer segmentation but outsourced the task to workers in Madagascar who manually classified user profiles for luxury brands. Amazon’s “Just Walk Out” stores, which promote frictionless AI shopping, required over a thousand workers in India to review 70% of customer transactions manually (Bridle, 2024). Similar patterns have emerged at DoNotPay, Expensify, Builder.ai, X.ai and Tesla, where supposedly intelligent products depended heavily on human-in-the-loop labor while being marketed as fully automated systems.

These cases reveal a systemic contradiction: value-in-use, a core tenet of S-D Logic, is often constructed through deception, relying not only on consumers’ experiential interpretation but also on their belief in the technological autonomy of a system that, in reality, is human-powered. The fetishization of AI renders labor invisible and legitimizes exploitative work arrangements within service ecosystems. By overlooking these dynamics, S-D Logic maintains the illusion of autonomous co-creation, even as modern service delivery depends on hidden labor and structural inequalities.

Critics of neoliberal capitalism shed further light on these contradictions. Mariana Mazzucato (2018) argued that mainstream economics has blurred the line between value creation and value extraction, treating all market profits as legitimate. In reality, much of today’s corporate profitability comes not from innovation or collaboration but from rent-seeking, monopolistic control and financial engineering. William Lazonick (2020) expanded this critique, showing how shareholder primacy has normalized stock buybacks, wage suppression and the decline of productive investment. Steve Denning (2021) similarly warned that when companies prioritize short-term financial results over long-term value creation, they undermine trust, innovation and stakeholder well-being. These critiques reveal the ideological role of S-D Logic: by framing capitalist exchange as co-creation, it hides unequal dependencies and shifts attention away from the core drivers of service system design – cost, control and capital accumulation. In addition, the idea that the market is a neutral space for mutual benefit needs to be challenged. As Michéa (2008) suggested, the idea of a morally neutral market is a modern invention that erases centuries of social norms centered on reciprocity and responsibility. Presenting capitalist service as co-creation hides the mechanics of extraction, making profit appear as partnership.

The critique developed here invites service researchers to broaden the scope of S-D Logic by attending to its material, political and institutional blind spots. Future research should explore how unequal labor arrangements, governance structures and digital infrastructures shape value co-creation. One promising direction lies in interrogating the techno-material underpinnings of so-called autonomous service systems. As empirical cases reveal, many AI-based service solutions marketed as fully automated rely on hidden human labor, often outsourced to precarious workers in the Global South. These systems – used in chatbots, content moderation or emotion-sensing interfaces – challenge the narrative of seamless technological co-creation and reveal how managerial innovation redistributes and conceals cognitive and affective labor.

This line of inquiry addresses a critical omission in S-D Logic, which has traditionally emphasized interactional and experiential dimensions while sidelining structural and geopolitical constraints. By incorporating perspectives from labor sociology, platform studies and critical algorithm studies, researchers can better understand how service ecosystems are not only co-constructed but also contested, extractive and exploitative. Such work aligns with broader socioeconomic transformations, including platformization, gig work, algorithmic management and the rise of “human-in-the-loop” systems, which demand renewed attention to power and inequality in service contexts.

In addition, interdisciplinary research into consumer misrecognition (i.e. how people interpret personalized or automated services as smooth and empowering) can help reveal the ideological functions of service design. Researchers should also investigate nonmarket forms of service and reciprocity, such as mutual aid networks and care work, which operate outside of commodified value systems but are still vital to daily life. Engaging with traditions like moral economy, the anthropology of the gift or critical labor studies could help redefine service not only as a space of economic exchange but also as a site of moral, emotional and political struggle.

Together, these directions aim to expand S-D Logic beyond its current meta-theoretical limits, providing frameworks that better address power, materiality and inequality in modern service ecosystems. Recognizing the hidden labor behind service automation also urges designers and regulators to create systems that prioritize transparency, dignity and social fairness.

This essay does not dismiss the contributions of S-D Logic but aims to expose its blind spots and reframe service theory through a materialist, sociological and political-economic perspective. From a Maussian viewpoint, service is not a smooth, voluntary exchange; it is a social fact influenced by ritual, hierarchy and obligation. Under capitalism, these relational aspects are reshaped to prioritize profit, often at the cost of dignity, care and equity.

By shifting attention from abstract co-creation to the concrete conditions of labor, power and value distribution, service research can confront the asymmetries embedded in contemporary service systems. Recognizing service as a site of governance and social reproduction, rather than merely a mechanism of economic exchange, opens new space to theorize care, labor and justice in ways that challenge dominant managerial logics. Rather than perpetuating the myth of seamless value integration, we must confront the tensions, contradiction and struggles that define service in the age of algorithmic capitalism.