Researchers and practitioners usually consider that integrating customers in firms’ business models comes with positive consequences. However, customer integration may also detrimentally influence firms by limiting their strategic and operational latitude, which, in this context, refers to the degree of freedom companies possess over their strategic and operational decisions and actions. Being aware of that would enable companies to limit this potentially harmful influence.
This is a conceptual paper that relies on recent business cases. It is suggested that the negative influence of customers on firms’ latitude occurs through the three dimensions of their business model, namely, resources and competences, value propositions (i.e. the firm’s offer) and the organization.
By influencing the use of resources and competences, the design and evolution of the value proposition or the functioning of the organization, customers may constrain firms’ strategic and operational moves and thus have detrimental effects on their performance and evolution. Three ways to counterbalance this potentially negative influence are proposed.
A lack of prior research on the negative side effects of customer integration in firms’ business models is emphasized. Further studies are needed to help firms take these into consideration.
Being aware of the potential drawbacks associated with using customers as resources, firms are invited to balance the level of their strategic and operational latitude with the importance that they grant to their customers.
This paper introduces the concept of strategic and operational latitude. It is also one of the few to highlight the negative consequences of customer integration in firms’ business models.
CitationDownload as .RIS
Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited