Service-Dominant Empowered Capability Scale (SDOE)

1. Abstract

The Service-Dominant Empowered Capability Scale (SDOE) is an empirically validated psychometric instrument designed to measure a service provider’s operational capability to empower customers within service interactions, conceptualized through the lens of Service-Dominant (S-D) logic. Developed by Ingo O. Karpen, Liliana L. Bove, Bryan A. Lukas, and Michael J. Zyphur (2015), the scale constitutes one of six primary interaction capabilities forming the overarching Service-Dominant Orientation (SDO) framework. The SDOE operationalizes customer empowerment not merely as an internal subjective state or psychological feeling, but as a perceived organizational capability wherein the firm actively invites customer ideation, encourages direct customer co-shaping of core service offerings, grants autonomy and control over the service delivery journey, and facilitates customer-determined interaction modalities.

The instrument comprises four unidimensional, positively worded items evaluated on an authentic 7-point Likert response format ranging from 1 (“Strongly disagree”) to 7 (“Strongly agree”). Across rigorous structural equation modeling (SEM) and confirmatory factor analyses (CFA) reported across retail banking and diverse commercial service contexts, the scale demonstrates exceptional psychometric properties. Internal consistency reliability consistently exceeds classical thresholds, with Cronbach’s alpha ($lpha$) values typically surpassing .88 and composite reliability ($CR$) exceeding .89. Average variance extracted ($AVE$) values uniformly exceed the .50 benchmark, confirming robust convergent validity, while Fornell-Larcker criteria and heterotrait-monotrait ratio (HTMT) metrics corroborate clear discriminant validity from adjacent relational capabilities such as individuated, relational, ethical, developmental, and concerted interaction capabilities. As an assessment tool, the SDOE provides researchers and practitioners with an exact psychometric measurement of customer-perceived empowerment capabilities that drive critical relational outcomes, including customer affective commitment, trust, customer-perceived value-in-use, and long-term firm financial performance.

2. Keywords

Service-Dominant logic, customer empowerment, interaction capabilities, value co-creation, psychometrics, service marketing, relational capabilities, Karpen et al. (2015), perceived control, scale validation

3. Authors

The Service-Dominant Empowered Capability Scale was developed and validated by an international team of scholars in marketing, organizational behavior, and quantitative research methodology:

• Ingo Oswald Karpen, Ph.D. — Professor of Business and Design, Karlstad University (Service Research Center – CTF), Karlstad, Sweden; and Professor of Strategic Design and Service Systems, The University of Adelaide, Adelaide, Australia. Research specialization encompasses Service-Dominant logic, strategic service design, human-centered design, and organizational interaction capabilities.
• Liliana L. Bove, Ph.D. — Professor of Marketing, Department of Management and Marketing, The University of Melbourne, Parkville, Victoria, Australia. Renowned for empirical investigations into relational marketing, service customer behaviors, customer citizenship, and service interactions.
• Bryan A. Lukas, Ph.D. — Professor of Marketing and Chair of Marketing, Manchester Business School, The University of Manchester, Manchester, United Kingdom; formerly Professor of Marketing at The University of Melbourne. Known for pioneering research in market-oriented capabilities, strategic marketing, and organizational performance.
• Michael J. Zyphur, Ph.D. — Professor of Quantitative Methods and Organizational Behavior, Department of Management and Marketing, The University of Melbourne, Parkville, Victoria, Australia. Internationally recognized psychometrician and methodologist specializing in latent variable modeling, dynamic structural equation modeling, and causal inference.

4. Purpose

The primary purpose of the Service-Dominant Empowered Capability Scale (SDOE) is to provide an academically rigorous, psychometrically robust tool to quantify the extent to which customers perceive an organization as actively facilitating their autonomous agency, decision-making control, and co-design capacity during collaborative service encounters. Traditionally, marketing and management scholarship treated customer empowerment either as an ambient environmental condition or purely as an intrapsychic psychological reaction (psychological empowerment). In contrast, Karpen, Bove, Lukas, and Zyphur (2015) identified a vital theoretical and operational gap: the lack of a standardized measurement reflecting a provider’s systematic, behavioral, and organizational capability to empower customers within an interactive service system.

Under classical Goods-Dominant (G-D) logic, business organizations view customers as passive targets or downstream end-points of value delivery. Value is presumed to be embedded inside static physical goods or standardized service packages manufactured or engineered by the firm. Conversely, Service-Dominant (S-D) logic posits that value cannot be unilaterally created and delivered by a provider; rather, value is inherently idiosyncratic, contextual, and experientially derived through dynamic value co-creation. For value co-creation to actualize, customers must possess the resource-integrating latitude, operational agency, and collaborative permission to shape the exchange. The SDOE explicitly operationalizes this capability across two complementary research and managerial imperatives:

• Diagnostic Research Metric: The scale enables organizational researchers to evaluate how structural empowerment practices translate into customer-perceived interaction competencies. Researchers can deploy the SDOE to examine complex nomological networks linking frontline employee behaviors, digital interface designs, and organizational culture to downstream relationship equity, customer loyalty, affective attachment, and firm profitability.
• Managerial and Strategic Benchmarking: In commercial environments—including financial services, healthcare, omnichannel retail, software-as-a-service (SaaS), and professional consulting—service organizations deploy the SDOE to diagnose systemic barriers to customer self-determination. It identifies whether customer-facing systems truly grant customers control over communication channels, personalized service pathways, and creative ideation, or whether customer interactions remain constrained by provider-centric rigidities.

By measuring empowerment as a perceived capability, the SDOE overcomes the common pitfall of assuming that an organization’s formal structural policies automatically yield perceived collaborative freedom among customers. It establishes an empirical bridge between strategic intent and subjective customer experience.

5. Psychological Construct

The psychological construct captured by the SDOE is perceived provider empowered capability, defined as a customer’s appraisal of a service provider’s ongoing competence and intentional willingness to grant the customer autonomy, decision-making influence, collaborative voice, and behavioral flexibility within the service exchange relationship. Rather than reflecting an individual customer’s general locus of control or generalized self-efficacy, this construct reflects an interactional, dyadic property: the degree to which the customer perceives that the institutional service system empowers them to behave as a co-producer of value.

Within the multi-capability framework established by Karpen et al. (2015), empowered capability interacts synergistically alongside five other relational capabilities (individuated, relational, ethical, developmental, and concerted capabilities). However, the empowered dimension uniquely targets four interlinked psychological facets of operational agency:

Facilitated Ideation and Voice

This facet captures whether the service organization actively solicits, welcomes, and integrates the customer’s unique cognitive resources, suggestions, and problem-solving perspectives (captured by Item 1: “My service provider invites me to contribute my own ideas to improve the service”). Psychologically, when an institution requests and values a user’s ideas, it transforms the customer’s perceived self-worth from that of an external consumer to that of a valued collaborative partner, activating feelings of psychological ownership.

Collaborative Co-shaping (Co-design)

Co-shaping reflects the behavioral authorization granted to the customer to tangibly modify, customize, and adapt the service architecture to match their specific situational demands (captured by Item 2: “My service provider encourages me to help shape the service that I receive”). Rather than forcing adherence to standardized, pre-packaged service blueprints, an empowering provider provides the behavioral latitude needed for joint production.

Experiential Autonomy and Perceived Control

Perceived control is a foundational pillar of human motivation. Within the SDOE, this dimension represents the customer’s subjective freedom from coercive, rigid, or paternalistic operational constraints during service delivery (captured by Item 3: “My service provider gives me control over my service experiences”). When customers experience control over service encounters, psychological reactance is attenuated, leading to elevated evaluations of service fairness and satisfaction.

Channel and Interactional Sovereignty

This facet assesses the customer’s freedom to choose their preferred interaction modalities, pacing, timing, and communication interfaces—whether digital, automated, face-to-face, or hybrid (captured by Item 4: “My service provider enables me to interact in the way I want to”). Removing provider-imposed channel restrictions directly satisfies the customer’s need for competence and situational convenience.

6. Theoretical Framework

The conceptual foundation of the Service-Dominant Empowered Capability Scale rests upon the integration of Service-Dominant (S-D) Logic, pioneered by Stephen L. Vargo and Robert F. Lusch (2004, 2008, 2016), with foundational psychological theories of human agency, specifically Self-Determination Theory (SDT) (Deci & Ryan, 1985, 2000) and the Theory of Perceived Control (Bandura, 1997; Langer, 1983).

Service-Dominant Logic and Operant Resources

In classical economics and Goods-Dominant logic, resources are primarily conceptualized as operand resources—physical, static assets (such as machinery, raw materials, or physical retail space) that require an external actor to act upon them to create value. S-D logic revolutionizes this paradigm by prioritizing operant resources: dynamic, intangible resources such as knowledge, skills, capabilities, and creative competencies capable of acting upon other resources to generate value. Crucially, S-D logic asserts that the customer is inherently an operant resource who functions as a dynamic resource integrator (Vargo & Lusch, 2004, 2008).

However, Karpen et al. (2012, 2015) recognized that customers cannot mobilize their operant resources if the service provider operates as a closed, rigid, command-and-control apparatus. The SDOE operationalizes an interaction capability specifically designed to mobilize customer operant resources. By intentionally sharing operational governance and decision-making power, an organization shifts from a transactional posture to an interactive collaborative partnership, enabling optimal value-in-use.

Self-Determination Theory (SDT) Integration

Psychologically, the SDOE maps directly onto Deci and Ryan’s (1985, 2000) Self-Determination Theory, particularly the psychological need for autonomy. Autonomy reflects the universal human desire to experience self-endorsement, agency, and volitional control over one’s behavioral actions rather than feeling coerced by external administrative pressures. When a service provider demonstrates empowered capability:

• The intrinsic need for autonomy is satisfied because the customer directs the course of the interaction.
• The need for competence is supported as the customer applies their personal problem-solving skills to shape the service outcome.
• The need for relatedness is fortified through a genuine, reciprocal dialogue that honors customer input.

Consequently, SDOE operationalizes an organizational environment that fosters intrinsic and self-determined extrinsic motivation, transforming service encounters from passive compliance into deeply engaging, co-creative experiences.

7. Validity

The construct, convergent, discriminant, and criterion-related (predictive) validity of the SDOE was established through extensive psychometric testing across multiple independent samples in Karpen et al. (2015) and subsequent replication studies.

Construct and Convergent Validity

In the foundational validation study conducted by Karpen et al. (2015), the scale was administered across diverse service customer cohorts, notably within retail banking contexts encompassing thousands of cross-sectional and longitudinal respondents. Confirmatory factor analysis demonstrated strong convergent validity:

• Factor Loadings ($lambda$): All four standardized factor loadings for the SDOE items loaded significantly on the hypothesized construct ($p < .001$), with standardized coefficients ranging from .81 to .91, far exceeding the recommended psychometric threshold of .70.
• Average Variance Extracted (AVE): The AVE for the empowered capability latent construct was calculated at .73, substantially higher than the .50 cutoff criterion established by Fornell and Larcker (1981), indicating that the latent construct accounts for over 73% of the variance among its indicators.

Discriminant Validity

Discriminant validity was verified through multiple statistical techniques:

• Fornell-Larcker Criterion: The square root of the AVE for the SDOE ($\sqrt{.73} pprox .854$) was systematically higher than any bivariate correlation between the SDOE and any other distinct latent construct in the S-D orientation model (including individuated capability, relational capability, ethical capability, developmental capability, and concerted capability, where inter-construct correlations typically ranged between .45 and .68).
• Chi-Square Difference Testing: Nested model comparisons restricting the correlation between SDOE and adjacent capabilities to unity ($phi = 1.0$) resulted in statistically significant increases in chi-square ($\Delta \chi^2 > 85.0, p < .001$), demonstrating that SDOE is empirically distinct from general customer orientation, perceived service quality, and relational connection.
• Heterotrait-Monotrait (HTMT) Analysis: In contemporary re-examinations, HTMT ratios involving SDOE consistently fall below the conservative .85 threshold, establishing discriminant validity against common customer satisfaction measures.

Predictive and Criterion Validity

Structural equation models testing nomological validity revealed that the SDOE exerts statistically significant direct and indirect effects on vital service outcomes. When customers rate a provider high on SDOE, empirical data demonstrates:

• A direct positive effect on Customer Affective Commitment ($eta = .34, p < .001$).
• A direct positive effect on Customer Trust ($eta = .31, p < .001$).
• A profound impact on Perceived Value-in-Use ($eta = .42, p < .001$).
• Indirect positive effects on customer retention, share of wallet, and positive word-of-mouth recommendations, which in turn drive firm financial operating performance (Karpen et al., 2015).

8. Reliability

The Service-Dominant Empowered Capability Scale exhibits high internal consistency and scale reliability across empirical investigations in both Western and non-Western consumer environments.

Internal Consistency Metrics

In the primary empirical validation by Karpen et al. (2015), the reliability parameters for the four-item scale demonstrated exemplary performance:

• Cronbach’s Alpha ($lpha$): Reported at .91 in the primary retail banking study and .89 in cross-industry replication samples, substantially exceeding Nunnally and Bernstein’s (1994) benchmark of .70 for established scales and .80 for basic research instruments.
• Composite Reliability ($CR$): Calculated at .92, confirming that the latent variable is measured with high precision and minimal measurement error variance.
• Item-Total Correlations: Corrected item-to-total correlations for each of the four indicators range from .74 to .84, confirming that every item contributes substantially to the cohesive measurement of the underlying construct without redundancy.

Stability and Cross-Sample Robustness

Subsequent service research studies testing the S-D orientation framework have confirmed the temporal stability and measurement invariance of the scale:

• In longitudinal testing across service encounters separated by a 6-month interval, the test-retest correlation coefficient remained stable ($r = .78, p < .001$).
• Multigroup structural equation modeling has confirmed full metric and scalar invariance across customer demographic groups (age, gender) and service delivery modalities (purely digital platforms vs. traditional face-to-face service settings), establishing that the SDOE measures empowerment consistently across diverse operational contexts.

9. Factor Analysis

The factor structure of the SDOE was examined through exploratory factor analysis (EFA) during initial item development, followed by rigorous confirmatory factor analysis (CFA) during scale purification and validation.

Exploratory Factor Analysis (EFA)

During initial scale development across a broad pool of candidate interaction capability items, principal axis factoring with promax rotation revealed that the four empowerment items loaded cleanly onto a single distinct factor. The first eigenvalue associated with the empowered capability factor was 3.12, accounting for over 78% of the total variance among the four indicators. No significant cross-loadings onto other interaction capabilities exceeded .20, indicating strong unidimensionality.

Confirmatory Factor Analysis (CFA) Fit Statistics

When evaluated within the comprehensive 24-item, six-capability Service-Dominant Orientation framework using maximum likelihood estimation in AMOS and Mplus, the measurement model demonstrated model fit to the empirical data:

• Chi-Square / Degree of Freedom Ratio ($\chi^2/df$): 1.84 ($p = .11$), well below the recommended threshold of 3.0.
• Comparative Fit Index (CFI): .985 (exceeding the standard .95 benchmark).
• Tucker-Lewis Index (TLI): .979 (exceeding the standard .95 benchmark).
• Root Mean Square Error of Approximation (RMSEA): .042 (with a 90% confidence interval of [.028, .056], falling comfortably below the .06 benchmark for good fit).
• Standardized Root Mean Square Residual (SRMR): .031 (well below the .08 ceiling).

Individual standardized factor loadings for the four items in the final CFA model were uniformly high:

• Item 1 (contribute ideas): $lambda = .83$, $t = 22.41$
• Item 2 (shape service): $lambda = .89$, $t = 26.15$
• Item 3 (control over experience): $lambda = .88$, $t = 25.32$
• Item 4 (interact in preferred way): $lambda = .82$, $t = 21.89$

These empirical findings confirm that the four items constitute an internally unified, structurally sound, unidimensional measurement model.

10. Instrument / Measurement Tool

• Instrument Name: Service-Dominant Empowered Capability Scale (SDOE)
• Component Context: Dimension of the 24-item Service-Dominant Orientation (SDO) Scale
• Primary Developer / Authors: Ingo O. Karpen, Liliana L. Bove, Bryan A. Lukas, and Michael J. Zyphur
• Original Publication Year: 2015
• Test Type: Psychometric rating scale / Latent variable self-report instrument
• Construct Measured: Customer-perceived service provider capability to facilitate customer autonomy, ideation, co-shaping, control, and channel preference
• Item Count: 4 items
• Response Scale: 7-point Likert scale (1 = Strongly disagree, 2 = Disagree, 3 = Somewhat disagree, 4 = Neither agree nor disagree, 5 = Somewhat agree, 6 = Agree, 7 = Strongly agree)
• Scoring Rules: All 4 items are positively phrased; no reverse scoring is required. The overall SDOE index score is calculated as the arithmetic mean or the sum of all four items:
• Mean Score: Sum of items divided by 4 (score range: 1.00 to 7.00). Higher scores indicate higher perceived provider empowered capability.
• Composite Sum Score: Direct sum of items (score range: 4 to 28).
• Administration Modality: Pen-and-paper survey, online web questionnaire, computer-assisted personal interviewing (CAPI), or mobile customer feedback terminal
• Target Population: Consumers, B2B clients, bank customers, retail shoppers, healthcare patients, and general service users
• Completion Time: Approximately 1 to 2 minutes

11. Permissions & Fee and Test Year

• Publication Year: 2015
• Source Journal: Journal of Retailing (Volume 91, Issue 1, Pages 89–108)
• Copyright Status: The academic article and scale are copyrighted © 2014 by New York University, Published by Elsevier Inc.
• Academic Research Usage: Under standard fair-use academic research conventions, the scale items may be utilized, reproduced, and administered for non-commercial scholarly research, university theses, and academic teaching purposes without paying licensing fees, provided that full bibliographic attribution is granted to Karpen et al. (2015).
• Commercial and Consulting Usage: Commercial deployments—including proprietary customer feedback systems, corporate consulting engagements, or proprietary enterprise software integrations—may require formal permission or licensing agreements through Elsevier Inc. or via the Copyright Clearance Center (CCC).

12. References

• Bandura, A. (1997). Self-efficacy: The exercise of control. W. H. Freeman.
• Deci, E. L., & Ryan, R. M. (1985). Intrinsic motivation and self-determination in human behavior. Plenum Press. https://doi.org/10.1007/978-1-4899-2271-7
• Deci, E. L., & Ryan, R. M. (2000). The “what” and “why” of goal pursuits: Human needs and the self-determination of behavior. Psychological Inquiry, 11(4), 227–268. https://doi.org/10.1207/S15327965PLI1104_01
• Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50. https://doi.org/10.1177/002224378101800104
• Karpen, I. O., Bove, L. L., & Lukas, B. A. (2012). Linking service-dominant logic and strategic business practice: A service-dominant orientation formulation. Journal of Service Research, 15(1), 21–38. https://doi.org/10.1177/1094670511425697
• Karpen, I. O., Bove, L. L., Lukas, B. A., & Zyphur, M. J. (2015). Service-dominant orientation: Measurement and impact on performance outcomes. Journal of Retailing, 91(1), 89–108. https://doi.org/10.1016/j.jretai.2014.10.002
• Langer, E. J. (1983). The psychology of control. SAGE Publications.
• Nunnally, J. C., & Bernstein, I. H. (1994). Psychometric theory (3rd ed.). McGraw-Hill.
• Vargo, S. L., & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68(1), 1–17. https://doi.org/10.1509/jmkg.68.1.1.24036
• Vargo, S. L., & Lusch, R. F. (2008). Service-dominant logic: Continuing the evolution. Journal of the Academy of Marketing Science, 36(1), 1–10. https://doi.org/10.1007/s11747-007-0069-6
• Vargo, S. L., & Lusch, R. F. (2016). Institutions and axioms: An extension and update of service-dominant logic. Journal of the Academy of Marketing Science, 44(1), 5–23. https://doi.org/10.1007/s11747-015-0456-3

13. Items of the Scale (Questionnaire)