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Not always co creation. introducing interactional co-destruction of value in service dominant logic
 

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    Not always co creation. introducing interactional co-destruction of value in service dominant logic Not always co creation. introducing interactional co-destruction of value in service dominant logic Document Transcript

    • Document de travail du LEM 2009-05 NOT ALWAYS CO-CREATION: INTRODUCINGINTERACTIONAL CO-DESTRUCTION OF VALUE IN SERVICE-DOMINANT LOGIC Loïc Plé, Ruben Chumpitaz IÉSEG School of Management, CNRS-LEM (UMR 8179)
    • Not always co-creation: introducing interactional co-destruction of value in Service-Dominant LogicAbstractPurpose – This article aims to demonstrate that, even though Service-Dominant (S-D) logic hasessentially considered value co-creation so far, it should not overlook the risks of value co-destructioneither.Design / methodology / approach – This conceptual paper critically reviews the co-creation and value-in-use concepts to elaborate on the notion of value co-destruction by service systems (i.e. configurationsof resources connected to other systems by value proposition).Findings – We show that value can be co-destroyed through the interactions between different servicesystems, although the extant literature usually suggests that it results in value co-creation. Co-destructionof value is due to a service system misusing either accidentally or intentionally its own resources or theones of another service system.Research limitations / implications – Empirical research supporting our theoretical findings couldconcern service systems’ characteristics, dynamics between co-destruction and value-in-exchange (i.e.price), or dynamics and antecedents of misuse.Practical implications – At a time when so many firms engage in co-creation strategies, it is importantnot to forget that these are not the ultimate panacea to get value. Analyzing how, where and to what extentvalue co-destruction may occur must not be neglected.Originality / value – To the best of our knowledge, this research is one of the first to underline the limitsof co-creation and to explore both the potential and process of value co-destruction in S-D logic.Keywords Co-destruction; Service system; Value-in-use; Service-Dominant Logic; Destruction-through-misusePaper type Conceptual paper 1
    • 1. IntroductionThe role of the customer as a co-producer of a product offering has been underlined early in theacademic literature (Barnard, 1948; Parsons, 1956). Yet, researchers have only begun to actuallyinvestigate this topic since the end of the seventies (e.g. Chase, 1978; Eiglier and Langeard, 1977;Lovelock and Young, 1979; Mills et al., 1983), paving the way for a rather impressive quantity oftheoretical and empirical contributions (see Bendapudi and Leone, 2003 for a summary of theliterature). Most of these have focused on the participation of the customer to the production of aservice (Bateson, 1985; Bitner et al., 1997; Bowers et al., 1990; Lengnick-Hall, 1996), or of atangible good (Thomke and Von Hippel, 2002; Von Hippel, 1978). However, more recently,some authors have suggested that the customer should primarily be seen as a co-creator ofexperience (Prahalad and Ramaswamy, 2000). From this point of view, the customer has becomea co-creator of value (Prahalad and Ramaswamy, 2002, 2004), rather than a mere co-producer ofthe core offering (be it a good or a service) that enables the delivery of the experience.This shift has been studied in greater depth by Vargo and Lush (e.g. Lusch and Vargo, 2006a;Lusch et al., 2007; Vargo and Lusch, 2004; Vargo and Lusch, 2008b, 2008c). These authorscontend that marketing has been evolving towards a new dominant logic, i.e. a service-dominant(S-D) logic, as opposed to the good-dominant (G-D) logic that has prevailed for decades.According to S-D logic, the customer is always a co-creator of value, implying that value isinteractional by nature (Vargo and Lusch, 2008c). More precisely, value is phenomenologicallydetermined, i.e. the value of a good or a service does not exist per se, but is function of the waycustomers perceive the contextual experiences enabled by this good or service (Woodruff andFlint, 2006). As a consequence, the firm can merely deliver value propositions to the market,whereas customers evaluate the benefits they may get from the firm’s offer. From the customer’spoint of view, value-in-use is thus the result of this perception. Another consequence of thisdistinction is that co-production of the core offering, which arises through co-design, jointproduction or collaborative inventiveness with the customer, becomes a component of value co-creation. Hence, co-production is distinct from, yet nested in, value co-creation (Lusch andVargo, 2006a).Moreover, co-creation of value occurs though the exchange of service, which in S-D logic is thefundamental basis of exchange (Vargo and Lusch, 2008c, 2008a). Service does not refer here to 2
    • the unit of output resulting from a (co-)production process. It is rather defined as “the applicationof specialized competences (operant resources – knowledge and skills), through deeds, processesand performances for the benefit of another entity or the entity itself” (Vargo and Lusch, 2008a,p. 26). This definition highlights the process nature of the service, which relates back to “doingsomething beneficial for and in conjunction with some entity” (ibid.). In other words, accordingto S-D logic, service is exchanged for service, whereas tangible goods are mere appliances (i.e.tools, distribution mechanisms) serving as alternatives to direct the provision of service. Theentities concerned by this service-for-service exchange are also called service systems (Spohrer etal., 2007), which are “configurations of resources (including people, information andtechnology) connected to other systems by value propositions” (Vargo et al., 2008, p. 145). So,firms are service systems, as well as their customers, suppliers, employees, and all the otherpartners of a firm’s network (Lusch and Vargo, 2006b).In summary, S-D logic posits that service systems exchange a service, either through direct orindirect interaction (in the latter case, through artifacts such as goods). Accordingly, the locus ofvalue creation is “a collaborative process of co-creation between parties” (Jacob and Ulaga,2008, p. 248; Vargo and Lusch, 2008b, p. 256), and value in this context refers to value-in-use forthese parties. Therefore, each system of this process contributes to the creation of value for itselfand for the other (Vargo et al., 2008). However, since it can be created, we deem that it is likelythat value may also be destroyed through such an interactional process. Yet, marketing thoughtremains deficient to fully understand value-related processes (Payne et al., 2008; Vargo et al.,2008). In particular, relatively little is known neither about devaluation (Woodruff and Flint,2006), nor about what we label value co-destruction. Though, it is important to identify wherevalue can be destroyed so that it can be remedied.Therefore, this article proposes to introduce value co-destruction in S-D logic, and to show howthis co-destruction may happen through the interactions between a firm and its customers. Ourarguments are developed in the three following parts. Firstly, we show how optimistically valuehas been studied so far in S-D logic, even though, from time to time, the idea of co-destructionhas been underlying in this literature. The second part proposes a definition of value co-destruction, and gives some details about the co-destruction process. Lastly, we show that the co-destruction process may result either from accidental or intentional actions from service systems. 3
    • 2. The absence of value co-destruction in S-D logicThe marketing literature seems to have essentially focused on value creation so far, and it wouldappear that it is even more the case in S-D logic. Yet, some authors have raised the issue of valuecreation costs and devaluation, but have not explicitly dealt neither with value destruction, norvalue co-destruction. 2.1. An optimistic point of view about valueAs we mentioned earlier, S-D logic has mainly underlined the possibilities of value co-creationthrough interaction so far, back to Vargo and Lusch’s seminal paper (2004). It reflects whatseems to be a shared standpoint in the academic literature that deals both with value andcollaborative relations between a firm and its customers. Indeed, a research on the EBSCOdatabase with “value creation” in the field “Abstract or Author-supplied Abstract” delivers 805results. About half of them relate to marketing. Another research with “creation of value” reveals128 results, with once again a large part of them in marketing. And “co-creation” results in 72references, all of which are related to marketing research. Moreover, in the index of The Service-Dominant Logic of Marketing book (2006), the entry “value creation” (p. 448) shows that it isstudied in 17 chapters out of 32.On the contrary, the same kind of research on EBSCO provides only a total of 25 results for“value destruction” (17 results) and “destruction of value” (8 results). As for “co-destruction”,there are only two results. None of these 27 entries concerns marketing. Finally, in the index ofthe aforementioned 2006 book dedicated to S-D logic, the expression “value creation costs” isonly associated with one chapter. Anyhow, these are just the costs associated to the value creationprocess, and they are different from value destruction. Besides, we haven’t noticed any otherentry that may be related to value destruction or co-destruction.Explaining these differences goes far beyond our paper. As far as S-D logic itself is concerned,we suggest that it could be the result of an optimistic standpoint adopted in the definitions ofsome determining contributions. Thus, the foregoing definition of service (Vargo and Lusch,2008a), considers that it is “at the benefit”, or “doing something beneficial” (our emphasis).What’s more, S-D logic defines value as “an improvement in a system well-being”, and ismeasured in terms of “a system’s adaptiveness or ability to fit in its environment” (Vargo et al., 4
    • 2008, p. 149, our emphasis). Doing so, it adopts a very optimistic and favorable point of view onvalue processes, which cannot but lead to value co-creation and implicitly exclude value co-destruction. 2.2. The implicit risks of value co-destructionSchematically, G-D logic has usually regarded value through the lens of a two-stage sequence(Grönroos, 2006; Vargo and Lusch, 2008a). First, value is created by the firm during theproduction process (hence the “added value” concept). It is subsequently destroyed by theconsumer at the moment of consumption. Accordingly, G-D logic posits that both value creationand value destruction are separate and unilateral (i.e. they are not interactional).As for S-D logic, to the best of our knowledge, value co-destruction has been rather implicit untilnow. For instance, Jaworski and Kohli (2006) mention that under some conditions, the firmshould not engage in co-creation of value with the customer because it would most certainly besuboptimal for both parties. However, they do not analyze the way value may be co-destroyed,since they insist on factors and circumstances under which the two parties should not interact.Furthermore, Woodruff and Flint (2006) also notice that devaluation processes may happen, i.e.there is a diminution of the co-created value, but these authors do not actually mention anypotential co-destruction of value. Nor do they explain what dynamics lead to devaluation, whileunderlining the need for further research on this topic.Finally, Etgar (2006) studies the costs associated to co-production, hence to value co-creation. Heexplains that the customer makes a trade-off between these costs and thus could engage inactivities that would “minimize the costs of performing value co-creation activities” (: 129).Nevertheless, he remains silent about the content of the interaction between the firm and thecustomer, as well as about the results for the firm in terms of value.3. Co-destruction: an interactional processWe begin this part with a definition of value co-destruction through the interactions of differentservices systems. The second section focuses on the process of value co-destruction, andintroduces what we label “destruction-through-misuse”. 5
    • 3.1. Defining value co-destructionAs showed before, value co-destruction has remained allusively tackled, even though it isunderlying in some recent articles. As a consequence, the concept is blurred, and needs to bedefined. To that end, we propose to rely on the aforementioned definitions of value and service inS-D logic. Thus we suggest that value co-destruction is an interactional process betweenservice systems (limited here to the firm and its customers) that results in a decline in at leastone of the systems’ well-being. During this process, systems interact either directly (person toperson) or indirectly (via appliances such as goods) through the integration and application ofresources. Eventually, the level of value co-destruction that results from this process may not bethe same for all the systems involved. There, we follow Woodruff and Flint (2006) who suggestthat the level of co-created value may be imbalanced between the firm and the customer – exceptthat we transpose this to value co-destruction. Given the manner S-D logic measures value, thismeans that when two systems co-destroy value, their adaptiveness (or ability to fit in theirenvironment) may be impacted differently.Nonetheless, this definition is only a first step, as it does not enlighten us on the co-destructionprocess as such. In other words, it does not enable us to understand how value is co-destroyedthrough the interactions between the firm and the customer. To overcome this limitation, we relyanew on the manner value is co-created in S-D logic. 3.2. The co-destruction processS-D logic focuses on value-in-use. This means that value is co-created through the interactions ofsystems which integrate and apply both their own resources, and the ones of other systems(Lusch and Vargo, 2006b; Lusch et al., 2007). Most of them are operant, i.e. resources that act onother resources (typically, knowledge and skills), even though some operand resources may beused as well (usually, tangible and inert resources that are acted upon). However, these resourcesmay be used in a detrimental manner for one of the service systems, or for all of them. Forinstance, a customer who buys a car but does not maintain it destroys value for herself and thefirm that sold it: she will have problems with the car, and consider that the firm’s valueproposition is not good. So she will most certainly have a bad image of the firm and convey it,destroying value for the firm due to her bad utilization of the car. At the same time, she destroys 6
    • the value she gets from using the car. Hence, the customer has triggered a value co-destructionprocess by misusing the firm’s value proposition.There is misuse because she integrated and / or applied resources (the firm’s and her own) in a“wrong” way. By “wrong”, we mean that she did not either integrate and / or apply theseresources as the firm expected her / him to: the customer misused these resources. Accordingly,we contend that value co-destruction results from the misuse by a system of its own resources, orthe ones of the other system, or from the misuse of these resources by both systems. So doing, weoppose destruction-through-misuse to value-in-use. By the way, it is important to note that,albeit this example illustrates customer misuse, the firm may also misuse its own resources and /or the ones of its customers. Drawing on what precedes, we deem that value co-destructionthrough the interactions of a firm and its customers can be studied at two different levels: thefirm’s, and the customer’s one. Each of these service systems may misuse either its ownresources, either the resources of the other service system. In each case, this misuse results invalue co-destruction for at least one of the two service systems (see Figure 1). ~~~~~~ TAKE IN FIGURE 1 ~~~~~~Finally, we now need to specify why we suppose that misuse is a use that was unexpected by theother service system. In fact, when the firm and its customers interact (directly or indirectly), theyhave expectations related to their own role, and to each other’s role (Bateson, 2002). Accordingto script theory, it is preferable that each system is able to foresee the actions and behaviors of theother, in addition to knowing how to act and behave on its own (Solomon et al., 1985). This helpsto be successful or, expressed in S-D logic terms, to co-create value-in-use through a betterintegration and application of resources. To put it another way, when two service systems havecongruent expectations of the way these resources should be used through their interactions, itshould result in value co-creation. However, discrepancies can occur between the systems’expectations, resulting in a system’s behavior that would be regarded as inappropriate by theother system (Hubbert et al., 1995). Under such circumstances, it is highly probable that theinteraction results in value co-destruction for at least one system. Consequently, we view misuseas the integration and / or the application of resources by a service system, in a way that is notexpected by the other system with which it interacts. 7
    • 4. Accidental vs. intentional misuse of resourcesAt first thought, value co-destruction evokes negative consequences of a process between two ormore service systems. With that in mind, it seems natural to think of misuse as purely accidental.However, an analysis of extant academic contributions shows that it is not always the case(Harris and Ogbonna, 2002, 2006). Indeed, some service systems intentionally misuse their ownresources or the ones of other systems. 4.1. Accidental misuseWhen interacting, service systems most likely intend to co-create value rather than co-destroy it.Since co-creation depends on congruent expectations of the manner they should integrate andapply their resources through the interaction, it would seem logical that discrepancies are notdeliberately created by the systems. Yet, they may exist, causing co-destruction. We characterizethis situation as the result of accidental misuse of resources by at least one of the interactingservice systems. Thereafter, we provide two examples of accidental misuse and of somecircumstances under which it may occur.The first one refers to co-innovation, i.e. implicating customers in the innovation process. It isthought to be a very powerful means to innovate (Chesbrough, 2003). However, the results canbe disappointing in many situations. In fact, due to limited knowledge about new technologies ornew materials, customers cannot always forecast future usages of innovations, or the kind ofinnovation that may be created (Ulwick, 2002). Accordingly, customers may be unable to usetheir resources and the firm’s ones as the firm expected them to, because they are limited by theirframe of reference. There, customers accidentally misuse these resources: misuse is not the resultof a deliberate choice. In view of that, the advantages of this process may be minor, if theoutcome is nothing more than incremental innovation or “me-too products”. From the firm’sperspective, such an outcome leaves the field open for competitors (Ulwick, 2002). In this case,co-innovation becomes a co-destruction process that decreases the firm’s competitive well-being,and limits its capacity to adapt to its competitive environment. Besides, this relative innovationfailure necessitated the customer to bring in resources she could have employed for other morebeneficial activities. This might provoke frustration and other psychological costs and eventuallynegatively affect her well-being. 8
    • Our second illustration is related to role conflict felt by service employees who are in directcontact with customers. Role conflict results from competing expectations between theorganization and its customers (Eddleston et al., 2002; Wetzels et al., 1999). For instance, acustomer may ask an employee to take a lot of time to deal with her demand, whereas the firm’spolicy is to shorten the contact length. Therefore, from the firm’s viewpoint, the customermisuses its resource (in this case, the employee), as she does not use it as the firm expected herto. Misuse here is accidental because the customer usually is not aware of a firm’s policy aboutcontact length, and thus does not try to overcome it intentionally. From this on, there are twopossibilities.On the one hand, the employee bends to the customer’s expectations. So doing, the customer getswhat she wants, and the interaction actually improves her well-being. Hence, misuse actuallygenerates value-in-use for the customer. However, this situation supposedly diminishes the firm’swell-being, since it is less efficient (co-destruction). But contrary to this first possibility, theemployee can finally comply with organizational expectations. There, the customer does not getwhat she wants: the interaction generates destruction-through-misuse, which reduces her well-being. Yet, the firm is more efficient and supposedly increases its well-being. This time, misusegenerates value-in-use for the firm.This second example shows how role conflict can be interpreted in light of value processes. Inparticular, it shows how destruction-through-misuse may result from service systems’interactions. More interestingly, it also hints that the interaction may not engender the samevalue-related effects for service systems. Indeed, it would seem that a co-destruction process canlead to clear differential results, since it may conduct to actual co-destruction for one system,whereas it may even engender co-creation for another one. 4.2. Intentional misuseEven though this may be counter-intuitive, service systems may sometimes have an interest inmisusing resources. Intentional misuse refers to a situation when a service system misuses itsown resources or the ones of another system on purpose. Doing so, this system plans to increaseits well-being and its capacity of adaptiveness to the detriment of another system’s well-beingand capacity of adaptiveness. This is totally different from accidental misuse, where major value 9
    • imbalances are unplanned. So intentional misuse implies that value co-destruction shouldnormally concern one of the service systems, at the benefit of the other interacting system.In our previous example about role conflict, we have addressed the firm’s viewpoint to illustratevalue co-destruction. However, we have deliberately specified that this situation “supposedlydiminishes the firm’s well-being”. Now, from the customer’s standpoint, it is the firm thatmisuses its own resources (employee), since they are not used as the customer expected to. Sofrom the customer’s angle, this interaction results in value co-destruction, whereas it co-createsvalue for the firm, since it enables it to be more productive and more efficient (Singh, 2000).In our second example, employees are regarded as service systems, and not merely as firm’sresources (Vargo et al., 2008). In this case, employees who are directly in touch with customersinteract with two other systems: the firm and the customers. Employees are in position to usetheir own resources (e.g. skills and knowledge) as well as the firm’s and the customers’resources. These employees may engage in “sabotage behaviors”, i.e. “behaviors that areintentionally designed negatively to affect service” (Harris and Ogbonna, 2002, p. 166). Thismeans that they misuse some of the resources they have at their disposal (theirs or others’) toimprove their well-being, while decreasing the one of the other systems (Harris and Ogbonna,2006). Indeed, service sabotage behaviors might increase the saboteurs’ self-esteem, perceivedstatus and job satisfaction, and lower their level of stress. At the same time, it has negativeimpacts on the firm’s performance and on the quality of service delivered to customers (Harrisand Ogbonna, 2002).Our third illustration focuses on distribution channels management. Firms may have interest (costeconomies, productivity improvement, etc.) in making their customers switch from traditionalhuman-based service encounters to self-service (Curran and Meuter, 2005). Yet, not all thecustomers have the same preferences towards self-service. Some may be very prone to use thistechnology, while others may be reluctant (Lee, 2002). Therefore, a firm which imposes on all itscustomers the use of a self-service technology (that is, does not use its resources as its customersexpected it to) will most certainly have a negative effect on the well-being of a part of them.Fourthly, customers too can intentionally misuse the firm’s and their own resources to get morevalue, leading to co-destruction for the firm. Customers misuse a firm’s resources and their ownwhen they complain illegitimately (Reynolds and Harris, 2005). Furthermore, it has been 10
    • empirically demonstrated that they can adopt opportunistic behaviors to take advantage ofinteractions with service employees (Plé, 2006). For example, they can lie to a front-lineemployee to benefit from a preferential treatment. In other words, they use their own resources(e.g. intelligence and other skills) in a manner that was not expected by the firm to influence theemployee’s actions so that they can get more value. 11
    • 5. Contributions and implications 5.1. Theoretical contributionsGrounded in S-D logic, this conceptual article aims to show that interactions between servicesystems (e.g. firms, customers, etc.) are likely to have detrimental consequences. In particular, weconcentrate on the way these interactions may support a value co-destruction process. Such aprocess is triggered when at least one of the interacting service systems misuses its own resourcesand / or the ones of another system. In this case, misuse happens when a service system does notintegrate and / or apply these resources in a way that is not expected by the other service system.As far as we know, this is the first attempt to introduce, and thus to comprehend value co-destruction in S-D logic (and one of the very few to study value destruction in the marketingliterature at large). So doing, we try and answer the call of Vargo and Lush (2008c) fordeveloping this new logic of marketing. Indeed, until now, S-D logic has largely highlighted thepossibilities of value co-creation through service systems’ interactions, leaving co-destructionaside.Related to its initial goal, this paper also hopes to contribute to the understanding of value-relatedprocesses, about which marketing thought has remained relatively silent so far (Payne et al.,2008; Vargo et al., 2008). To this extent, we have explained that these processes may result ineither accidental or intentional misuse of resources by service systems. In addition, we haveshown that they may engender imbalanced levels of value between different service systems.What is even more interesting is how important the imbalance may be. In fact, co-destructionprocesses between two systems may actually result in value co-destruction for one of the twosystems, whereas value is co-created for the other. 5.2. Directions for further researchThis study does not pretend to be exhaustive in any way. Instead, it most certainly raises moreinterrogations for further empirical and theoretical research than it answers questions. Fourdirections are proposed below.First of all, exploring the potential influence of service systems’ characteristics on the co-destruction process may be of interest. For instance, some customers may have a greaterknowledge and understanding of a product and the way it can be used than others (Ulwick, 2002; 12
    • Von Hippel, 1978). In other words, they have more resources than other customers. Theirinteractional behavior with the firm might be different from the latter. Identically, not all thecustomers are interested in having a relationship with a firm (Ward and Dagger, 2007), meaningthat not all of them are ready to bring the same quantity and quality of resources in thisinteraction. Does this impact the intensity of value-related processes, by improving ordiminishing chances of co-destruction?Some of our previous examples have also raised the issue of the dynamics of value-relatedprocess. Consider the case of multichannel management. We have noticed that a firm that obligesits customer to use self-service technology would co-create value for itself, while co-destroyingvalue for some of its customers. But this observation does not take time into account. On theshort-term, the firm may get value from this decision. Yet, it may result in long-term co-destruction if too many customers are disappointed and eventually leave the firm. Hence,longitudinal research on co-destruction and on value-related processes at large is needed(Woodruff and Flint, 2006).In the same vein, studying dynamics and antecedents of misuse is of primary importance, giventhat it is at the origin of co-destruction. For instance, under which circumstances will a servicesystem misuse its own resources, or the ones of others? Is a service system more liable to misuseits own resources, or others’ ones? Does accidental misuse formalize over time to becomeintentional?Lastly, dynamics between co-destruction and value-in-exchange (i.e. money one service systemgives to another to get its value proposition) should be examined. We showed that a co-destruction process may have imbalanced consequences on service systems. Does this impactvalue-in-exchange as well? If it does, to what extent? 5.3. Managerial implicationsThis paper also has some interesting managerial implications. In an era where a growing numberof firms rely (or at least claim to be relying) on co-production and co-creation, it is important tobear in mind that such strategies do not come without risks. Beyond obvious financial costs, theremay be significant hidden costs, or side-effects, associated to transforming the customer into aco-creator. 13
    • These costs must also be determined over time: short-term value co-creation may eventuallybecome long-term value co-destruction, as we showed it. It does not seem to us that these kindsof costs are usually taken into account. Yet, analyzing a value-related process from its initialstages may enable to identify where and how co-destruction can occur. Accordingly, it mightreveal new ways to use resources, and untapped possibilities of value co-creation and competitiveadvantage.6. ConclusionThe potential for co-creating value through interactions is huge. But so are the dangers and issuesthat might come with them. Therefore, the risks of interactional value co-destruction should notbe overlooked. This is why we have strived to underscore throughout this paper that value co-creation is not the only possible outcome of service systems’ interactions. Side effects andnegative externalities may happen for different reasons during the process. Hence, beforeimplementing a strategy based on S-D logic, it is primordial to consider where, how and to whatextent co-destruction may occur. 14
    • Figure 1 : Sources of value co-destruction through the firm / customer interactions Interaction Firm Customer May result in Interactional value co-destruction May happen At the firm’s level At the customer’s level Due to either a Due to either aMisuse of the Misuse of the Misuse of the Misuse of the firm’s own customer’s customer’s own firm’s resources resources resources resources 15
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