Abstract: The profit of an enterprise is the result of cost transformation and appreciation. The cost structure determines its profitability and competitiveness. Based on “service-dominant logic” proposed by Vargo and Lusch, this paper exploratively divided enterprise cost into “active cost” and “reactive cost.” The function of “reactive cost” is to transfer value, while the input of “active cost” is the key to enterprise upgrading and profitability. Using industrial enterprise cost survey data, empirical research shows: active cost input, such as research and development expenditure, personnel education fund, salary of sales staff and so on has significant positive impact on profitability. This impact was more obvious in large and medium-sized enterprises. Active cost input showed similar positive impact in both high added-value and low added-value industries.
Full text: Cost Structure and Enterprise Upgrading: Based on “Service-dominant Logic”
