A conceptual model for value co-creation

Frow, (2010) European

1. Introduction

Recent research highlights value co-creation as a process of collaboration and interaction,

between producer and consumer operating within a network of stakeholders (Vargo, Lusch &
Tanniru, 2009; Laczniak, 2006; Cova & Salle, 2008). Lusch and Vargo (2006) suggest that
collaboration lies at the heart of marketing where it: "facilitates voluntary exchange through
collaborative relationships that create reciprocal value through the application of
complementary resources" (p. xvii). The aim of these collaborative co-creation activities is to
integrate resources, through interaction and dialog.
However, there is little discussion about the nature of the relationships, the specific
co-creation within a service system. The paper is structured as follows. First, we consider
the nature of co-creation within a service system. Next, we develop a conceptual framework
for integrating co-creation activity within a stakeholder network and service system. We
outline twelve potential forms of co-creation activity. Finally, we discuss implications of this
theoretical model and consider future research opportunities.

2. Value Co-creation and Service Systems

Traditional marketing theories represent value creation as a series of value adding Kotler,
1992; Morgan & Hunt, 1994; Gummesson, 1995), the stakeholder perspective has received
relatively little attention within the discussion on S-D logic. Whilst S-D logic draws attention
to the topic of resource integration between all social and economic actors (Vargo and Lusch,
2008b), co-creation has not been fully addressed in this context.
S-D logic research suggests consideration of a value co-creating system of network actors
who purposefully integrate their resources. A marketing system can be specified at different
levels including: transactions between specific buyers and sellers; a network of stakeholders;
and a complex set of activities characterizing a complete economy at an aggregate marketing
system level (e.g., Layton, 2008; Wilkie & Moore, 2006). Such systems are described
variously
the system participants and other systems (Vargo et al., 2008a). However, much of the
literature on co-creation and co-creation frameworks focuses on supplier-customer
relationships. Further work on models of co-creation needs to consider other stakeholders
including intermediaries, non-supplier stakeholders and consumer to consumer interactions
(Payne et al., 2008).

3.1 Co-creation activities

The central section of the model in Figure 1 identifies twelve potential collaborative.
Sheth and Uslay (2007) list ten of these co-creation activities, but do not consider how these
might be ressed in a broader stakeholder context, thus motivating the present work. Whilst
some of these co-creative activities logically precede others, this does not imply a linear
model. Rather, the arrows in Figure 1 represent the iterative and recursive nature of the
collaborative co-creation activities. Activities undertaken at a later stage may impact earlier.

Previously co-creation of value has been considered by organizations in a much less

structured manner. In this model we propose a more comprehensive and integrated set of
potential co-creation activities that provide a framework to help the focal firm design,. Value
co-creation within a service system includes identifying existing and potential actors who may
wish to share their resources beneficially with others.

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3.2 The focal firm and co-creation design

This section of the model represents the collaborative co-creation design process
undertaken by the focal firm - in this case the supplier - seeking to achieve mutual benefit for
itself, the customer and other resource integrators within the service system. As the locus of
all value creation no longer resides within firm boundaries, there is a need for constructs that
depict networked value creation. Zott and Amit (2008) suggest that business models represent
a broader conceptualization of value co-creation that captures this change. A firm needs to
resources can be optimally integrated in the value co-creation processes), resource
configuration (building on Vargo & Lusch (2008b), operand resources are usually tangible,
static resources that require action to make them valuable, whereas operant resources are
usually intangible, dynamic resources that are capable of creating value), and capabilities
utilization (a firm’s ability to coordinate activities through organizational processes and make
use of their resources to achieve goals (Day, 1994; Morgan & Hunt, 1999)).

3.3 Customers, other main actors and influencers

This section of the model represents the potential range of stakeholders with which the
focal organization can either develop relationships, help facilitate relationships, or monitor
external stakeholder to stakeholder interactions with the objective of learning how to design
and facilitate collaborative co-creation processes. We considered alternative frameworks for
co-creation depends on voluntary, reciprocal sharing of resources between service
systems, with each system willingly collaborating and sharing in value creation (Maglio,
Vargo, Caswell & Spohrer, 2009). This raises the possibility that in some instances unwilling
resource sharing may occur leading to unintended consequences, including value destruction.

4. Discussion

A cornerstone of S-D logic is the co-creation of value through the integration of operant
resources. However, there has been little attention given to exploring the co-creation process
involving multiple actors, using an S-D perspective. Our conceptual model describes the
a firm in designing the most advantageous mix. The model also highlights collaborations
which may enhance value but do not include the resources of the focal firm, as other
stakeholders may collaborate and indirectly benefit the focal firm as well as themselves.
An important consideration is the propensity of different segments to collaborate in
specific co-creation activities. For example, certain initiatives by the firm aimed at
encouraging co-creation may resonate strongly with particular customer segments, but such
activities may in fact destroy value in other segments. For example, IKEA’s business model
includes co-creative activities of co-production (assembly of furniture), co-distribution
(conveyance of the product) and co-experiencing (the family shopping experience). Young
singles and full nest families may enjoy these collaborative activities. However, time poor
mature couples, whilst they are attracted to the modern Scandinavian design, may be highly
reluctant to engage in such collaborative activities which, from their point of view, destroy
value. (Blocker & Flint, 2007). Henneberg et al.(2009) propose a business network
segmentation to address this issue.
Finally, we propose several areas for future research. First, we do not claim the list of
twelve forms of collaborative co-creation detailed above is fully exhaustive. Rather we
sought to identify key forms of potential co-creation activity from the literature and from our
prior research in this area. Other interesting forms of co-creative activity may emerge with
further investigation. Second, there is considerable potential in studying the extent to which
different segments (customers and other actors) are willing to engage in collaborative .

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