- Email: [email protected]
Capturing the broader picture of value co-creation management
Accepted Manuscript Capturing the broader picture of value Co-creation management Daniela Corsaro PII:
S0263-2373(18)30096-3
DOI:
10.1016/j.emj.2018.07.007
Reference:
EMJ 1873
To appear in:
European Management Journal
Received Date: 27 August 2017 Revised Date:
4 July 2018
Accepted Date: 24 July 2018
Please cite this article as: Corsaro D., Capturing the broader picture of value Co-creation management, European Management Journal (2018), doi: 10.1016/j.emj.2018.07.007. This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
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Capturing the Broader Picture of Value Co-creation Management
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Daniela Corsaro, Ph.D. Associate Professor of Marketing Department of Business, Law, Economics and Consumer Behavior IULM University Via Carlo Bo’ 1, 20100 Milano, phone 0039-2-891412664 [email protected]
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Capturing the Broader Picture of Value Co-creation Management
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Abstract
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The interactional, interdependent, and dynamic nature of value co-creation has made value management in business relationships a particularly challenging issue for both academicians and practitioners. In addition, studies on this topic have mostly focused on managing value co-creation in isolation from the wider relational context without completely capturing the influence of other value processes on value co-creation. This paper examines the broader picture of value co-creation management by providing a model based on interlinked value processes, namely, value communication, value appropriation, value measurement, and value representation. We adopted a qualitative approach based on 86 interviews with managers of both customer and supplier companies, which operated in different industries. Results showed that the management of value co-creation implies considering complex patterns of interconnections with other value processes. In particular, the study will shed light on the centrality of value appropriation to co-create value and on the importance of value representation to coordinate ideas and enable future co-creation opportunities.
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Keywords: relationship value, value co-creation, value management, value appropriation, business relationships.
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ACCEPTED MANUSCRIPT 1. Introduction
Value is the main anchor of management decisions, and as such, it has a long tradition in the study of economics and business management. In business-to-business
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marketing in particular, where the role of relationships is emphasized, recent contributions have shown the complexity of the value concept in an interactional and networked setting (Büchel & Raub, 2002; Grönroos, 1997; Gummeson, 2006).
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Value co-creation implies that both the supplier and customer are actively involved in the value process (i.e., products, services, and/or knowledge components), a mutual
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process and a matter of ongoing adjustments (Anderson et al., 2009). This process is influenced not only by supplier-related factors but also by customer-related factors with regard to what type of value proposition is suitable for particular use contexts (Gummesson, 2006; Vargo & Lusch, 2004).
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Recent literature has further stated that value is co-created in interactive processes that occur in use (Grönroos, 2008; Håkansson & Snehota, 1995; Vargo & Lusch, 2008). This research has shown that value co-creation results in a complex process, where
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heterogeneous actors and resources are involved, the contextual conditions modify
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rapidly, and conflicts and misalignments are frequent between interacting parties. Scholars in service-dominant logic (Vargo et al., 2008), for instance, assume that value co-creation depends on the conditions of a specific situation that, in turn, shape and refine actors’ perceptions of the value they experienced (Chandler & Vargo, 2011; Edvardsson et al., 2011). Therefore, as with any other category of social action, the business, cultural, and social contexts influence economic behavior and its consequences. Aitken and Paton (2016) also discussed the temporal, contextual, and actor-related
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ACCEPTED MANUSCRIPT nature of value perceptions, which are situational and contingent on factors that are both internal and/or external to the relationship itself (Flint et al., 2002). All these elements—subjectivity, interdependence, context dependency, interactivity, and dynamicity—made the management of value co-creation in business relationships
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a particularly challenging issue for both academicians and practitioners. Managing value co-creation is an intricate issue due to the difficulty in ensuring the goaloriented behavior of more parties toward complex goals, combined heterogeneous
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resources, distributed power, and holistic network dynamics (Darbi & Knott, 2016). In addition, given that value is co-created in use, it is not easy to define the portion of
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value realized that each party should capture and to implement those actions to maintain the relationship in equilibrium. Notwithstanding these difficulties, managing value co-creation remains a priority, even more so in light of the increased number of informal collaborations, formal business relationships, and failed alliances (Ritala &
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Tidström, 2014; van Fenema & Loebbecke, 2014).
Specifically, two gaps have emerged in the research on the management of value cocreation in business relationships. First, scholars’ attention to value management has
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often been devoted to develop general insights that are difficult to apply through
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managerial practice (Holtgrave, Nienaber & Ferreira, 2017), whereas there is a need to develop a framework for value co-creation that is also useful to the company’s management (van Rensburg, 2012). Business-to-business (B2B) managers have identified the management of value co-creation as a top priority (ISBM, 2012). However, to be useful, the process should become less abstract for practitioners and easier to be translated into real-life business. Second, different studies show that many attempts to manage value co-creation in business relationships fail, leading to tensions, conflicts, and in some cases
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ACCEPTED MANUSCRIPT relationship termination (Laamanen and Skalen, 2014; Grayson & Ambler, 1999; Chowdhury et al., 2016; Anderson & Jap, 2005; Vafeas et al., 2016). But these investigations have focused primarily on understanding the activities for managing value co-creation, considering them in isolation from the broader relational context
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(see Payne and Holt, 1999; Vargo et al., 2008; Aarikka-Sternoss & Jakkola, 2012; Anderson, 1995) and thus leaving out how value co-creation is connected to other value processes (Corsaro, 2014; Edvardsson et al., 2011; Grönroos, 2011).
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Considering the complexity of the value co-creation concept as interactional, interdependent, and dynamic, it may be beneficial to investigate the interlinks
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between value co-creation and other relationship value processes to offer a richer and more nuanced picture of value co-creation management.
In this paper, we define value processes as a set of actions grouped into activities that generate specific outcomes for the actors involved in business relationships (Weske,
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2007; Davenport, 1993). These activities reflect the nature and characteristics of the complex and emergent interaction processes characterizing business relationships. We refer in particular to those value processes that B2B marketing scholars have mostly
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studied in connection with value co-creation: Value appropriation, value
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communication, value measurement, and value representation (Corsaro, 2014; Cox, 2004; Ballantyne & Varey, 2006; Gadde & Snehota, 2000). Given the two research gaps above, our research questions are as follows: What are the main activities to manage value co-creation in business relationships? How do activities to manage value co-creation interrelate with other value processes? To gain a holistic and multisided picture of value co-creation management, the empirical research consists of a qualitative study involving 86 in-depth interviews, with key interlocutors in customer and supplier firms operating in different industries.
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ACCEPTED MANUSCRIPT This research aims to capture the broader picture on value co-creation management by identifying most relevant interconnections among value processes and developing a model that offers insights into activities for the management of value co-creation in complex, heterogeneous, and changing business relationships.
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Our results will show that enabling value co-creation implies consideration for many activities of another nature, which can strongly influence value co-creation both directly and indirectly. This study constitutes a bridge between the complexity of
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conceptualizing value co-creation in a relational setting and the need to provide clearcut indications for business practitioners. Therefore, as the study adopts a granular
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perspective, it will contribute to both to advance theoretical knowledge on value cocreation management and bring theory closer to managerial practice. The paper’s structure follows. Section 2 contains the literature review on value cocreation management and examines contributions to intertwined relationship value
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processes. Section 3 describes the study method, and Section 4 illustrates the findings. Section 5 discusses results from the empirical study, whereas Section 6 ends the paper
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with the conclusions and implications for research and practice.
2. Literature review
Managing value co-creation in business relationships
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2.1
At the beginning of 2000, Prahalad and Ramaswamy (2000) suggested that the place for value creation was shifting from the research and development (R&D) department of a company to the interaction between the company and its customers; such an idea created a stream of research subsequently called “value co-creation.” Applying a service logic, Grönroos and Voima (2013) distinguished value creation from value cocreation: Value creation concerns the customer’s creation of value in use, whereas value co-creation only takes place in a joint value sphere. In that vein, the role and 5
ACCEPTED MANUSCRIPT activities pursued by the supplier vary depending on the degree to which the supplier can influence the application of its resources. The authors also stated that value propositions should convey the potential value that suppliers and customers can cocreate in their interactions over time; the company offering, therefore, should be seen
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as an input that becomes part of the process of value creation for the customer and not as its output (Ballantyne et al., 2011; Frow & Payne, 2011; Payne & Frow, 2014). In other words, the customer becomes an endogenous variable for the company and part
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of the value network (Büchel & Raub, 2002).
Scholars agree that specific actions are required for value co-creation to generate
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positive outcomes and grant the development of business relationships over time. Aarikka-Stenroos and Jaakkola (2012) analyze the key activities constituting the dyadic value co-creation process of complex offerings. Their study demonstrated that value co-creation occurs through a dyadic problem-solving process encompassing five
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key activities: diagnosing needs, designing and producing the solution, organizing the process and resources, managing value conflicts, and implementing the solution. Haas et al. (2012) also adopted a mutual perspective and identified value co-creation
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activities involving both customer and supplier into jointness, balanced initiative,
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interacted value, and socio-cognitive construction, highlighting the subjectivity of value perceptions. However, Payne and Holt (1999) argued that while much of the literature has focused on value co-creation for the customer, the relationshipmarketing paradigm demands a broader view. They thus provided a framework for managing value co-creation that distinguishes three key stakeholder groups: customer, organization, and external stakeholders, each of them representing opportunities for value co-creation. A few years later, Payne and Frow (2014) further stated that value
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ACCEPTED MANUSCRIPT co-creation management organizations entails to take an integrated approach that links employee, customer, and shareholder value. The previously mentioned studies undoubtedly have the merit to identify activities to manage value co-creation. Nevertheless, only a few of them considered connections
2012), as will be discussed in the next section.
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2.2 Value co-creation and the other value processes
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between value co-creation processes and the other value processes (Hammervoll,
Value co-creation is dependent on other relationship value processes; even though,
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interconnections among value processes have not been considered in a systemized way, thereby overlooking a more holistic view of value co-creation management (Salomonson et al., 2013; Hammervoll, 2012).
Value processes include activities and actions that generate specific outcomes for the
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actors involved in business relationships (Weske, 2007; Davenport, 1993). Our study considers those value processes that have mostly been studied with respect to value co-creation in B2B marketing literature. We refer in particular to value co-creation,
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value appropriation, value communication, value measurement, and value
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representation (see Cox, 2004; Ballantyne & Varey, 2006; Gadde & Snehota, 2000). In the following, we present how the literature discussed value co-creation with respect to each other value process. Value co-creation and value appropriation. Value co-creation is not sufficient for the effectiveness of business relationships; companies must also be able to appropriate the value co-created. For strategy scholars, value appropriation is the portion of the total value created that the various participants in the system have been able to capture, and which in turn depends on the parties’ bargaining power and their position within the
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ACCEPTED MANUSCRIPT network (Brandenburger & Nalebuf, 1995). Actors with more power expect to take possession of a larger share of the value co-created (Cox, 2004), generating value slippage. The rate of slippage of the value depends on the direct and indirect competition and on the isolation mechanisms provided (Lepak, Smith, & Taylor,
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2007).
Aspara and Tikkanen (2012) demonstrated that placing a high emphasis on the cocreation of new value and a low emphasis on its appropriation help to achieve a high
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average growth rates because the focus on appropriation distracts management attention and resources. The authors explained that managers should choose value
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configurations that consider value creation and value appropriation jointly rather than relying only on dimensions that are independent of each other. According to Pardo et al. (2006), the “degree of value appropriation is dependent on the degree of its creation and is driven by other aspects of the relationship (force, negotiation skills,
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etc.) that characterize the different patterns of interaction” (p. 1368). Henneberg et al. (2009) also asserted that relationship value activities should aim to identify activities to manage internal, exchange, and relational values, which are co-created and
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appropriated within a relationship.
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Value co-creation and value communication. Research seems to similarly support the fact that value co-creation activities are connected with value communication activities. Communicating the value proposition, however, is a particularly tricky question in the context of value co-creation. It is no longer a one-directional concept, but rather should involve all parties in a constant dialogue and common sense-making activity. Relationships with suppliers, customers, and other market players improve when they are engaged in continuous dialogue, an element that allows both sides to become co-creators of value (Gummenson, 2004).
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ACCEPTED MANUSCRIPT Ballantyne et al. (2011) explained that the development of a platform for interactive communication process to co-create value should include the following activities: check the interaction of specific episodes in the development of mutual value proposition, verify the relationships between network actors, and prove the value of
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integrated resources by the counterparty. Salomonson et al. (2012) also identified three activities of communication between supplier and customer aimed at value cocreation: customer focus, discernment, and receptivity, which expresses the level of
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understanding and agreement with the customer. In general, communication activities
creation (Krause & Ellram, 1997).
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influence value perceptions and the development of trust, which is key for value co-
Value co-creation and value measurement. The value co-created needs also to be measured as a basis for decisions in terms of appropriation. In general, the value that a party receives from the relationship is difficult to verify. Most of the co-created value
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is intangible and, therefore, hard to measure when employing normal accounting techniques: If some value dimensions are rather simple to identify, measure, and quantify, others are not, such as those that are indirect and dependent on secondary
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activities (Gadde & Snehota, 2000).
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Keränen and Jalkala (2013) identified activities for value measurement to co-create potential value into checking the customer base, evaluating the performance, identifying the long-term value, and managing information systematically. They have also stressed that value measurement should involve continuous activities along the value creation process, rather than be an assessment performed only at the moment of transferring the offer. Value co-creation and value representation. Value co-creation has resulted from the enactment of practices among multiple actors; therefore, there are many perspectives
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ACCEPTED MANUSCRIPT of value, or in other words, value heterogeneity. One of the biggest challenges that management has thus faced is to deepen the relationship with customers to help them “see” in its entirety the value proposition that is offered (Kindström, Kowalkowski & Nordin, 2012). Value representation has been defined as “how an actor translates its
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own idea of value into something that can be observed by the other actors, and its meaning shared among them” (Corsaro, 2014, p. 992). Therefore, on the one hand, there is the process of representation; on the other hand, there are representations as
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outcome objects. Anderson, Narus, and Van Rossum (2006) determined the importance of activities aimed at demonstrating value through value case histories,
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value calculators, and value-generating planning.
Inter-cognitive representations inscribe shared understandings and thus provide an objective basis and guidance for further interactions (Mouzas & Henneberg, 2015). For instance, new actors who enter a relationship may be unaware of previous
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interactions and attribute new and different meanings to representations left by previous communications (Mason & Leek, 2012).
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Figure 1 illustrates the above discussion. We can notice that the framework emerged
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from the literature is quite nonspecific and in such a way “flat”: Value co-creation is in a central position, and interlinks have been mostly considered between value cocreation and each other (single) process, while not presenting a more comprehensive picture of their multiple interconnections. Even if we look at the recent literature, scholars have underscored the need for more research on how value co-creation is supported by value communication (Salomonson, Åberg, & Allwood, 2012), on the linkage between value co-creation and value appropriation (Aspara & Tikkanen, 2013; Bowman & Ambrosini, 2000; Lepak et al., 2007; Lindgreen et al., 2012), how
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ACCEPTED MANUSCRIPT value co-creation is translated into value metrics (Anderson, Narus, & Narayandas, 2009; Gummeros, 2013), and what is the role of value symbols in value co-creation (Akaka et al., 2014; Kindström et al., 2012; Corsaro & Kjellberg, 2012). Therefore, such literature seems to neglect the need for a framework where
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interconnections among multiple value processes are explicated. This could mean to draw a picture even more articulated than Figure 1, but somehow more useful for practitioners as reflecting the real complexity of their business interactions. To reach
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this goal and understand higher-level interconnections among value processes, we
characterize each value process.
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adopt a granular perspective, which passes through the identification of activities that
Figure 1: A generic framework on value processes in business relationships from the literature
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Value appropriation
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Value communication
Value co-creation
Value representation
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Value measuring
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Research method
3.1 Research approach
This study explored activities to manage value co-creation processes gaining an
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understanding of value co-creation management from the actors’ own perspectives and in a process-oriented way (Blumberg et al., 2008). A qualitative study was applied to facilitate the rich and in-depth descriptions necessary given the nature of
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the phenomenon in question, which is both complex and multifaceted (cf. Patton, 1989). The epistemology position is interpretivist, according to which there is no
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single external reality. For the interpretivist, “[…] the research endeavor is itself an act of story making and storytelling” (Hopkinson & Hogg, 2006, p. 158). Reality exists through perceived knowledge, seeking to understand specific context (Carson et al., 2001, Hietanen et al., 2014). Consistent with this epistemological position, our
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methodology concentrates on interpretation, where the use of preunderstanding is important. We thus attempted to understand subjects in the context in which they act to account for complexity and context dependency (e.g., Flyvbjerg, 2006).
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The research followed an abductive process: Data collection, analysis, and the search for complementary theories constitute parallel iterative processes in which the
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researcher moves back and forth between theoretical concepts and field observations in an effort to enhance the understanding of both theory and data during that process (Dubois & Gadde, 2002). Theoretical structures and empirical observations develop concomitantly and interactively in an abductive approach, which facilitates the study of the holistic characteristics of inter-organizational relationships (Robson, 2002). This alternation allowed gaining a better understanding especially of the value representation process, which is one of the less studied processes in the B2B marketing literature. 12
ACCEPTED MANUSCRIPT Further, instead of following only a logical process, the advances we proposed have been often achieved through an intuitive leap that comes forth as a whole, and this can be called abductive reasoning (Taylor et al., 2002). For instance, intuition has been particularly significant to find out clues that B2B managers to coordinate their views
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in context characterized by information overload increasingly use representations and visual aspects.
The presentation of our findings also reflects this abductive approach, as empirical
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findings and theoretical considerations are alternated and combined.
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3.2 Data gathering
A purposive or theoretical sampling procedure was used to recruit managers across functions and hierarchical levels in multiple industries (e.g., Bendapudi & Leone 2002) and to ensure coverage of close business relationships that have frequent
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interactions and involve actor-to-actor relationships. We decided to include organizations of various sizes as this might uncover a broader range of views and be more representative of the population. Heterogeneity of contexts in which companies
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operate was thus sought to achieve a multisided and rich perspective of observations (Kohli & Jaworski, 1990), maximize diversity among participants, discover various
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potential relationship value activities (see Ulaga & Eggert,
2006), and
interconnections among them. We believe that this approach would be revealing, given the acknowledged differences in their respective value systems (Krause & Ellram, 1997).
The qualitative study consisted of 86 semi-structured interviews conducted with key referents in Italian companies or Italian branches of global corporations. Data were acquired from 39 customer companies and 47 supplier companies in a range of industries (mechanics, automation, consulting, ICT, distribution and retail, and 13
ACCEPTED MANUSCRIPT business services, among others) in organizations of different sizes (see Table 1 and Table 2 in Appendix). We conducted interviews in Italy in 2016. To allow for comparability, we relied on key informants—namely, managers who were influential decision-makers involved in
roles,
with
significant
responsibility
for
managing
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customer/supplier relationships. All respondents held primarily senior management interactions
with
the
buyer/supplier. The informants in customer organizations were mostly CEOs,
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entrepreneurs, and buying managers (see Table 2 in Appendix). The informants in supplier firms were most often CEOs, entrepreneurs, salespeople, and marketing
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managers (see Table 3). For confidentiality reasons, we used fancy names to indicate companies.
We were interested in the viewpoints of individuals who could accurately describe relationship dynamics. These referents were already connected with the University’s
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research center, which ensured a higher level of engagement with the research goals. To ensure quality and reliability of the information collected and to motivate the informants’ participation, the researchers contacted all managers interviewed in
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advance. We applied a data triangulation technique (e.g., Beverland & Lindgreen,
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2010; Huberman & Miles, 1994) that involved information collection from firms’ websites, articles on news, and reports from associations in which the companies took part (for instance Confimprese, Confindustria, FNDI, etc.). We also applied information feedback and contacted managers a second time to verify the accuracy of their comments and obtain their permission to quote. When the study was concluded, we also provided respondents with a summary of the research results. Of the 86 interviews, 52 were conducted face-to-face, whereas the remaining interviews were conducted by using Skype with camera video included, thus offering
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ACCEPTED MANUSCRIPT a reliable and familiar alternative to managers. Data collection lasted 18 months, with a significant amount of time expended on gaining access to managers with relevant experience. The unit of analysis for this study was the relationship as formed by a series of
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relational episodes (Ravald & Grönroos, 1996), including actor–actor interactions that create value outcomes and which have been managed through specific activities. The focus is on actors who participate in B2B relationships in the context of business
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networks. We thus focused on interactions between customers and suppliers; third actors, both organizations and consumers, have been included in the analysis when
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they were involved in the focal relationships analyzed.
3.3 Interview scheme
We used a semi-structured set of questions for the interviews, which provided the
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formality necessary to analyze complex phenomena and allowed for the emergence of unexpected issues (Wengraf, 2001). Interviews were divided into two parts. First, we invited respondents to map the history of the relationship (Musson, 2004) with the
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most important supplier (in terms of purchasing volumes) or customer (in terms of sales revenues) (see Ulaga & Eggert, 2006). Managers shared their experiences in
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business relationships with respect to key episodes and critical incidents. Accordingly, we used the definition of critical events provided by Schurr, Hedaa, and Geersbro (2008): happenings relevant to a party at a given place and time. Critical events in business relationships depend at least in part on the perceptions and intentions of the actors; these are events that one participant considers problematic and confusing (Halinen et al., 1999). Once an interesting element emerged, we guided the discussion toward interactions and episodes that characterized it, which effects the events generated, how actors managed them, and in which way such effects have influenced 15
ACCEPTED MANUSCRIPT other activities. For instance, the Casta system, a specialized producer of buttons, discovered that its best customer asked a Chinese supplier to copy its tailored button sample. The Casta system has perceived this event as very critical for the company, which raised issues about managing the counterpart’s opportunism.
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The five-value processes have been used as an underlining guide for the interviewer, but without making it explicit for the respondent to avoid influencing him/her. For example, regarding value communication, we posed open questions, such as “Could
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you tell me which main problems you find to communicate the value of your offering to customers?” “How do you try to make simple a complex concept for your
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customer/supplier?” We followed up with more specific questions, such as “Could you give an example of a situation in which a communication problem generated important consequences for the relationship with your best customer/supplier?” “Which further interlocutors have been influenced apart from you? and “How have
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you tried to minimize such effects?”
The second part of the interview was more structured as discussion themes, which enabled the interviewees to raise matters that were not specifically queried (Hesse-
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Biber & Leavy, 2010); for instance, some interviewed people made a parallel between
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the focal relationship analyzed and other relationships or highlighted how value cocreation changes as an effect of digitalization and the uncertainty derived from it. The time dimension of relationship value management was then captured by analyzing, in a retrospective way, episodes that occurred over time to determine how they were connected to previous, present, and future events (Medlin & Törnroos, 2014). During interviews, we followed up with additional questions requesting clarification, examples, and more details regarding potentially interesting ideas. All interviews were recorded and transcribed.
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ACCEPTED MANUSCRIPT 3.4 Data analysis and quality As this research is interpretive, the analysis process materializes in an oscillation between the parts and the whole, in which we can only give meaning to the part if we
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can put it into a systemic and holistic context (Gummesson, 2003). Andersen (1995) described the researcher’s role as “interactive consultant”—a definition that fits our interpretivistic research position well because it promotes entering the world of the
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respondents and understanding the environment from their perspective (Saunders et al., 2011). Because of the multiple interactions across the episode, we attempted to
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juxtapose this evidence with descriptions in the literature. When we found differences, we engaged in the subsequent data analysis. We continued this process in an iterative fashion throughout the development of the research. Data analysis involved a detailed coding process that identified the major themes
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addressing the research objectives of the study. Primarily, we selected a particularly rich transcript from each respondent and analyzed these transcripts, line by line, to develop an initial list of first-order concepts, the value actions, intended as practical
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initiatives to manage specific interaction episodes (Ravald & Grönroos, 1996; Schurr et al. 2008). As subsequent transcripts were coded, the set of concepts expanded.
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Once this initial coding was complete, we searched for associations between firstorder concepts (value actions) and categorized them into higher-order and secondorder concepts, i.e., value activities (Weske, 2007; Davenport, 1993). Each value action described by the respondents was episodic and referred to a specific interaction event; therefore, our analysis was aimed at revealing the common actions across different relationships and grouping them. We categorized them into 12 themes that reflected similar value activities. The coding of value activities was followed by an abstraction to the overarching 17
ACCEPTED MANUSCRIPT aggregate dimensions (value processes). For example, activities were labeled as “alignment in metrics” and “contextualization”, and aggregated to the theoretical dimension of value measurement activities. Selective coding then followed to provide rich descriptions of the focal phenomena and the interrelationships among value
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activities.
To drive the analysis, any idea or insight should be applicable beyond a specific context, such as a firm or industry, and multiple participants should have mentioned it
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(see Bendapudi & Leone, 2002). Thus, we do not include industry-specific ideas, actor-specific ideas, or ideas mentioned by only one participant but selected the most
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cited ones.
The narrative approach was then used to present findings from interviews (e.g., Czarniawska, 2004; Hummel, 1991). Every narrative offered a plausible reason for a particular outcome and the connected sequence of events, thus reducing equivocality
meaningful realities.
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(Weick, 1995). From our interpretivist position, stories themselves construct
In the interest of establishing trustworthiness, we provide “proof quotes” in Table 3 to
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offer supporting data for value activities (second-order concepts). These are in
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addition to the quotations contained in our findings section. Quotes were used in the empirical scenarios to give insights into the respondents’ views and reasoning used to provide a chain of evidence as well as a sense of the context.
4. Findings The data structure illustrated in Figure 1 shows aggregate dimensions in terms of value processes (value co-creation, value communication, value appropriation, value measurement, and value representation); second-order concepts (value activities that
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ACCEPTED MANUSCRIPT compose each process); and first-order concepts (value actions that make up each activity). In the next section, we specifically discuss on each element of the classification model
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proposed, and Table 3 provides further quotes to support findings (see Appendix).
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Figure 2: Findings in terms of value processes, value activities, and value actions.
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4.1 Activities for value co-creation in business relationships Adaptation. Accepting value-in-use as a foundational value co-creation concept implies that customers are the value co-creators (Grönross, 2008; Vargo & Lusch, 2004). Among customer companies interviewed, many examples exist of customers who are active in co-creating value with the supplier. In Information and
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ACCEPTED MANUSCRIPT Communication (ICT) Security industry, for instance, customer companies tend to invest with system integrators to scout new technologies abroad. In finance, banks increasingly collaborate with consultancy companies to develop RoboAdvisor, a class of financial advisers that provide portfolio management online with minimal human
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intervention. In a very different realm, business-to-consumer (B2C), wellness centers co-invest with fitness machine providers to develop sophisticated equipment, thus enabling to self-produce the energy they need.
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Some customers are even in a position to promote value co-creation by providing suppliers with their skills and performing some activities in their place. In the case of
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the medical center Santa, it decided to conduct activities on behalf of its small suppliers that did not have sufficient resources to perform them effectively. The company supported them in administrative matters, price definition, and marketing activities: “When the involvement of the customer company in the co-creation process
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is high, it should not use its power over the supplier to appropriate higher portion of the value co-created; rather, it should see these supporting activities as a way to generate a better collaboration from which both parties will benefit” (General
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Director, Santa). Such behavior generated trust and led to a stronger relationship
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between the customer and its suppliers, thereby reinforcing the growth of long-term value.
Adaptation is especially important in situations characterized by heterogeneous customer needs, complex products and services, and a high-risk perception (Hallen et. al., 1991; Jeffries & Reed, 2000). Adaptation is however not only technological but also relational. For instance, the software company Altilia developed a solution for bank customer that effectively integrated its technological content with the solutions already implemented by the bank’s suppliers. This process required many interactions
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ACCEPTED MANUSCRIPT and collaboration in the relationships among Altilia, the customer, and the other suppliers. The technological adaptation was made possible only because of the positive relational atmosphere created. In many of the cases observed, relational adaptation to co-create value also implied to
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increase the level of flexibility. Managers interviewed stressed the need for sales and procurement staff to be open in understanding their counterparts and to adjust their approaches when they seemed ineffective. To avoid myopia, companies are
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encouraging managers to gain experience in different branches of the company along their career path and in a multicultural environment. With this scope, training
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activities are also changing. Most managers—both sales and purchasing—believe that the usefulness of training activities in their company is limited by the low level of fit with personal features and needs (Baumgartner et al., 2016). In addition, according to the interviewees, most effective training activities adapt their content to suit the
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specific context in which managers operate with respect to their customers and suppliers, as well as their personality traits; thus, they consist fewer of predefined packages: “Each organization needs to determine what good looks like from their
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perspective. In every specific environment and culture, organizations must determine
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what traits drive high performance” (Consultant, Miller).
Bridging. Mutual recognition and understanding that the success of each firm depends in part on the other firms lead to undertaking actions in order to provide a coordinated effort focused on jointly satisfying the requirements of the different market players. As stated in the literature (see Verbeke, Dietz, & Verwall, 2011), to scout new business opportunities, we observed that activities to co-create value often include the attempt to connect with actors belonging to the counterpart’s relationship portfolio. The focus is on not only customer relationships but also more in general on 22
ACCEPTED MANUSCRIPT relationships with a wider set of stakeholders. For such reasons, companies increasingly organize networking activities such as breakfast or lunch meetings to enable customers, suppliers, and connected parties to meet in a positive atmosphere and nurture future opportunities of value co-creation. For example, to identify
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problems and find ways to solve them, Zeto organized “dreaming sessions,” where customers can share their innovation opportunities and pain points with Zeto staff and researchers. The outcome of these sessions is documented and shared with all
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participants. Similarly, to identify opportunities and promptly detach from possible problems, continuous analysis of the development of the different sources of value co-
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creation emerged important. For instance, the software house Digi International’s sales and marketing persons periodically interview their customers, suppliers, and third parties to understand the perceived value co-created from the collaboration. The literature then stated that the co-creation of value in multiple stakeholder domains
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can provide an important mechanism for aligning value within a marketing system (Frow & Payne, 2011) and thus to enable value co-creation: “Especially when the power in the company is extremely fragmented, there is a sense of uncertainty
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because the decision taken by a certain manager could be potentially revised by
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another” (Reput, Sales Director). A way to mitigate this aspect is to refer to a unique source of codified information, which is potentially available in real time. In the case of the four divisions of Ginara Elec—namely, Medical Systems Italia, Healthcare, Healthcare Clinical Systems, and Life Sciences—four separate CRM systems were used that did not interface with each other, thus resulting in every division referring only to its own database of customers without registration, for instance, that a customer of the medical systems could also be a customer of Healthcare. To improve such situations, in 2015, the company implemented a unique CRM in all four
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ACCEPTED MANUSCRIPT divisions, thus generating synergies in the commercial sales strategies throughout the company. However, bridging can also happen in time: Generating continuity between the past and future can be one way to reduce uncertainty. For example, a company that
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manufactures ropes for the sailing industry, such as America’s cup race, in 2015 decided to enter the furniture and clothing markets. This decision implied the need to deal with individual consumers and to develop completely new supply networks. To
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face this challenge, the company decided to recycle the ropes used in sailing to produce chairs, lamps, frames, bags, and shoes, each accompanied by the story of the
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race where the rope was used. In this way, the rope represented a bridge between past and present—an element that created a coherent story about the company’s evolution. This reduced perceived uncertainty by partners and opened up new opportunities for
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value co-creation.
Advising. Customers increasingly expect sellers to be able to understand, learn, and anticipate their needs, much like personal advisers (Baumgartner et al., 2016): “They
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want sales to be a trusted advisor, such as going beyond a sales rep role to be consultative to customers. It implies being focused on helping achieve their
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company’s needs, not just making a quick sale, to be available when the company needs them, without trying to sell them products they don’t need” (Italian Vice President, Sopforce). Therefore, provider organizations are often not just suppliers but also consultants on how to best use the products and services they purchase, which thus adds value to the customers’ business. Customers, on their side, are not anymore only receivers of the solution but become active part of the co-creation process. New ICT technologies have further enabled such processes, thereby allowing for new opportunities of value co-creation. Using big data analytics, more granular and 24
ACCEPTED MANUSCRIPT contextualized data are determined, which are useful for achieving micro segmentation in real time. According to the Country Manager of Akai: “The ability to gather more data and in a more punctual manner will allow moving from large predictive models to a personalized approach. Information about past interactions
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with customers or present interactions can be used to customize purchasing experience instantly”. Even in B2B and not only in B2C, thus, firms look for a seamless multichannel experience. The value drivers stay in the business customer
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journey: “The same experiences should be created along the company’s different touch points. In order to make the customer journey through the different channels
(Dale, Business Developer).
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‘seamless,’ you need to guide your customers to those paths that make it less effort”
4.2 Activities for value communication in business relationships
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Management of multiple touch points. According to Grönroos (2008), the supplier’s ability to engage in active dialogue and interact with the customer increases its
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potential to support the creation of value-in-use. Reciprocal value propositions reveal opportunities for focal firm engagement with suppliers, customers, and other
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beneficiaries beyond sale/purchase transactions as part of a platform for communicative interaction (Ballantyne & Varey, 2006; Ballantyne et al., 2011). For instance, a global specialist in electrical and digital infrastructures for home automation solutions created an online community for its 100,000 B2B customers who include installers, designers, architects, and retailers. This initiative shows that, in B2B as well as in B2C, customers want to not only get informed but also interact with the company’s branding as protagonists of the company’s story. Building deeper customer relationships with direct customer interaction in communities also enables 25
ACCEPTED MANUSCRIPT customers to give direct feedback and share their enthusiasm for the brand and the products. Within communities, characterized by multisided or reciprocal propositions, business customers transform themselves into ambassadors (Ballantyne et al., 2011). Interviewees then revealed that the first pain point for purchase functions is to receive
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multiple contacts by salespeople from the same company or being affected by diverging behaviors. For example, if a salesperson granted a price reduction to a customer in a country without coordinating with his colleague in another country, it
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could create a significant factor of dissatisfaction. The increasing complexity requires more alignment among both departments and company branches. “Every sales
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manager is just focused on its own customer portfolio, without realizing there could be synergies among the portfolios of different sales accounts; what’s more, many of our customers are multinational companies operating globally” (Sales Account
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Manager, Zeto).
Translation. In terms of activities to communicate value, the increasing interconnections among contexts, lack of time, and information overload amplify the
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importance of keeping issues simple and communicating them in a straightforward manner. Simplifying complex ideas through communication allows to translate them
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more easily into worthy insights, even for heterogeneous people. Interviewed managers realized that more personalized communication activities increase the effectiveness of value communication (Baumgartner et al, 2006). An example is an online marketplace specialized in food delivery from a large pool of restaurants. At the beginning, salespeople encountered strong difficulties in including Chinese operators in their portfolio of restaurants. To address the problem, the company’s CEO devised a plan asking a Chinese restaurant that was already a customer to make a video in Chinese. “The video reassured Chinese operators about 26
ACCEPTED MANUSCRIPT the reliability of the service and the potential for further developing their business by joining the marketplace. Salespeople enter Chinese restaurants with an iPad in front of their faces and show the owner the video!” (CEO, Iate). This activity, even if unusual, enabled the company to achieve its purpose by increasing the number of Chinese
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restaurants included in its portfolio.
In the case of an Italian retail chain, different cultures and business approaches created difficulties when trying to establish collaborations abroad. “Bangladesh has
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grown a lot in recent years; however, the mentality there is very cooperative but totally unprofessional. This has resulted in difficulties in setting up relationships
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based on managerial skills and not only on operations” (Supply Chain Manager, OVV). Being aware of how cultural barriers can negatively influence business relationships, parties agreed to introduce the figure of the cultural mediator to support
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know-how transfer among them.
Development of interpersonal interactions. Managers in supplier and customer firms believe that investing in improving interpersonal communication provides different
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benefits. The interviewees indicated that the majority of problems in communicating value occurred when there were no direct interactions between parties. More and
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more companies are encouraging people to relate at an interpersonal level, which also contributes to understanding them better from an emotional point of view while identifying their views of the interaction. “They understand what we can give them only once I meet them, after months of negotiations by email, telephone, and intermediaries in the United States… How can we think of getting married by chat? The relationship is doomed to fail because this is not the right way to develop any relationship” (Sales Account Manager, Cani). When people are perceived as empathic, buyers appreciate the ability to focus on the 27
ACCEPTED MANUSCRIPT individual level of their specific needs, which in turn leads to greater satisfaction (Andersen & Kumar, 2006). Therefore, the ability to tell engaging stories and generate emotional ties has become increasingly important too as indicated by a key buyer at Pisher: “The supplier purpose is to make its audience see what he saw, heard
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what he heard, feel what he felt. Relevant detail, couched in concrete, colorful language, is the best way to recreate the incident as it happened and to picture it for the audience”. Any attempt to change the value of customers’ perceptions is partly a
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cognitive issue related to the change in value thinking and simultaneously placed in
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interpersonal relationships and emotions (Ivanova & Torkkeli, 2013).
4.3 Activities for value appropriation in business relationships Limiting opportunism. Most managers interviewed agreed that asymmetries in the value appropriated by the different actors could generate perceptions of inequity,
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tensions, misunderstandings, and frustrations. The value appropriation activities we observed empirically often consist of attempts to contain opportunistic behaviors by a
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counterpart who appropriated more value than the one co-created (Holtgrave et al., 2017), especially when this counterpart is in a preferential power position. The issue
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has been widely debated by Bowman and Swart (2007), according to whom the appropriation of value is a function of the bargaining process among the actors involved (e.g., customers, employers, and suppliers). To reduce the incentive for opportunistic behaviors and knowledge spillovers, some customers link their results to those of the supplier, allowing the provider to feel like it is part of the company. “I request that the supplier takes an entrepreneurial approach, which means that he has to assume risks” (Channel Manager, Tecnica). These activities act as isolating mechanisms that enable the firm to appropriate proportionally the value it has created 28
ACCEPTED MANUSCRIPT (Mizik & Jacobson, 2003). Yet, other managers think “When sellers feel a need to either lock you into a long-term agreement or get payment up front, they are implying that you might find a better alternative. If the vendor assumes the risk of delivering and maintaining value by not requiring the long-term commitment, then the customer
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will reward the seller with more trust.”
Consequently, to allow for more flexibility, many companies are shifting from single, up-front payments for products to recurring revenue for a service, thus fully applying
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the logic of value in-use for value appropriation activities too. “Financial markets reward predictable, recurring revenue. Whether it be monthly or annual, smart
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companies recognize that recurring revenue with a high renewal rate demonstrates perceived customer value. High renewal rates become an incredible marketing message” (Founder, Tattid.com).
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Collective anchoring. When trying to appropriate value, a customer cannot realize the total value created by the entire network. For instance, interviewees revealed that in projects conducted jointly by a multitude of suppliers, the customer referred to the
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total contribution to value co-creation not as a sum of single contribution but more as a multiplier, thereby valorizing the increased value generated by collaboration. This is
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also a control mechanism in case a supplier opportunistically applies with other suppliers to a tender but, in reality, is going to work in isolation, appropriating value that the customer has valorized but it will not create in the end. To manage this behavior, companies are increasingly experiencing the use of network contracts, rather than only bilateral ones, by linking the performance of the individual company to that of the other actors involved in the co-creation process. At any rate, these contracts are worthy only when they are able to keep up with changing contextual conditions (Jeffries & Reed, 2000). In particular, companies are 29
ACCEPTED MANUSCRIPT increasingly ready to change the mechanisms for value co-creation when they realize that they have generated unfair value appropriation. A further element, which generates troubles in value appropriation, relates to ambiguities in the role of actors in the network. For example, in the ICT industry,
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system integrators have started to perform also as distributors and, in parallel, distributors have begun to operate as value-added resellers; this causes increasing overlaps in co-creation activities and thus generating problems in the distribution of
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margins.
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4.4 Activities for value measurement in business relationships
Alignment of metrics. The interviewed managers affirmed that it is important to understand the types of proxies customers utilize as early as the preliminary phases of relationship development, even if the relationship has not yet generated any returns.
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Thus, suppliers make explicit the key performance indicators (KPIs) used from the start of the relationship while also recognizing the counterpart KPIs. Similarly, the
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importance of introducing intermediate measurements during the relationship, not only at its end, has been highlighted to help in detaching misalignments before they
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produce negative outcomes.
The alignment of metrics in networks is particularly emblematic in the case of Fitos. In 2007, the Company introduced a seven-year strategy called “Shared Vision” that implied the use of new and more specific KPIs along the entire value chain. Unfortunately, these KPIs were not part of the common practices used with Lego’s distributors. Thus, the company had to train its salespeople, distributors, and resellers about the use of different and more sophisticated metrics compared to the past, resulting in a noticeably positive effect on communication. 30
ACCEPTED MANUSCRIPT Measurement activities also included the development of networked key performance indicators (nKPIs): “Individual performance measures should be accompanied by measurements that reflect the performance of the network as a whole, where actors who contribute more to the collaboration get higher portion of value” (Channel
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Manager, Beretta).
Considering the supplier and customer processes jointly can then help understand the context in which they operate, thereby supporting the use of better-fitting proxies. “I
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can tell you that will reach 20% not just because I choose you, but because we will work together: It is a relationship of value and not a value transfer. I carry the value
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that you will get if you use Sophos” (Top account manager, Sophos). According to this interviewee, traditional suppliers’ metrics were unreliable for the measurement of potential value because the intervention of the customer is essential to co-create value.
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Contextualization. Acting in different contexts gives rise to difficulties for managers in the measurement and comparison of values of different solutions and various relationships. This happens because many factors influence the process of value
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measurement. First, customers use different parameters to compare the performance of a certain solution with respect to those of competitors. Second, because these
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parameters are specific to the context, they tend to vary significantly. “Every company works in a different way, and sometimes I am amazed at how companies calculate their costs” (Purchasing manager, Kit). Thus, suppliers expect customers to clarify to them which parameters they apply to compare the value of their offerings with alternative ones to avoid the formation of misunderstandings and an incorrect benchmarking activity. Interviewees then revealed the importance of finding proxies that are contextual not only to the customer and supplier industry but also to the specific relationship. 31
ACCEPTED MANUSCRIPT Salesbot offers a good example of this. One of the main strengths of its CRM is the possibility for the user company to adapt and modify it based on its specific context. Salesbot was also the first to allow software upgrades without losing customizations already applied by the customers. Before this, the software upgrade was a challenging
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problem for companies, as they had to develop a complex process of migration to maintain their customizations. This long and costly procedure caused companies to postpone such efforts, thereby limiting their innovation capability. To solve this
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problem, Salesbot made updates of Web-based applications extremely simple and fast, and users always have access to the latest version of their software. All additions and
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customizations are retained during the update, which lasts only 6 minutes.
4.5 Activities for value representation in business relationships Confronting representations. Many malfunctions in business relationships are the
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result of different sense-making processes—and, hence, diverging processes—that lead to the attribution of sense and meaning to contexts and events (Malshe et al.,
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2017). Value representation describes the way an actor translates his own idea of value into something that can be observed by the other actors and its meaning shared
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(Corsaro & Kiellberg, 2012). In such a way, representations reduce the complexity of business affairs (Ivanova & Torkelli, 2013). Representations, for instance, are useful for parties to understand the areas of collaboration in the relationship, the individual activities and joint activities to be carried out, and the counterpart’s relationship portfolio. Representation provided by customers describes not only the expected characteristics of the solution but also the different contexts in which it will be used and the benefits and problems that can emerge from it. “The best thing is to represent how the 32
ACCEPTED MANUSCRIPT customer uses the solution, but salespersons often fail in that. Sometimes we take the order, we develop the product, and then it does not work as expected because the customer uses it in a different way” (Key Account Manager, Burgi). As a result, not only does value representation emerge as a responsibility of the supplier toward the
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customer, but both parties are to be involved in it as well: The supplier and the customer attempt to make explicit their visions of the value and the benefits they expect from each other’s promises.
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Exemplary is then the case of Buzza, a digital intelligence company that has built its competitive advantage around the key role of representations. The company’s value
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activities are summarized as follows: “We listen for words, we visualize concepts, we enlighten meanings.” (CEO, Buzza). Buzza has realized the importance of visualizing concepts for its business customers as knowledge now goes through signs, symbols, visual insights, and representations. To reach this scope, they created inter-functional
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teams made up by both data analysts and designers.
Changing representations. An important aspect of value representations is their
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ongoing nature: Parties enact representations while they interact. One example is the implementation of conference call systems such as Webex or Lifezize. These systems
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allow for the sharing of desktops, thereby making representations instantly available to other persons, who can then modify them while interaction, thus transforming representations from static to dynamic objects. Even more sophisticated is again the example of Salesbot’s CRM. “The last release of our CRM works like Facebook, where a person uploads a photo and his friends comment on it. Similarly, in our CRM, a business opportunity is no longer a record, but it becomes a social object, expressed through a text, an image, a graphic, an audio message, and a like. People can easily browse the news feed and post status updates, 33
ACCEPTED MANUSCRIPT upload files, share links and more, right from the dashboard.” (Vice President Italy, Salesbot Italy). Salesforce’s CRM works similar to social networks, making it very familiar and easy to use for customers: “We have completely changed the way we interact. We use rarely emails and have dramatically reduced the number of calls.
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Interaction has become much more seamless, smart, and fast” (Akamai, Country Manager).
As further example, Mivron Tools, a Swiss company specializing in high-precision
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tools, has also recognized the importance of value representations and is beginning to use holograms during trade fairs to show potential buyers how its machineries work.
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Holograms are much more effective than videos because they are flexible and recreate contextual real-life situations. Salespeople can show immediate functioning to their prospective customers and save the costs of transport and insure physical machines.
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5. Discussion
The marketing literature highlights a range of activities inherent in value co-creation management. However, notwithstanding the lively debate on value co-creation, no
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studies have examined activities for different and interconnected value processes in
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customer–supplier relationships. The research has tended to consider value cocreation in isolation and to provide only a partial picture of interdependencies with other ones. Nevertheless, the interactive and changing nature of business relationships would require a more holistic standpoint to capture the complexity of value cocreation management. We agree with scholars such as Payne and Frow (1999) and Grönroos & Voima (2013), who assert that a broader view of value co-creation management is required. However, they proposed the introduction of new stakeholder groups and different value spheres (customer, supplier, and joint). Rather, we
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ACCEPTED MANUSCRIPT contribute to the research by showing that value co-creation management is not only an issue of managing the locus of value, i.e., where value co-creation is situated with respect to the actors involved but also regarding how wide-ranging the context for value co-creation is in terms of interconnected processes.
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As a first contribution, our study described in detail the activities and actions required to manage value co-creation and the four value processes (communication, appropriation, measurement, and representation) for consideration. This allowed us to
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reach a microperspective on value co-creation management and support managerial practice. By adopting a transversal view of the value activities identified for each
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process, we notice that some of them refer more to an individual (personal) level, such as adapting, advising, and limiting opportunism, whereas some others recall how parties relate in dyads in terms of bridging and confronting representations. Others examined how parties behave in the wider context of interaction, such as in the case
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of translation, contextualization, management of multiple touch points, and collective anchoring. Finally, further activities evoked the idea of adjusting ongoing interactions between customers and suppliers, for instance through adaptation, changing
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representations, and alignment in metrics. Therefore, these elements are clear clues
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that, to jointly co-create value, customers and suppliers should understand in depth the context of interaction both in terms of space, i.e., the levels on which different activities take place (individual, dyadic, and network), and time. As a second contribution, our study revealed that, compared to the literature, the picture of interconnections between value co-creation and other value processes is not as linear as represented in Figure 1 (see for instance Pardo et al., 2006; Gummenson, 2004; Keränen & Jalkala, 2004; Kindström et al., 2012). In particular, we found that the following patterns are recurrent in the customer-supplier relationships observed.
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ACCEPTED MANUSCRIPT Value co-creation affecting value appropriation and the other way round. Activities that promote adaptation and advising are very important for value appropriation, as they facilitate higher flexibility in changing conditions for value appropriation when the context modifies. This would allow extension beyond
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contractual mechanisms, which could block the relationship in a situation of unfair value appropriation, in turn negatively affecting further value co-creation activities.
Activities that are addressed to connect with others (bridging) are also significant for
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value appropriation; if on the one side, value co-creation can be considered a condition for value appropriation (Lepak, Smith, & Taylor, 2007), on the other side,
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companies should fairly appropriate the value co-created (Blocker et al., 2012). In our empirical material, activities of value appropriation are often aimed at limiting opportunism (Hallberg, 2007), which are very frequent, even in long-term relationships, “leading to an asymmetric bargaining position and the dissipation of
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firm-specific assets” (Park & Ungson, 2001, p. 51). To limit opportunism, companies increasingly implement activities of collective anchoring to ground the parties’ contribution in value co-creation to the total value co-created in the relationship.
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However, compared to the literature on value co-creation and value appropriation (see
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Brandenburger & Nalebuf, 1995), we found that the total value appropriated is more a multiplication than a sum of individual contributions, because of the beneficial effects from collaboration, which leverage value co-creation potentialities. Value representation affecting value communication. Value representation connects quite strongly with value communication. While this is not new in B2C marketing literature (Blomberg, 2008), in B2B research, it is an interesting finding, as visual insights are gaining importance in line with increased use of social media for business purposes.
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ACCEPTED MANUSCRIPT We know from the literature that managers can use representations in communication to represent value and thus facilitate communication with the external surroundings while avoiding misunderstandings (Ivanova & Torkkeli, 2013). Communication can be used to confront representations and better coordinate dialogues, as different types
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of visualizations can inspire different kinds of cognitive processes (Havemo, 2018). Salesbot was a particularly emblematic case of the way to leverage the power of representations. This case demonstrated that how a business opportunity can assume
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sense and meaning through the continued participation of various persons who contributed to its representation and hence definition in real time, also enabling
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activities that easily change representations based on evolving interactions. Representation of the network composition and its resources is also similarly important for obtaining a comprehensive picture of the relevant context of value cocreation and converging in assigning common meanings to value outcomes. In other
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words, using representations in communication activities offers the ability to converge on a certain clue of future value co-creation. Value communication affecting value appropriation. Parties may have different
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perceptions of the co-created and appropriated value. Especially when multiple touch-
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points are involved, communication across the different channels is important to avoid confusing the counterparts about who will appropriate the value; this aspect is often under evaluated in the literature while having a strong impact on the effectiveness of business relationships. Subjectivity, in fact, affects not only the resources that a company decides to invest to co-create value (Aitken & Paton, 2016; Bendapudi & Leone, 2003) but also the evaluation of the potential to appropriate the value cocreated. As a result, communication is used not only to facilitate the understanding of value co-creation opportunities but also to mitigate the effects of unbalanced value
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ACCEPTED MANUSCRIPT appropriation: With effective communication, partners can implement actions that translate their expectations regarding the value they are going to appropriate and their views about the value that has been co-created. The presence of personal interactions can then lead people to tolerate temporary inequities in the value appropriated without
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damaging the business relationship.
Value representation affecting value appropriation. Linked to the previous two patterns, interviewees strongly corroborated the significance of representing the
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network with respect to the process of value appropriation: How parties perceive the actors involved in their focal relationships influences their ideas of who appropriates,
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or should appropriate, the co-created value (Helkkula & Kelleher, 2010). Activities aimed at representing the partners’ network of relationships and the resources that can be attracted from others could settle on more coordinated actions to determine how the other parties organize their activities for value co-creation.
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Therefore, confronting representations is not only about identifying the actors who co-create value but also those who will appropriate the value. Parties may not share the same vision of who is benefiting from the co-creation of value. For example, if an
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actor perceives its role in the network as amplified, it would demand a greater share of
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value. This confrontation implies continuous activities to change representations, possibly in real time while interacting, to promptly detach any negative misalignment. Representation of the value co-created can then be confronted with those of the value appropriated and activities implemented to recalibrate them. Value measurement affecting value appropriation. We learned from interviews that misalignment in value appropriation occurs especially when customers and suppliers use different proxies to evaluate their common business relationships. This in turn requires implementing actions to align metrics when discordant and to
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ACCEPTED MANUSCRIPT contextualize metrics with respect to the specificity of the relationship considered. As the appropriation of benefits generated from value co-creation happens not only through monetary flows but also through the appropriation of intangible resources, the difficulty in measuring some intangible components of value could also have a direct
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effect on value appropriation in terms of pricing (Hinterhuber, 2008). In addition, it is important to communicate not only the amount of value customer and supplier desire to appropriate but also the type of value, suggesting the ability to measure qualitative
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considerations along with quantitative metrics. Introducing joint thoughts about the amount and type of value that parties can appropriate would help to limit the
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formation of unreliable expectations of future value co-creation.
Value measurement affecting value co-creation. Lindberg and Nordin (2008) noticed that buyers put considerable efforts into objectifying and calculating the value of relationships. Our findings confirm the importance of measuring the value co-
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created, which also connects to value appropriation with the scope to understand if inequities are real or just caused by different measurement systems of the value cocreated (i.e., aligning metrics).
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Thus, the parameters customers apply to compare the value of their offerings with
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alternative ones should be contextualized to the specific relationship to avoid the formation of misunderstandings and an incorrect benchmarking activity.
Figure 3 summarizes the contribution of the study by illustrating the emerging patterns of interlinked value processes in business relationships and specifying the activities connected with each process. Compared to the generic framework gathered from the literature (see Figure 1), in which value co-creation presents only direct connections, our study clearly revealed a hierarchy among value processes: Most
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ACCEPTED MANUSCRIPT effects on value co-creation are indirect ones, hence mediated by other value processes. This point confirms the relevance of proposing a holistic view of value cocreation management that moves beyond activities for value co-creation. In our model, in particular, value appropriation is very central for enabling value co-creation
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because both directly link to value co-creation and all other processes. Indeed, the opportunity to appropriate in a fair way the value that parties contributed to co-create strongly depends on the quality of activities to measure the value co-created. At the
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same time, when value measurement is complicated and not reliable, for instance, in the case of intangible value or of future value in use, representations can be very
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useful to envision such value during communication.
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Figure 3: A model for value co-creation management based on interlinked value processes.
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ACCEPTED MANUSCRIPT 6.
Conclusions and implications for research and practice
The concept of value co-creation is and has been at the center of practice and theory in economics and in management. The assumption that value matters for the behavior of various market actors is commonly held as a prerequisite for explaining any
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business activity. Nevertheless, we have shown that existing research provides only a partial elaboration on the definition of relationship value activities for different value processes and their interconnections. Our findings thus respond to extant studies
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calling for more research on how value co-creation is associated with other value processes (see Aspara & Tikkanen, 2012; Gummeros, 2013; Salomonson et al., 2012).
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This paper contributes to theory by showing that enabling value co-creation implies considering many activities of another nature that can strongly influence it, both directly and indirectly. Value activities identified mostly refer to five relationship value processes: co-creation, communication, appropriation, measurement, and value
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representation. Overall, we showed how value co-creation works together with other relationship value processes to form a theoretical model for value co-creation management.
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Managers should consider these processes to gain a comprehensive view of value co-
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creation management in business relationships. Consequently, notwithstanding the complex nature of value co-creation as interactional, networked, and in continuous change, its management should lead to define specific activities related to this scope. Currently, managers pursue such actions mostly in a disconnected way and without recognizing value activities as a system. For these reasons, our study adopted the term “activities” rather than “strategies,” as strategy passes through managers’ realization of them and thus their coordination. The results of this study also highlight that value appropriation activities are very
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ACCEPTED MANUSCRIPT central in the model proposed as it is directly associated with all other value processes; opportunism frequently characterizes business relationships, and trust is often only a facade. Therefore, it should be better understood how to combine contractual-based mechanisms with trust-based ones to limit the effects of
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opportunism on value appropriation and, in turn, on value co-creation.
Similarly, value representation emerges as an interesting concept for future research as quite an under-investigated in the literature but very recurrent in our analysis.
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Value representation is key for both the purpose of co-creating value between the supplier and customer and achieving better coordination in the network. Moreover,
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value representations strongly influence value appropriation by entailing that representations are shared, at least partially, between parties. In a specific timeframe, it means adapting existing representations or generating new ones when the previous representations are no longer effective. This process is crucial, as the network can
for value co-creation.
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reorganize itself around new representations, thereby generating novel opportunities
This study also has some limitations. First, while we considered value activities
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recurrent in business relationships, we do not exclude the existence of others. Second,
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our analysis has been retrospective; it would be worthy to observe mechanisms that lead to change in value patterns in a longitudinal stance. Further research could then be aimed at moving beyond the customer and supplier perspective to gain an even richer picture on joint (common) value activities with respect to value co-creation, value communication, value appropriation, value measurement, and value representation. This could be of particular interest in the light of service-dominant logic stream of research, according to which the difference between customers’ and suppliers’ activities is diminishing as “all actors are
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ACCEPTED MANUSCRIPT fundamentally doing the same things, co-creating value through resource integration and service provision” (Vargo & Lusch, 2011, p. 211). In addition to that, this study provided a theoretical model, which could be further elaborated and tested quantitatively through proper scales.
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With regard to managerial implications, the paper is already oriented in a practical stance by identifying activities and actions to manage value processes. Overall, we highlighted the need for managers to think of value co-creation management in more
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strategic terms, which in turn implies defining a coordinated plan including different value activities and how they interconnect. This could expose to the necessity for a
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new figure in both customer and supplier organizations, which one could suggest as the “relationship value architect,” responsible for designing the different value processes and making them available to specialized value process managers. Different from the existing role of the relationship manager, who recalls more the relationships
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portfolio manager, the “architect” should have a whole picture of all value processes and their bonding. This role should be strategic and not limited to mere collectors of information, becoming an intermediate one between top management and specialist
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functions. Related to that, and given the growing importance of value representations,
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information design and data visualization provide interesting practical tools for the shaping of ideas, so that representations can be more straightforwardly realized, shared, and modified by interacting parties.
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Appendix
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Table 1: Customer companies interviewed divided by industry and key informants
Company
ABT
Aggiustami.it Alessandro Raspagni Anon Birino Calighting Santa Ceresoli Cleaf Dietan Digi International
Customer companies Industry Technologies for energy and automation Digital marketplace for car repairs Jewelry company Banking group Global specialist in electrical and digital infrastructures for home automation solutions Manufacturer of lighting solutions Health Services, service, and trade Production and tool sharpening Furniture Digital marketplace for home delivery services System integrators
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Interlocutor interviewed Senior sales engineer Owner Owner Network manager Buyer manager
CEO CEO Buyer Buyer Franchising manager Purchasing manager
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MFG.com Moraglione 1950 Omira OVV Picchiotti srl Scheinecker Suhner Su-Matic SRL
Owner Purchasing manager Supply chain manager Owner Buying manager Production assistant
Founder Member of the purchasing group Procurement manager Buying manager Raw materials buyer CEO, CAD manager Founder Buyer
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Tattid.com Tam Srl Technifond Teknos SRL TMP SRL Vartel Ventieventi
Technical manager Buyer Owner Technician Purchasing manager Vice-President Product quality responsible CEO General director Purchasing manager Owner Owner
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Manufacturer of sewing threads Industrial fastening systems Retail clothing and accessories Metal cutting Geotextile industry, China reseller Pharmaceutics Turbine manufacturer Distributor of ICT solutions Digital marketplace, food delivery Wind energy Jewelry company Online marketplace for CNC machining and plastic injection molding Jewelry company Mechanics Retail chain, clothing Jewelry company Cutting tools Manufacturer of mechanical components Digital marketplace for jobs Automatic lathes Foundry Technologies for hospitals Turning and milling precision Mechanics, speed reducers Events organization Technologies for energy efficiency, security, globalization, and productivity Toolmaker ICT distributor
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Filpproject Pisher Fratelli srl Gaillard SA Gootextile Gura Harbin Turbine Co. Ltd Isead Iate Kit Luca Carati srl
Wumi precision Machinery
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YY-1 Italia Yoram
CAD manager General director, Buyer
Table 2: Supplier companies interviewed divided by industry and key informants
Supplier companies
Industry Precision tools Management systems for big data System-based composite materials Cloud computing technologies High-precision cutters Digital intelligence Company Clothing Solutions for imaging Buttons producer Consulting services on export Industrial robotics Sales training Strategic consulting and marketing Market research Producer of fibers for industrial applications Energy Energy Cured meats Medical imaging Precision tools Strategic consulting Ropes and cables for marine applications
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Company Alfa Globat Altilia Arsea Progetti e Sistemi Akai Burga Buzza Cangiari Cani Casta System Co-tark Carau Dale Dialogica Dota Metrics DSM Dyneema B.V. Eno Fedayo Beretta Ginara elec Gibas Tools Giotto Maffioli
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Interlocutor interviewed Key account manager CEO CEO Country manager Key account manager Founder Owner Service line manager Owner CEO Business developer Business developer CEO CEO Consultant Sales business intelligence Country manager Channel manager Sales specialist Sales manager CEO General director
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Miller Miracle
Strategic consultancy Data management systems
Primavera & Partners Reput Sacel SRL
Consulting Market research-consulting Design and construction of progressive dies for production details CRM software provider Distributor of high precision tools
Sopforce SEF Meccano Tecnica Salesbot Sigi Skorpion
Software house Design and development of industrial prototypes Endpoint and network security China reseller
Network manager Sales manager CEO, business developer, and sales manager Consultant Sales executive middle-sized market Owner Sales director Project manager
Vice-President Italy General director Country manager Owner
Purchasing Manager Sales manager
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Sophos Summit Precision Engine Products Tecnica Tormatic Srl
Marketing and sales manager CEO Marketing manager General director Sales assistant
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Mechmet MG Sanders Mivron Tools
Renewable energies Products for hydraulic applications Science and technology park Toy manufacturer Construction of molds, sheet metal stamping, and turning Network of companies in mechanics Precision engineering Mechanics, high precision tools
SC
Innovamec Hytac Kilotetro Fitos Meccanica Franchin SNC
Producer of special cables Production of components for turning high-precision mechanics Document management company and business process outsourcing Digital marketplace, online shopping 3D printing and service
Zeto
Top account manager
Country manager Sales manager
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Zolata 3DP
Channel manager CEO
Table 3. Supporting data for second-order concepts.
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First order concept
Secondorder concept
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“The ability for relational adaptation is important in increasingly changing contexts. This could also boost people to co-create value by developing solutions outside the box.” (Business Developer, Carau) “We try to manage the complexity of the organization in order to simplify the relational experience of customers and employees”(Country Manager, Zolata)
Adapting
“Our organizational structure allows us to easily adapt to changing customer needs.” (Owner, Aggiustami.it) “The problem lies in motivating salespeople to invest their time in training and coaching other people” (CEO, Hytac) “Our persons try to combine different pieces of knowledge to better manage relationships and seek out opportunities unused.”(Oracle, Sales Executive) “We are introducing the figure of the ‘global account manager full portfolio’, which manages single customers and develops for them a full portfolio of services. In this way, sales managers deal with a greater number of heterogeneous business areas. This change was obviously destined to influence the figure of the buying manager whose responsibilities would become less parceled as well.” (Dota, Top Account Management)
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Bridging
ACCEPTED MANUSCRIPT “The customer company should also verify who is going to appropriate the value inside the supplier firm primarily: if the company, the business unit or the individual. This would allow understanding how to bridge collective and individual interests of the counterpart.”(Reputation Institute, Sales Director)
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“Digi recently introduced a modeling team and a new role, the modeling engineer, responsible for building and offering models to customers by drawing upon information from all the divisions involved: sales, operations, finance and so on.” (Digi International, CEO) “Customers expect their supplier to be a trusted advisor”(CEO, Dialogica) “Selling complex solutions almost always requires a customization of the sales process itself, and salespeople are required to play the role of entrepreneurs when they develop their territories for such solutions” (Alfa Tool International, Key account Manager)
Advising
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“We developed sophisticated software to allow salespeople to elaborate in realtime offerings tailored to customers’ needs. As such, during the first meeting the presence of a technical person is not required anymore.” (Marketing and Sales Manager, Innovamec) “It’s mandatory to connect with the customer at any time the customer journey, granting a fluid and consistent experience through each channel”(Primavera &Partners, Owner) “We should not learn to play individual instruments, but conducting an orchestra”(Dietan, Franchising manager)
“In the new organization, too many persons can express an opinion on an issue, but then it is not clear who undertake the final decision. Sometimes I ask: Who is the responsible for such activity? And no one knows” (Dale, Sales Director).
Managing multiple touch points
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“Many times dysfunctionality are not managed by the top management, letting the time to harmonize them; but often time only exacerbates them.” (Isead, CEO) “Systems of artificial intelligence should understand and interact with the client in a way even more intuitive and closer to human intelligence; they should be able to provide personalized recommendations for each customer, in each channel and circumstance (ABT, Senior sales engineer)
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“All our offices worldwide are exactly the same in terms of spaces, furnishings, colors, layout, so that employees and visitors so that people are facilitated when moving from one site to another”. (LEGO, General Director). Translating
“What is the language of your interlocutor? Because it is useless to explain the technical or the advanced technological aspects if he/she does not understand the topic.” (CEO, Vartel).
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“When more individuals are involved in negotiations, it is a positive action to informally confront each other about what the parties understood by repeating the main points of the content of the conversation, and then prepare a formal written summary of each meeting to be shared with the parties involved”(Reput, Founder) “ICT support, phone calls, presentations sent by email, teleconference…they are all useful, but none of this can ever substitute for a motivated, prepared and passionate person in reducing perceived uncertainty.” (Miracle, Supply Chain Quality Director) “To align people need to trust each other, they need to talk face to face; they are ‘soft’ aspects which are very important and can determine the failure of the whole process of change. Putting a name in the organization chart is definitely not sufficient”. (DSM Dyneema B.V, Consultant).
"I have friends among suppliers and I tend to promote them. Since I know how they work, I’ll save relational costs." (Digi International, Marketing Manager). “When I succeeded my father in running the business, the customer snubbed me for 53
Developing interpersonal interactions
ACCEPTED MANUSCRIPT a long time due to perceived insecurity.” (Luca Carati srl, Owner) “Our products have not been present in the Italian Auchan retail chain for five years simply because our Sales Director and Auchan’s Buyer did not like each other on a personal level” (Omira, General Director).
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“Establishing the right attitude implies knowing people otherwise the risk is that you spend a great deal of time and energy trying to overcome resistances.”(Dale, Business Developer) “Bigger companies will tend to exploit their power and appropriate higher part of the value created by their sub-contractors” (Fedabo, County Manager) “Stakeholders with misaligned power have dissimilar access to relationships and resources. This misalignment may even lead stakeholders to view the appropriation of value as an allocation—something that is not chosen deliberately, but assigned by others.”(Venti Eventi, Owner)
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“The longer the relationship, the more likely a party will pretend to appropriate a higher portion of value, for the customer in terms of new services, reduction in prices, more favorable payment conditions” (Primavera & Partners, Owner)
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“An agent that works for the company is a person who is almost dangerous: it is always a balance between working for the company and for himself.” (General Manager, Calighting). “We accidentally discovered that the customer attached to our product a mark-up equal to our margin, and also applied incredible pressure on us to reduce prices ....” (Vartel, CEO) “Before you run out to create content for your potential clients to research, understand that your content is useless if it lacks honesty and transparency. You should always be looking out for their best interests, whether or not that means making a sale.”(Casta system, Owner)
Limiting opportunism
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“Why should I promise to the others what I am not even able to keep to myself? It seems to me too much, so I try to make the best of the current situation. Parties should try to be both at ease without forcing the relationships and generating, in turn, a state of embarrassment” (CEO, Calighting).
EP
“Tio, the distributor, disregarded the rules of the channel and dealt directly with us, the customer, skipping the reseller. Nevertheless, this is not our problem; the channel model is sometimes imperfect. When the distributor knows the solution better than the reseller, we can even benefit from this kind of misconduct.” (Digi International, Purchasing Manager).
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“People should not feel too locked into contractual constraints that can limit new forms of value co-creation”(Yoram, Buyer) “If you give your client the choice to renew or leave every month, then you’ll have your finger on the pulse of your market.” (Eon, Sales Business Intelligence) “Value should be verified periodically, some shared control points implemented, and, when goals are not achieved or an unequal value appropriation is realized, a back plan implemented.” (Co-tark, CEO) “Suppliers limit clients’ tendency to ask for the lowest price, rather boosting them to look at the potential of the relationship as a whole.” (Burgmaier, Key account manager) “The ICT distributor Esprinet considers the system integrator Digi as a partner, while Magirus sees it as a competitor, limiting the opportunities for value cocreation”(Anonymous, Network manager) “In applying for collective tenders, there are companies who propose prices that don’t cover expenses even though they win! Can they really provide the service under such conditions? In the long term, will the customer be really satisfied with 54
Collective anchoring
ACCEPTED MANUSCRIPT these suppliers?” (General Director, Dota Metrics). “Whereas 80% of senior executives felt that their company provided a superior customer experience, no more than 8% of their customers agreed.” (Dialogica, CEO) Aligning metrics
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“Traditional metrics, such as sales and pipeline-generation, are not considered sufficient metrics to measure the success of the business. The importance of measuring intangible assets, such as the customer experience, is strategic.” (Kilotetro, Consultant)
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“The use of KPIs could make communication less ambiguous and more anchored to elements that parties can easily represent and therefore around which to organize discourses.”(Mechmet, Channel Manager) “Measuring relationship value in supplier firms is linked to the measurement of salespeople's performance. To avoid salesmen focusing only on short-term financial results, multiples metrics evaluations should be implemented, such as teamwork competencies, self-management, adaptability, problem solving, communication skills, client focus, and many others”(Akamai, Country Manager)
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“It is time to start tracking the customer experience along with ability to generate revenue: Analytics is a beneficial tool for understanding customer sentiment even in btob and not only btoc” (Business Developer, Carau).
“Traditional metrics such as sales and pipeline-generation are not considered sufficient to measure the success of the business. In other words, quota-related metrics are not effective in measuring relationship value, leading to the need for new KPIs”. (Zolata, Country Manager)
Contextualizing
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“The use of standardized examples by the supplier should be limited in favor of attempts to support customers and retailers in calculating the performance of the solutions offered, beginning with the measures that are familiar to them” (Fisheritalia, Buyer)
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“Unfortunately nowadays the economic part of the offering has a much higher weight than the technical one. Quality was not valorized compared to price”(Dotametrics, General Director) “Compare the risk with return and therefore represent the cost of inaction versus action benefit. This representation should be memorable in order to generate not only rational but also emotional involvement, create a sense of urgency, and avoid procrastination.” (Teknos, Procurement manager) “If you want your entire message to be consumed, video tends to be the preferred medium.” (Wuxi Wefuautocam precision Machinery, Buyer)
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“In the 3D printing case, architects, designers, inventors, craftsmen, but also individuals can more easily see translated their ideas into a physical product. Interest groups are built around ideas and projects giving rise to a new form of entrepreneurship that exceeds the logic of traditional marketing and becomes more social.” (3DP, Sales Manager) “Inside of social media it is important to not only listen to conversations, but try to give a shape to perceptions.” (Ate, General Director) “By accessing our CRM by mobile device we can be in contact with our customers whenever and wherever. When reps have data, analytics, and automation in their hands, they can interact with customers, collaborate, and close deals from anywhere, at any time.” (Salestop, Vice President Italy) “Today, you have to add and show value during the sales process, not just when the contract is signed.”(Sophos, Purchasing manager) “We realized that many consumers and doctors establish negative associations with the ‘homeopathic medicine’ as not being effective. They thus developed the
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Confronting representations
Changing representations
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concept of ‘low-dose medicine’ instead of homeopathy. This change has allowed the creation of more value in the entire value chain, including doctors and pharmacies” (GURA, President)
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S0263-2373(18)30096-3
DOI:
10.1016/j.emj.2018.07.007
Reference:
EMJ 1873
To appear in:
European Management Journal
Received Date: 27 August 2017 Revised Date:
4 July 2018
Accepted Date: 24 July 2018
Please cite this article as: Corsaro D., Capturing the broader picture of value Co-creation management, European Management Journal (2018), doi: 10.1016/j.emj.2018.07.007. This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
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Capturing the Broader Picture of Value Co-creation Management
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Daniela Corsaro, Ph.D. Associate Professor of Marketing Department of Business, Law, Economics and Consumer Behavior IULM University Via Carlo Bo’ 1, 20100 Milano, phone 0039-2-891412664 [email protected]
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Capturing the Broader Picture of Value Co-creation Management
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Abstract
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The interactional, interdependent, and dynamic nature of value co-creation has made value management in business relationships a particularly challenging issue for both academicians and practitioners. In addition, studies on this topic have mostly focused on managing value co-creation in isolation from the wider relational context without completely capturing the influence of other value processes on value co-creation. This paper examines the broader picture of value co-creation management by providing a model based on interlinked value processes, namely, value communication, value appropriation, value measurement, and value representation. We adopted a qualitative approach based on 86 interviews with managers of both customer and supplier companies, which operated in different industries. Results showed that the management of value co-creation implies considering complex patterns of interconnections with other value processes. In particular, the study will shed light on the centrality of value appropriation to co-create value and on the importance of value representation to coordinate ideas and enable future co-creation opportunities.
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Keywords: relationship value, value co-creation, value management, value appropriation, business relationships.
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ACCEPTED MANUSCRIPT 1. Introduction
Value is the main anchor of management decisions, and as such, it has a long tradition in the study of economics and business management. In business-to-business
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marketing in particular, where the role of relationships is emphasized, recent contributions have shown the complexity of the value concept in an interactional and networked setting (Büchel & Raub, 2002; Grönroos, 1997; Gummeson, 2006).
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Value co-creation implies that both the supplier and customer are actively involved in the value process (i.e., products, services, and/or knowledge components), a mutual
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process and a matter of ongoing adjustments (Anderson et al., 2009). This process is influenced not only by supplier-related factors but also by customer-related factors with regard to what type of value proposition is suitable for particular use contexts (Gummesson, 2006; Vargo & Lusch, 2004).
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Recent literature has further stated that value is co-created in interactive processes that occur in use (Grönroos, 2008; Håkansson & Snehota, 1995; Vargo & Lusch, 2008). This research has shown that value co-creation results in a complex process, where
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heterogeneous actors and resources are involved, the contextual conditions modify
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rapidly, and conflicts and misalignments are frequent between interacting parties. Scholars in service-dominant logic (Vargo et al., 2008), for instance, assume that value co-creation depends on the conditions of a specific situation that, in turn, shape and refine actors’ perceptions of the value they experienced (Chandler & Vargo, 2011; Edvardsson et al., 2011). Therefore, as with any other category of social action, the business, cultural, and social contexts influence economic behavior and its consequences. Aitken and Paton (2016) also discussed the temporal, contextual, and actor-related
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ACCEPTED MANUSCRIPT nature of value perceptions, which are situational and contingent on factors that are both internal and/or external to the relationship itself (Flint et al., 2002). All these elements—subjectivity, interdependence, context dependency, interactivity, and dynamicity—made the management of value co-creation in business relationships
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a particularly challenging issue for both academicians and practitioners. Managing value co-creation is an intricate issue due to the difficulty in ensuring the goaloriented behavior of more parties toward complex goals, combined heterogeneous
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resources, distributed power, and holistic network dynamics (Darbi & Knott, 2016). In addition, given that value is co-created in use, it is not easy to define the portion of
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value realized that each party should capture and to implement those actions to maintain the relationship in equilibrium. Notwithstanding these difficulties, managing value co-creation remains a priority, even more so in light of the increased number of informal collaborations, formal business relationships, and failed alliances (Ritala &
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Tidström, 2014; van Fenema & Loebbecke, 2014).
Specifically, two gaps have emerged in the research on the management of value cocreation in business relationships. First, scholars’ attention to value management has
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often been devoted to develop general insights that are difficult to apply through
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managerial practice (Holtgrave, Nienaber & Ferreira, 2017), whereas there is a need to develop a framework for value co-creation that is also useful to the company’s management (van Rensburg, 2012). Business-to-business (B2B) managers have identified the management of value co-creation as a top priority (ISBM, 2012). However, to be useful, the process should become less abstract for practitioners and easier to be translated into real-life business. Second, different studies show that many attempts to manage value co-creation in business relationships fail, leading to tensions, conflicts, and in some cases
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ACCEPTED MANUSCRIPT relationship termination (Laamanen and Skalen, 2014; Grayson & Ambler, 1999; Chowdhury et al., 2016; Anderson & Jap, 2005; Vafeas et al., 2016). But these investigations have focused primarily on understanding the activities for managing value co-creation, considering them in isolation from the broader relational context
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(see Payne and Holt, 1999; Vargo et al., 2008; Aarikka-Sternoss & Jakkola, 2012; Anderson, 1995) and thus leaving out how value co-creation is connected to other value processes (Corsaro, 2014; Edvardsson et al., 2011; Grönroos, 2011).
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Considering the complexity of the value co-creation concept as interactional, interdependent, and dynamic, it may be beneficial to investigate the interlinks
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between value co-creation and other relationship value processes to offer a richer and more nuanced picture of value co-creation management.
In this paper, we define value processes as a set of actions grouped into activities that generate specific outcomes for the actors involved in business relationships (Weske,
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2007; Davenport, 1993). These activities reflect the nature and characteristics of the complex and emergent interaction processes characterizing business relationships. We refer in particular to those value processes that B2B marketing scholars have mostly
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studied in connection with value co-creation: Value appropriation, value
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communication, value measurement, and value representation (Corsaro, 2014; Cox, 2004; Ballantyne & Varey, 2006; Gadde & Snehota, 2000). Given the two research gaps above, our research questions are as follows: What are the main activities to manage value co-creation in business relationships? How do activities to manage value co-creation interrelate with other value processes? To gain a holistic and multisided picture of value co-creation management, the empirical research consists of a qualitative study involving 86 in-depth interviews, with key interlocutors in customer and supplier firms operating in different industries.
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ACCEPTED MANUSCRIPT This research aims to capture the broader picture on value co-creation management by identifying most relevant interconnections among value processes and developing a model that offers insights into activities for the management of value co-creation in complex, heterogeneous, and changing business relationships.
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Our results will show that enabling value co-creation implies consideration for many activities of another nature, which can strongly influence value co-creation both directly and indirectly. This study constitutes a bridge between the complexity of
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conceptualizing value co-creation in a relational setting and the need to provide clearcut indications for business practitioners. Therefore, as the study adopts a granular
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perspective, it will contribute to both to advance theoretical knowledge on value cocreation management and bring theory closer to managerial practice. The paper’s structure follows. Section 2 contains the literature review on value cocreation management and examines contributions to intertwined relationship value
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processes. Section 3 describes the study method, and Section 4 illustrates the findings. Section 5 discusses results from the empirical study, whereas Section 6 ends the paper
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with the conclusions and implications for research and practice.
2. Literature review
Managing value co-creation in business relationships
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2.1
At the beginning of 2000, Prahalad and Ramaswamy (2000) suggested that the place for value creation was shifting from the research and development (R&D) department of a company to the interaction between the company and its customers; such an idea created a stream of research subsequently called “value co-creation.” Applying a service logic, Grönroos and Voima (2013) distinguished value creation from value cocreation: Value creation concerns the customer’s creation of value in use, whereas value co-creation only takes place in a joint value sphere. In that vein, the role and 5
ACCEPTED MANUSCRIPT activities pursued by the supplier vary depending on the degree to which the supplier can influence the application of its resources. The authors also stated that value propositions should convey the potential value that suppliers and customers can cocreate in their interactions over time; the company offering, therefore, should be seen
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as an input that becomes part of the process of value creation for the customer and not as its output (Ballantyne et al., 2011; Frow & Payne, 2011; Payne & Frow, 2014). In other words, the customer becomes an endogenous variable for the company and part
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of the value network (Büchel & Raub, 2002).
Scholars agree that specific actions are required for value co-creation to generate
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positive outcomes and grant the development of business relationships over time. Aarikka-Stenroos and Jaakkola (2012) analyze the key activities constituting the dyadic value co-creation process of complex offerings. Their study demonstrated that value co-creation occurs through a dyadic problem-solving process encompassing five
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key activities: diagnosing needs, designing and producing the solution, organizing the process and resources, managing value conflicts, and implementing the solution. Haas et al. (2012) also adopted a mutual perspective and identified value co-creation
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activities involving both customer and supplier into jointness, balanced initiative,
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interacted value, and socio-cognitive construction, highlighting the subjectivity of value perceptions. However, Payne and Holt (1999) argued that while much of the literature has focused on value co-creation for the customer, the relationshipmarketing paradigm demands a broader view. They thus provided a framework for managing value co-creation that distinguishes three key stakeholder groups: customer, organization, and external stakeholders, each of them representing opportunities for value co-creation. A few years later, Payne and Frow (2014) further stated that value
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ACCEPTED MANUSCRIPT co-creation management organizations entails to take an integrated approach that links employee, customer, and shareholder value. The previously mentioned studies undoubtedly have the merit to identify activities to manage value co-creation. Nevertheless, only a few of them considered connections
2012), as will be discussed in the next section.
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2.2 Value co-creation and the other value processes
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between value co-creation processes and the other value processes (Hammervoll,
Value co-creation is dependent on other relationship value processes; even though,
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interconnections among value processes have not been considered in a systemized way, thereby overlooking a more holistic view of value co-creation management (Salomonson et al., 2013; Hammervoll, 2012).
Value processes include activities and actions that generate specific outcomes for the
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actors involved in business relationships (Weske, 2007; Davenport, 1993). Our study considers those value processes that have mostly been studied with respect to value co-creation in B2B marketing literature. We refer in particular to value co-creation,
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value appropriation, value communication, value measurement, and value
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representation (see Cox, 2004; Ballantyne & Varey, 2006; Gadde & Snehota, 2000). In the following, we present how the literature discussed value co-creation with respect to each other value process. Value co-creation and value appropriation. Value co-creation is not sufficient for the effectiveness of business relationships; companies must also be able to appropriate the value co-created. For strategy scholars, value appropriation is the portion of the total value created that the various participants in the system have been able to capture, and which in turn depends on the parties’ bargaining power and their position within the
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ACCEPTED MANUSCRIPT network (Brandenburger & Nalebuf, 1995). Actors with more power expect to take possession of a larger share of the value co-created (Cox, 2004), generating value slippage. The rate of slippage of the value depends on the direct and indirect competition and on the isolation mechanisms provided (Lepak, Smith, & Taylor,
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2007).
Aspara and Tikkanen (2012) demonstrated that placing a high emphasis on the cocreation of new value and a low emphasis on its appropriation help to achieve a high
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average growth rates because the focus on appropriation distracts management attention and resources. The authors explained that managers should choose value
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configurations that consider value creation and value appropriation jointly rather than relying only on dimensions that are independent of each other. According to Pardo et al. (2006), the “degree of value appropriation is dependent on the degree of its creation and is driven by other aspects of the relationship (force, negotiation skills,
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etc.) that characterize the different patterns of interaction” (p. 1368). Henneberg et al. (2009) also asserted that relationship value activities should aim to identify activities to manage internal, exchange, and relational values, which are co-created and
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appropriated within a relationship.
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Value co-creation and value communication. Research seems to similarly support the fact that value co-creation activities are connected with value communication activities. Communicating the value proposition, however, is a particularly tricky question in the context of value co-creation. It is no longer a one-directional concept, but rather should involve all parties in a constant dialogue and common sense-making activity. Relationships with suppliers, customers, and other market players improve when they are engaged in continuous dialogue, an element that allows both sides to become co-creators of value (Gummenson, 2004).
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ACCEPTED MANUSCRIPT Ballantyne et al. (2011) explained that the development of a platform for interactive communication process to co-create value should include the following activities: check the interaction of specific episodes in the development of mutual value proposition, verify the relationships between network actors, and prove the value of
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integrated resources by the counterparty. Salomonson et al. (2012) also identified three activities of communication between supplier and customer aimed at value cocreation: customer focus, discernment, and receptivity, which expresses the level of
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understanding and agreement with the customer. In general, communication activities
creation (Krause & Ellram, 1997).
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influence value perceptions and the development of trust, which is key for value co-
Value co-creation and value measurement. The value co-created needs also to be measured as a basis for decisions in terms of appropriation. In general, the value that a party receives from the relationship is difficult to verify. Most of the co-created value
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is intangible and, therefore, hard to measure when employing normal accounting techniques: If some value dimensions are rather simple to identify, measure, and quantify, others are not, such as those that are indirect and dependent on secondary
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activities (Gadde & Snehota, 2000).
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Keränen and Jalkala (2013) identified activities for value measurement to co-create potential value into checking the customer base, evaluating the performance, identifying the long-term value, and managing information systematically. They have also stressed that value measurement should involve continuous activities along the value creation process, rather than be an assessment performed only at the moment of transferring the offer. Value co-creation and value representation. Value co-creation has resulted from the enactment of practices among multiple actors; therefore, there are many perspectives
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ACCEPTED MANUSCRIPT of value, or in other words, value heterogeneity. One of the biggest challenges that management has thus faced is to deepen the relationship with customers to help them “see” in its entirety the value proposition that is offered (Kindström, Kowalkowski & Nordin, 2012). Value representation has been defined as “how an actor translates its
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own idea of value into something that can be observed by the other actors, and its meaning shared among them” (Corsaro, 2014, p. 992). Therefore, on the one hand, there is the process of representation; on the other hand, there are representations as
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outcome objects. Anderson, Narus, and Van Rossum (2006) determined the importance of activities aimed at demonstrating value through value case histories,
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value calculators, and value-generating planning.
Inter-cognitive representations inscribe shared understandings and thus provide an objective basis and guidance for further interactions (Mouzas & Henneberg, 2015). For instance, new actors who enter a relationship may be unaware of previous
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interactions and attribute new and different meanings to representations left by previous communications (Mason & Leek, 2012).
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Figure 1 illustrates the above discussion. We can notice that the framework emerged
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from the literature is quite nonspecific and in such a way “flat”: Value co-creation is in a central position, and interlinks have been mostly considered between value cocreation and each other (single) process, while not presenting a more comprehensive picture of their multiple interconnections. Even if we look at the recent literature, scholars have underscored the need for more research on how value co-creation is supported by value communication (Salomonson, Åberg, & Allwood, 2012), on the linkage between value co-creation and value appropriation (Aspara & Tikkanen, 2013; Bowman & Ambrosini, 2000; Lepak et al., 2007; Lindgreen et al., 2012), how
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ACCEPTED MANUSCRIPT value co-creation is translated into value metrics (Anderson, Narus, & Narayandas, 2009; Gummeros, 2013), and what is the role of value symbols in value co-creation (Akaka et al., 2014; Kindström et al., 2012; Corsaro & Kjellberg, 2012). Therefore, such literature seems to neglect the need for a framework where
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interconnections among multiple value processes are explicated. This could mean to draw a picture even more articulated than Figure 1, but somehow more useful for practitioners as reflecting the real complexity of their business interactions. To reach
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this goal and understand higher-level interconnections among value processes, we
characterize each value process.
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adopt a granular perspective, which passes through the identification of activities that
Figure 1: A generic framework on value processes in business relationships from the literature
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Value appropriation
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Value communication
Value co-creation
Value representation
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Value measuring
ACCEPTED MANUSCRIPT 3.
Research method
3.1 Research approach
This study explored activities to manage value co-creation processes gaining an
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understanding of value co-creation management from the actors’ own perspectives and in a process-oriented way (Blumberg et al., 2008). A qualitative study was applied to facilitate the rich and in-depth descriptions necessary given the nature of
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the phenomenon in question, which is both complex and multifaceted (cf. Patton, 1989). The epistemology position is interpretivist, according to which there is no
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single external reality. For the interpretivist, “[…] the research endeavor is itself an act of story making and storytelling” (Hopkinson & Hogg, 2006, p. 158). Reality exists through perceived knowledge, seeking to understand specific context (Carson et al., 2001, Hietanen et al., 2014). Consistent with this epistemological position, our
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methodology concentrates on interpretation, where the use of preunderstanding is important. We thus attempted to understand subjects in the context in which they act to account for complexity and context dependency (e.g., Flyvbjerg, 2006).
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The research followed an abductive process: Data collection, analysis, and the search for complementary theories constitute parallel iterative processes in which the
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researcher moves back and forth between theoretical concepts and field observations in an effort to enhance the understanding of both theory and data during that process (Dubois & Gadde, 2002). Theoretical structures and empirical observations develop concomitantly and interactively in an abductive approach, which facilitates the study of the holistic characteristics of inter-organizational relationships (Robson, 2002). This alternation allowed gaining a better understanding especially of the value representation process, which is one of the less studied processes in the B2B marketing literature. 12
ACCEPTED MANUSCRIPT Further, instead of following only a logical process, the advances we proposed have been often achieved through an intuitive leap that comes forth as a whole, and this can be called abductive reasoning (Taylor et al., 2002). For instance, intuition has been particularly significant to find out clues that B2B managers to coordinate their views
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in context characterized by information overload increasingly use representations and visual aspects.
The presentation of our findings also reflects this abductive approach, as empirical
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findings and theoretical considerations are alternated and combined.
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3.2 Data gathering
A purposive or theoretical sampling procedure was used to recruit managers across functions and hierarchical levels in multiple industries (e.g., Bendapudi & Leone 2002) and to ensure coverage of close business relationships that have frequent
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interactions and involve actor-to-actor relationships. We decided to include organizations of various sizes as this might uncover a broader range of views and be more representative of the population. Heterogeneity of contexts in which companies
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operate was thus sought to achieve a multisided and rich perspective of observations (Kohli & Jaworski, 1990), maximize diversity among participants, discover various
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potential relationship value activities (see Ulaga & Eggert,
2006), and
interconnections among them. We believe that this approach would be revealing, given the acknowledged differences in their respective value systems (Krause & Ellram, 1997).
The qualitative study consisted of 86 semi-structured interviews conducted with key referents in Italian companies or Italian branches of global corporations. Data were acquired from 39 customer companies and 47 supplier companies in a range of industries (mechanics, automation, consulting, ICT, distribution and retail, and 13
ACCEPTED MANUSCRIPT business services, among others) in organizations of different sizes (see Table 1 and Table 2 in Appendix). We conducted interviews in Italy in 2016. To allow for comparability, we relied on key informants—namely, managers who were influential decision-makers involved in
roles,
with
significant
responsibility
for
managing
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customer/supplier relationships. All respondents held primarily senior management interactions
with
the
buyer/supplier. The informants in customer organizations were mostly CEOs,
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entrepreneurs, and buying managers (see Table 2 in Appendix). The informants in supplier firms were most often CEOs, entrepreneurs, salespeople, and marketing
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managers (see Table 3). For confidentiality reasons, we used fancy names to indicate companies.
We were interested in the viewpoints of individuals who could accurately describe relationship dynamics. These referents were already connected with the University’s
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research center, which ensured a higher level of engagement with the research goals. To ensure quality and reliability of the information collected and to motivate the informants’ participation, the researchers contacted all managers interviewed in
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advance. We applied a data triangulation technique (e.g., Beverland & Lindgreen,
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2010; Huberman & Miles, 1994) that involved information collection from firms’ websites, articles on news, and reports from associations in which the companies took part (for instance Confimprese, Confindustria, FNDI, etc.). We also applied information feedback and contacted managers a second time to verify the accuracy of their comments and obtain their permission to quote. When the study was concluded, we also provided respondents with a summary of the research results. Of the 86 interviews, 52 were conducted face-to-face, whereas the remaining interviews were conducted by using Skype with camera video included, thus offering
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ACCEPTED MANUSCRIPT a reliable and familiar alternative to managers. Data collection lasted 18 months, with a significant amount of time expended on gaining access to managers with relevant experience. The unit of analysis for this study was the relationship as formed by a series of
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relational episodes (Ravald & Grönroos, 1996), including actor–actor interactions that create value outcomes and which have been managed through specific activities. The focus is on actors who participate in B2B relationships in the context of business
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networks. We thus focused on interactions between customers and suppliers; third actors, both organizations and consumers, have been included in the analysis when
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they were involved in the focal relationships analyzed.
3.3 Interview scheme
We used a semi-structured set of questions for the interviews, which provided the
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formality necessary to analyze complex phenomena and allowed for the emergence of unexpected issues (Wengraf, 2001). Interviews were divided into two parts. First, we invited respondents to map the history of the relationship (Musson, 2004) with the
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most important supplier (in terms of purchasing volumes) or customer (in terms of sales revenues) (see Ulaga & Eggert, 2006). Managers shared their experiences in
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business relationships with respect to key episodes and critical incidents. Accordingly, we used the definition of critical events provided by Schurr, Hedaa, and Geersbro (2008): happenings relevant to a party at a given place and time. Critical events in business relationships depend at least in part on the perceptions and intentions of the actors; these are events that one participant considers problematic and confusing (Halinen et al., 1999). Once an interesting element emerged, we guided the discussion toward interactions and episodes that characterized it, which effects the events generated, how actors managed them, and in which way such effects have influenced 15
ACCEPTED MANUSCRIPT other activities. For instance, the Casta system, a specialized producer of buttons, discovered that its best customer asked a Chinese supplier to copy its tailored button sample. The Casta system has perceived this event as very critical for the company, which raised issues about managing the counterpart’s opportunism.
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The five-value processes have been used as an underlining guide for the interviewer, but without making it explicit for the respondent to avoid influencing him/her. For example, regarding value communication, we posed open questions, such as “Could
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you tell me which main problems you find to communicate the value of your offering to customers?” “How do you try to make simple a complex concept for your
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customer/supplier?” We followed up with more specific questions, such as “Could you give an example of a situation in which a communication problem generated important consequences for the relationship with your best customer/supplier?” “Which further interlocutors have been influenced apart from you? and “How have
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you tried to minimize such effects?”
The second part of the interview was more structured as discussion themes, which enabled the interviewees to raise matters that were not specifically queried (Hesse-
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Biber & Leavy, 2010); for instance, some interviewed people made a parallel between
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the focal relationship analyzed and other relationships or highlighted how value cocreation changes as an effect of digitalization and the uncertainty derived from it. The time dimension of relationship value management was then captured by analyzing, in a retrospective way, episodes that occurred over time to determine how they were connected to previous, present, and future events (Medlin & Törnroos, 2014). During interviews, we followed up with additional questions requesting clarification, examples, and more details regarding potentially interesting ideas. All interviews were recorded and transcribed.
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ACCEPTED MANUSCRIPT 3.4 Data analysis and quality As this research is interpretive, the analysis process materializes in an oscillation between the parts and the whole, in which we can only give meaning to the part if we
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can put it into a systemic and holistic context (Gummesson, 2003). Andersen (1995) described the researcher’s role as “interactive consultant”—a definition that fits our interpretivistic research position well because it promotes entering the world of the
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respondents and understanding the environment from their perspective (Saunders et al., 2011). Because of the multiple interactions across the episode, we attempted to
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juxtapose this evidence with descriptions in the literature. When we found differences, we engaged in the subsequent data analysis. We continued this process in an iterative fashion throughout the development of the research. Data analysis involved a detailed coding process that identified the major themes
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addressing the research objectives of the study. Primarily, we selected a particularly rich transcript from each respondent and analyzed these transcripts, line by line, to develop an initial list of first-order concepts, the value actions, intended as practical
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initiatives to manage specific interaction episodes (Ravald & Grönroos, 1996; Schurr et al. 2008). As subsequent transcripts were coded, the set of concepts expanded.
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Once this initial coding was complete, we searched for associations between firstorder concepts (value actions) and categorized them into higher-order and secondorder concepts, i.e., value activities (Weske, 2007; Davenport, 1993). Each value action described by the respondents was episodic and referred to a specific interaction event; therefore, our analysis was aimed at revealing the common actions across different relationships and grouping them. We categorized them into 12 themes that reflected similar value activities. The coding of value activities was followed by an abstraction to the overarching 17
ACCEPTED MANUSCRIPT aggregate dimensions (value processes). For example, activities were labeled as “alignment in metrics” and “contextualization”, and aggregated to the theoretical dimension of value measurement activities. Selective coding then followed to provide rich descriptions of the focal phenomena and the interrelationships among value
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activities.
To drive the analysis, any idea or insight should be applicable beyond a specific context, such as a firm or industry, and multiple participants should have mentioned it
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(see Bendapudi & Leone, 2002). Thus, we do not include industry-specific ideas, actor-specific ideas, or ideas mentioned by only one participant but selected the most
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cited ones.
The narrative approach was then used to present findings from interviews (e.g., Czarniawska, 2004; Hummel, 1991). Every narrative offered a plausible reason for a particular outcome and the connected sequence of events, thus reducing equivocality
meaningful realities.
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(Weick, 1995). From our interpretivist position, stories themselves construct
In the interest of establishing trustworthiness, we provide “proof quotes” in Table 3 to
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offer supporting data for value activities (second-order concepts). These are in
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addition to the quotations contained in our findings section. Quotes were used in the empirical scenarios to give insights into the respondents’ views and reasoning used to provide a chain of evidence as well as a sense of the context.
4. Findings The data structure illustrated in Figure 1 shows aggregate dimensions in terms of value processes (value co-creation, value communication, value appropriation, value measurement, and value representation); second-order concepts (value activities that
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ACCEPTED MANUSCRIPT compose each process); and first-order concepts (value actions that make up each activity). In the next section, we specifically discuss on each element of the classification model
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proposed, and Table 3 provides further quotes to support findings (see Appendix).
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Figure 2: Findings in terms of value processes, value activities, and value actions.
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4.1 Activities for value co-creation in business relationships Adaptation. Accepting value-in-use as a foundational value co-creation concept implies that customers are the value co-creators (Grönross, 2008; Vargo & Lusch, 2004). Among customer companies interviewed, many examples exist of customers who are active in co-creating value with the supplier. In Information and
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ACCEPTED MANUSCRIPT Communication (ICT) Security industry, for instance, customer companies tend to invest with system integrators to scout new technologies abroad. In finance, banks increasingly collaborate with consultancy companies to develop RoboAdvisor, a class of financial advisers that provide portfolio management online with minimal human
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intervention. In a very different realm, business-to-consumer (B2C), wellness centers co-invest with fitness machine providers to develop sophisticated equipment, thus enabling to self-produce the energy they need.
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Some customers are even in a position to promote value co-creation by providing suppliers with their skills and performing some activities in their place. In the case of
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the medical center Santa, it decided to conduct activities on behalf of its small suppliers that did not have sufficient resources to perform them effectively. The company supported them in administrative matters, price definition, and marketing activities: “When the involvement of the customer company in the co-creation process
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is high, it should not use its power over the supplier to appropriate higher portion of the value co-created; rather, it should see these supporting activities as a way to generate a better collaboration from which both parties will benefit” (General
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Director, Santa). Such behavior generated trust and led to a stronger relationship
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between the customer and its suppliers, thereby reinforcing the growth of long-term value.
Adaptation is especially important in situations characterized by heterogeneous customer needs, complex products and services, and a high-risk perception (Hallen et. al., 1991; Jeffries & Reed, 2000). Adaptation is however not only technological but also relational. For instance, the software company Altilia developed a solution for bank customer that effectively integrated its technological content with the solutions already implemented by the bank’s suppliers. This process required many interactions
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ACCEPTED MANUSCRIPT and collaboration in the relationships among Altilia, the customer, and the other suppliers. The technological adaptation was made possible only because of the positive relational atmosphere created. In many of the cases observed, relational adaptation to co-create value also implied to
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increase the level of flexibility. Managers interviewed stressed the need for sales and procurement staff to be open in understanding their counterparts and to adjust their approaches when they seemed ineffective. To avoid myopia, companies are
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encouraging managers to gain experience in different branches of the company along their career path and in a multicultural environment. With this scope, training
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activities are also changing. Most managers—both sales and purchasing—believe that the usefulness of training activities in their company is limited by the low level of fit with personal features and needs (Baumgartner et al., 2016). In addition, according to the interviewees, most effective training activities adapt their content to suit the
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specific context in which managers operate with respect to their customers and suppliers, as well as their personality traits; thus, they consist fewer of predefined packages: “Each organization needs to determine what good looks like from their
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perspective. In every specific environment and culture, organizations must determine
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what traits drive high performance” (Consultant, Miller).
Bridging. Mutual recognition and understanding that the success of each firm depends in part on the other firms lead to undertaking actions in order to provide a coordinated effort focused on jointly satisfying the requirements of the different market players. As stated in the literature (see Verbeke, Dietz, & Verwall, 2011), to scout new business opportunities, we observed that activities to co-create value often include the attempt to connect with actors belonging to the counterpart’s relationship portfolio. The focus is on not only customer relationships but also more in general on 22
ACCEPTED MANUSCRIPT relationships with a wider set of stakeholders. For such reasons, companies increasingly organize networking activities such as breakfast or lunch meetings to enable customers, suppliers, and connected parties to meet in a positive atmosphere and nurture future opportunities of value co-creation. For example, to identify
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problems and find ways to solve them, Zeto organized “dreaming sessions,” where customers can share their innovation opportunities and pain points with Zeto staff and researchers. The outcome of these sessions is documented and shared with all
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participants. Similarly, to identify opportunities and promptly detach from possible problems, continuous analysis of the development of the different sources of value co-
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creation emerged important. For instance, the software house Digi International’s sales and marketing persons periodically interview their customers, suppliers, and third parties to understand the perceived value co-created from the collaboration. The literature then stated that the co-creation of value in multiple stakeholder domains
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can provide an important mechanism for aligning value within a marketing system (Frow & Payne, 2011) and thus to enable value co-creation: “Especially when the power in the company is extremely fragmented, there is a sense of uncertainty
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because the decision taken by a certain manager could be potentially revised by
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another” (Reput, Sales Director). A way to mitigate this aspect is to refer to a unique source of codified information, which is potentially available in real time. In the case of the four divisions of Ginara Elec—namely, Medical Systems Italia, Healthcare, Healthcare Clinical Systems, and Life Sciences—four separate CRM systems were used that did not interface with each other, thus resulting in every division referring only to its own database of customers without registration, for instance, that a customer of the medical systems could also be a customer of Healthcare. To improve such situations, in 2015, the company implemented a unique CRM in all four
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ACCEPTED MANUSCRIPT divisions, thus generating synergies in the commercial sales strategies throughout the company. However, bridging can also happen in time: Generating continuity between the past and future can be one way to reduce uncertainty. For example, a company that
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manufactures ropes for the sailing industry, such as America’s cup race, in 2015 decided to enter the furniture and clothing markets. This decision implied the need to deal with individual consumers and to develop completely new supply networks. To
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face this challenge, the company decided to recycle the ropes used in sailing to produce chairs, lamps, frames, bags, and shoes, each accompanied by the story of the
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race where the rope was used. In this way, the rope represented a bridge between past and present—an element that created a coherent story about the company’s evolution. This reduced perceived uncertainty by partners and opened up new opportunities for
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value co-creation.
Advising. Customers increasingly expect sellers to be able to understand, learn, and anticipate their needs, much like personal advisers (Baumgartner et al., 2016): “They
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want sales to be a trusted advisor, such as going beyond a sales rep role to be consultative to customers. It implies being focused on helping achieve their
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company’s needs, not just making a quick sale, to be available when the company needs them, without trying to sell them products they don’t need” (Italian Vice President, Sopforce). Therefore, provider organizations are often not just suppliers but also consultants on how to best use the products and services they purchase, which thus adds value to the customers’ business. Customers, on their side, are not anymore only receivers of the solution but become active part of the co-creation process. New ICT technologies have further enabled such processes, thereby allowing for new opportunities of value co-creation. Using big data analytics, more granular and 24
ACCEPTED MANUSCRIPT contextualized data are determined, which are useful for achieving micro segmentation in real time. According to the Country Manager of Akai: “The ability to gather more data and in a more punctual manner will allow moving from large predictive models to a personalized approach. Information about past interactions
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with customers or present interactions can be used to customize purchasing experience instantly”. Even in B2B and not only in B2C, thus, firms look for a seamless multichannel experience. The value drivers stay in the business customer
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journey: “The same experiences should be created along the company’s different touch points. In order to make the customer journey through the different channels
(Dale, Business Developer).
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‘seamless,’ you need to guide your customers to those paths that make it less effort”
4.2 Activities for value communication in business relationships
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Management of multiple touch points. According to Grönroos (2008), the supplier’s ability to engage in active dialogue and interact with the customer increases its
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potential to support the creation of value-in-use. Reciprocal value propositions reveal opportunities for focal firm engagement with suppliers, customers, and other
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beneficiaries beyond sale/purchase transactions as part of a platform for communicative interaction (Ballantyne & Varey, 2006; Ballantyne et al., 2011). For instance, a global specialist in electrical and digital infrastructures for home automation solutions created an online community for its 100,000 B2B customers who include installers, designers, architects, and retailers. This initiative shows that, in B2B as well as in B2C, customers want to not only get informed but also interact with the company’s branding as protagonists of the company’s story. Building deeper customer relationships with direct customer interaction in communities also enables 25
ACCEPTED MANUSCRIPT customers to give direct feedback and share their enthusiasm for the brand and the products. Within communities, characterized by multisided or reciprocal propositions, business customers transform themselves into ambassadors (Ballantyne et al., 2011). Interviewees then revealed that the first pain point for purchase functions is to receive
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multiple contacts by salespeople from the same company or being affected by diverging behaviors. For example, if a salesperson granted a price reduction to a customer in a country without coordinating with his colleague in another country, it
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could create a significant factor of dissatisfaction. The increasing complexity requires more alignment among both departments and company branches. “Every sales
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manager is just focused on its own customer portfolio, without realizing there could be synergies among the portfolios of different sales accounts; what’s more, many of our customers are multinational companies operating globally” (Sales Account
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Manager, Zeto).
Translation. In terms of activities to communicate value, the increasing interconnections among contexts, lack of time, and information overload amplify the
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importance of keeping issues simple and communicating them in a straightforward manner. Simplifying complex ideas through communication allows to translate them
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more easily into worthy insights, even for heterogeneous people. Interviewed managers realized that more personalized communication activities increase the effectiveness of value communication (Baumgartner et al, 2006). An example is an online marketplace specialized in food delivery from a large pool of restaurants. At the beginning, salespeople encountered strong difficulties in including Chinese operators in their portfolio of restaurants. To address the problem, the company’s CEO devised a plan asking a Chinese restaurant that was already a customer to make a video in Chinese. “The video reassured Chinese operators about 26
ACCEPTED MANUSCRIPT the reliability of the service and the potential for further developing their business by joining the marketplace. Salespeople enter Chinese restaurants with an iPad in front of their faces and show the owner the video!” (CEO, Iate). This activity, even if unusual, enabled the company to achieve its purpose by increasing the number of Chinese
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restaurants included in its portfolio.
In the case of an Italian retail chain, different cultures and business approaches created difficulties when trying to establish collaborations abroad. “Bangladesh has
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grown a lot in recent years; however, the mentality there is very cooperative but totally unprofessional. This has resulted in difficulties in setting up relationships
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based on managerial skills and not only on operations” (Supply Chain Manager, OVV). Being aware of how cultural barriers can negatively influence business relationships, parties agreed to introduce the figure of the cultural mediator to support
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know-how transfer among them.
Development of interpersonal interactions. Managers in supplier and customer firms believe that investing in improving interpersonal communication provides different
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benefits. The interviewees indicated that the majority of problems in communicating value occurred when there were no direct interactions between parties. More and
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more companies are encouraging people to relate at an interpersonal level, which also contributes to understanding them better from an emotional point of view while identifying their views of the interaction. “They understand what we can give them only once I meet them, after months of negotiations by email, telephone, and intermediaries in the United States… How can we think of getting married by chat? The relationship is doomed to fail because this is not the right way to develop any relationship” (Sales Account Manager, Cani). When people are perceived as empathic, buyers appreciate the ability to focus on the 27
ACCEPTED MANUSCRIPT individual level of their specific needs, which in turn leads to greater satisfaction (Andersen & Kumar, 2006). Therefore, the ability to tell engaging stories and generate emotional ties has become increasingly important too as indicated by a key buyer at Pisher: “The supplier purpose is to make its audience see what he saw, heard
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what he heard, feel what he felt. Relevant detail, couched in concrete, colorful language, is the best way to recreate the incident as it happened and to picture it for the audience”. Any attempt to change the value of customers’ perceptions is partly a
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cognitive issue related to the change in value thinking and simultaneously placed in
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interpersonal relationships and emotions (Ivanova & Torkkeli, 2013).
4.3 Activities for value appropriation in business relationships Limiting opportunism. Most managers interviewed agreed that asymmetries in the value appropriated by the different actors could generate perceptions of inequity,
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tensions, misunderstandings, and frustrations. The value appropriation activities we observed empirically often consist of attempts to contain opportunistic behaviors by a
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counterpart who appropriated more value than the one co-created (Holtgrave et al., 2017), especially when this counterpart is in a preferential power position. The issue
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has been widely debated by Bowman and Swart (2007), according to whom the appropriation of value is a function of the bargaining process among the actors involved (e.g., customers, employers, and suppliers). To reduce the incentive for opportunistic behaviors and knowledge spillovers, some customers link their results to those of the supplier, allowing the provider to feel like it is part of the company. “I request that the supplier takes an entrepreneurial approach, which means that he has to assume risks” (Channel Manager, Tecnica). These activities act as isolating mechanisms that enable the firm to appropriate proportionally the value it has created 28
ACCEPTED MANUSCRIPT (Mizik & Jacobson, 2003). Yet, other managers think “When sellers feel a need to either lock you into a long-term agreement or get payment up front, they are implying that you might find a better alternative. If the vendor assumes the risk of delivering and maintaining value by not requiring the long-term commitment, then the customer
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will reward the seller with more trust.”
Consequently, to allow for more flexibility, many companies are shifting from single, up-front payments for products to recurring revenue for a service, thus fully applying
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the logic of value in-use for value appropriation activities too. “Financial markets reward predictable, recurring revenue. Whether it be monthly or annual, smart
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companies recognize that recurring revenue with a high renewal rate demonstrates perceived customer value. High renewal rates become an incredible marketing message” (Founder, Tattid.com).
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Collective anchoring. When trying to appropriate value, a customer cannot realize the total value created by the entire network. For instance, interviewees revealed that in projects conducted jointly by a multitude of suppliers, the customer referred to the
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total contribution to value co-creation not as a sum of single contribution but more as a multiplier, thereby valorizing the increased value generated by collaboration. This is
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also a control mechanism in case a supplier opportunistically applies with other suppliers to a tender but, in reality, is going to work in isolation, appropriating value that the customer has valorized but it will not create in the end. To manage this behavior, companies are increasingly experiencing the use of network contracts, rather than only bilateral ones, by linking the performance of the individual company to that of the other actors involved in the co-creation process. At any rate, these contracts are worthy only when they are able to keep up with changing contextual conditions (Jeffries & Reed, 2000). In particular, companies are 29
ACCEPTED MANUSCRIPT increasingly ready to change the mechanisms for value co-creation when they realize that they have generated unfair value appropriation. A further element, which generates troubles in value appropriation, relates to ambiguities in the role of actors in the network. For example, in the ICT industry,
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system integrators have started to perform also as distributors and, in parallel, distributors have begun to operate as value-added resellers; this causes increasing overlaps in co-creation activities and thus generating problems in the distribution of
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margins.
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4.4 Activities for value measurement in business relationships
Alignment of metrics. The interviewed managers affirmed that it is important to understand the types of proxies customers utilize as early as the preliminary phases of relationship development, even if the relationship has not yet generated any returns.
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Thus, suppliers make explicit the key performance indicators (KPIs) used from the start of the relationship while also recognizing the counterpart KPIs. Similarly, the
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importance of introducing intermediate measurements during the relationship, not only at its end, has been highlighted to help in detaching misalignments before they
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produce negative outcomes.
The alignment of metrics in networks is particularly emblematic in the case of Fitos. In 2007, the Company introduced a seven-year strategy called “Shared Vision” that implied the use of new and more specific KPIs along the entire value chain. Unfortunately, these KPIs were not part of the common practices used with Lego’s distributors. Thus, the company had to train its salespeople, distributors, and resellers about the use of different and more sophisticated metrics compared to the past, resulting in a noticeably positive effect on communication. 30
ACCEPTED MANUSCRIPT Measurement activities also included the development of networked key performance indicators (nKPIs): “Individual performance measures should be accompanied by measurements that reflect the performance of the network as a whole, where actors who contribute more to the collaboration get higher portion of value” (Channel
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Manager, Beretta).
Considering the supplier and customer processes jointly can then help understand the context in which they operate, thereby supporting the use of better-fitting proxies. “I
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can tell you that will reach 20% not just because I choose you, but because we will work together: It is a relationship of value and not a value transfer. I carry the value
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that you will get if you use Sophos” (Top account manager, Sophos). According to this interviewee, traditional suppliers’ metrics were unreliable for the measurement of potential value because the intervention of the customer is essential to co-create value.
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Contextualization. Acting in different contexts gives rise to difficulties for managers in the measurement and comparison of values of different solutions and various relationships. This happens because many factors influence the process of value
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measurement. First, customers use different parameters to compare the performance of a certain solution with respect to those of competitors. Second, because these
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parameters are specific to the context, they tend to vary significantly. “Every company works in a different way, and sometimes I am amazed at how companies calculate their costs” (Purchasing manager, Kit). Thus, suppliers expect customers to clarify to them which parameters they apply to compare the value of their offerings with alternative ones to avoid the formation of misunderstandings and an incorrect benchmarking activity. Interviewees then revealed the importance of finding proxies that are contextual not only to the customer and supplier industry but also to the specific relationship. 31
ACCEPTED MANUSCRIPT Salesbot offers a good example of this. One of the main strengths of its CRM is the possibility for the user company to adapt and modify it based on its specific context. Salesbot was also the first to allow software upgrades without losing customizations already applied by the customers. Before this, the software upgrade was a challenging
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problem for companies, as they had to develop a complex process of migration to maintain their customizations. This long and costly procedure caused companies to postpone such efforts, thereby limiting their innovation capability. To solve this
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problem, Salesbot made updates of Web-based applications extremely simple and fast, and users always have access to the latest version of their software. All additions and
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customizations are retained during the update, which lasts only 6 minutes.
4.5 Activities for value representation in business relationships Confronting representations. Many malfunctions in business relationships are the
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result of different sense-making processes—and, hence, diverging processes—that lead to the attribution of sense and meaning to contexts and events (Malshe et al.,
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2017). Value representation describes the way an actor translates his own idea of value into something that can be observed by the other actors and its meaning shared
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(Corsaro & Kiellberg, 2012). In such a way, representations reduce the complexity of business affairs (Ivanova & Torkelli, 2013). Representations, for instance, are useful for parties to understand the areas of collaboration in the relationship, the individual activities and joint activities to be carried out, and the counterpart’s relationship portfolio. Representation provided by customers describes not only the expected characteristics of the solution but also the different contexts in which it will be used and the benefits and problems that can emerge from it. “The best thing is to represent how the 32
ACCEPTED MANUSCRIPT customer uses the solution, but salespersons often fail in that. Sometimes we take the order, we develop the product, and then it does not work as expected because the customer uses it in a different way” (Key Account Manager, Burgi). As a result, not only does value representation emerge as a responsibility of the supplier toward the
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customer, but both parties are to be involved in it as well: The supplier and the customer attempt to make explicit their visions of the value and the benefits they expect from each other’s promises.
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Exemplary is then the case of Buzza, a digital intelligence company that has built its competitive advantage around the key role of representations. The company’s value
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activities are summarized as follows: “We listen for words, we visualize concepts, we enlighten meanings.” (CEO, Buzza). Buzza has realized the importance of visualizing concepts for its business customers as knowledge now goes through signs, symbols, visual insights, and representations. To reach this scope, they created inter-functional
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teams made up by both data analysts and designers.
Changing representations. An important aspect of value representations is their
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ongoing nature: Parties enact representations while they interact. One example is the implementation of conference call systems such as Webex or Lifezize. These systems
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allow for the sharing of desktops, thereby making representations instantly available to other persons, who can then modify them while interaction, thus transforming representations from static to dynamic objects. Even more sophisticated is again the example of Salesbot’s CRM. “The last release of our CRM works like Facebook, where a person uploads a photo and his friends comment on it. Similarly, in our CRM, a business opportunity is no longer a record, but it becomes a social object, expressed through a text, an image, a graphic, an audio message, and a like. People can easily browse the news feed and post status updates, 33
ACCEPTED MANUSCRIPT upload files, share links and more, right from the dashboard.” (Vice President Italy, Salesbot Italy). Salesforce’s CRM works similar to social networks, making it very familiar and easy to use for customers: “We have completely changed the way we interact. We use rarely emails and have dramatically reduced the number of calls.
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Interaction has become much more seamless, smart, and fast” (Akamai, Country Manager).
As further example, Mivron Tools, a Swiss company specializing in high-precision
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tools, has also recognized the importance of value representations and is beginning to use holograms during trade fairs to show potential buyers how its machineries work.
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Holograms are much more effective than videos because they are flexible and recreate contextual real-life situations. Salespeople can show immediate functioning to their prospective customers and save the costs of transport and insure physical machines.
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5. Discussion
The marketing literature highlights a range of activities inherent in value co-creation management. However, notwithstanding the lively debate on value co-creation, no
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studies have examined activities for different and interconnected value processes in
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customer–supplier relationships. The research has tended to consider value cocreation in isolation and to provide only a partial picture of interdependencies with other ones. Nevertheless, the interactive and changing nature of business relationships would require a more holistic standpoint to capture the complexity of value cocreation management. We agree with scholars such as Payne and Frow (1999) and Grönroos & Voima (2013), who assert that a broader view of value co-creation management is required. However, they proposed the introduction of new stakeholder groups and different value spheres (customer, supplier, and joint). Rather, we
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ACCEPTED MANUSCRIPT contribute to the research by showing that value co-creation management is not only an issue of managing the locus of value, i.e., where value co-creation is situated with respect to the actors involved but also regarding how wide-ranging the context for value co-creation is in terms of interconnected processes.
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As a first contribution, our study described in detail the activities and actions required to manage value co-creation and the four value processes (communication, appropriation, measurement, and representation) for consideration. This allowed us to
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reach a microperspective on value co-creation management and support managerial practice. By adopting a transversal view of the value activities identified for each
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process, we notice that some of them refer more to an individual (personal) level, such as adapting, advising, and limiting opportunism, whereas some others recall how parties relate in dyads in terms of bridging and confronting representations. Others examined how parties behave in the wider context of interaction, such as in the case
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of translation, contextualization, management of multiple touch points, and collective anchoring. Finally, further activities evoked the idea of adjusting ongoing interactions between customers and suppliers, for instance through adaptation, changing
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representations, and alignment in metrics. Therefore, these elements are clear clues
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that, to jointly co-create value, customers and suppliers should understand in depth the context of interaction both in terms of space, i.e., the levels on which different activities take place (individual, dyadic, and network), and time. As a second contribution, our study revealed that, compared to the literature, the picture of interconnections between value co-creation and other value processes is not as linear as represented in Figure 1 (see for instance Pardo et al., 2006; Gummenson, 2004; Keränen & Jalkala, 2004; Kindström et al., 2012). In particular, we found that the following patterns are recurrent in the customer-supplier relationships observed.
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ACCEPTED MANUSCRIPT Value co-creation affecting value appropriation and the other way round. Activities that promote adaptation and advising are very important for value appropriation, as they facilitate higher flexibility in changing conditions for value appropriation when the context modifies. This would allow extension beyond
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contractual mechanisms, which could block the relationship in a situation of unfair value appropriation, in turn negatively affecting further value co-creation activities.
Activities that are addressed to connect with others (bridging) are also significant for
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value appropriation; if on the one side, value co-creation can be considered a condition for value appropriation (Lepak, Smith, & Taylor, 2007), on the other side,
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companies should fairly appropriate the value co-created (Blocker et al., 2012). In our empirical material, activities of value appropriation are often aimed at limiting opportunism (Hallberg, 2007), which are very frequent, even in long-term relationships, “leading to an asymmetric bargaining position and the dissipation of
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firm-specific assets” (Park & Ungson, 2001, p. 51). To limit opportunism, companies increasingly implement activities of collective anchoring to ground the parties’ contribution in value co-creation to the total value co-created in the relationship.
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However, compared to the literature on value co-creation and value appropriation (see
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Brandenburger & Nalebuf, 1995), we found that the total value appropriated is more a multiplication than a sum of individual contributions, because of the beneficial effects from collaboration, which leverage value co-creation potentialities. Value representation affecting value communication. Value representation connects quite strongly with value communication. While this is not new in B2C marketing literature (Blomberg, 2008), in B2B research, it is an interesting finding, as visual insights are gaining importance in line with increased use of social media for business purposes.
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ACCEPTED MANUSCRIPT We know from the literature that managers can use representations in communication to represent value and thus facilitate communication with the external surroundings while avoiding misunderstandings (Ivanova & Torkkeli, 2013). Communication can be used to confront representations and better coordinate dialogues, as different types
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of visualizations can inspire different kinds of cognitive processes (Havemo, 2018). Salesbot was a particularly emblematic case of the way to leverage the power of representations. This case demonstrated that how a business opportunity can assume
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sense and meaning through the continued participation of various persons who contributed to its representation and hence definition in real time, also enabling
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activities that easily change representations based on evolving interactions. Representation of the network composition and its resources is also similarly important for obtaining a comprehensive picture of the relevant context of value cocreation and converging in assigning common meanings to value outcomes. In other
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words, using representations in communication activities offers the ability to converge on a certain clue of future value co-creation. Value communication affecting value appropriation. Parties may have different
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perceptions of the co-created and appropriated value. Especially when multiple touch-
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points are involved, communication across the different channels is important to avoid confusing the counterparts about who will appropriate the value; this aspect is often under evaluated in the literature while having a strong impact on the effectiveness of business relationships. Subjectivity, in fact, affects not only the resources that a company decides to invest to co-create value (Aitken & Paton, 2016; Bendapudi & Leone, 2003) but also the evaluation of the potential to appropriate the value cocreated. As a result, communication is used not only to facilitate the understanding of value co-creation opportunities but also to mitigate the effects of unbalanced value
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ACCEPTED MANUSCRIPT appropriation: With effective communication, partners can implement actions that translate their expectations regarding the value they are going to appropriate and their views about the value that has been co-created. The presence of personal interactions can then lead people to tolerate temporary inequities in the value appropriated without
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damaging the business relationship.
Value representation affecting value appropriation. Linked to the previous two patterns, interviewees strongly corroborated the significance of representing the
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network with respect to the process of value appropriation: How parties perceive the actors involved in their focal relationships influences their ideas of who appropriates,
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or should appropriate, the co-created value (Helkkula & Kelleher, 2010). Activities aimed at representing the partners’ network of relationships and the resources that can be attracted from others could settle on more coordinated actions to determine how the other parties organize their activities for value co-creation.
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Therefore, confronting representations is not only about identifying the actors who co-create value but also those who will appropriate the value. Parties may not share the same vision of who is benefiting from the co-creation of value. For example, if an
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actor perceives its role in the network as amplified, it would demand a greater share of
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value. This confrontation implies continuous activities to change representations, possibly in real time while interacting, to promptly detach any negative misalignment. Representation of the value co-created can then be confronted with those of the value appropriated and activities implemented to recalibrate them. Value measurement affecting value appropriation. We learned from interviews that misalignment in value appropriation occurs especially when customers and suppliers use different proxies to evaluate their common business relationships. This in turn requires implementing actions to align metrics when discordant and to
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ACCEPTED MANUSCRIPT contextualize metrics with respect to the specificity of the relationship considered. As the appropriation of benefits generated from value co-creation happens not only through monetary flows but also through the appropriation of intangible resources, the difficulty in measuring some intangible components of value could also have a direct
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effect on value appropriation in terms of pricing (Hinterhuber, 2008). In addition, it is important to communicate not only the amount of value customer and supplier desire to appropriate but also the type of value, suggesting the ability to measure qualitative
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considerations along with quantitative metrics. Introducing joint thoughts about the amount and type of value that parties can appropriate would help to limit the
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formation of unreliable expectations of future value co-creation.
Value measurement affecting value co-creation. Lindberg and Nordin (2008) noticed that buyers put considerable efforts into objectifying and calculating the value of relationships. Our findings confirm the importance of measuring the value co-
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created, which also connects to value appropriation with the scope to understand if inequities are real or just caused by different measurement systems of the value cocreated (i.e., aligning metrics).
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Thus, the parameters customers apply to compare the value of their offerings with
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alternative ones should be contextualized to the specific relationship to avoid the formation of misunderstandings and an incorrect benchmarking activity.
Figure 3 summarizes the contribution of the study by illustrating the emerging patterns of interlinked value processes in business relationships and specifying the activities connected with each process. Compared to the generic framework gathered from the literature (see Figure 1), in which value co-creation presents only direct connections, our study clearly revealed a hierarchy among value processes: Most
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ACCEPTED MANUSCRIPT effects on value co-creation are indirect ones, hence mediated by other value processes. This point confirms the relevance of proposing a holistic view of value cocreation management that moves beyond activities for value co-creation. In our model, in particular, value appropriation is very central for enabling value co-creation
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because both directly link to value co-creation and all other processes. Indeed, the opportunity to appropriate in a fair way the value that parties contributed to co-create strongly depends on the quality of activities to measure the value co-created. At the
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same time, when value measurement is complicated and not reliable, for instance, in the case of intangible value or of future value in use, representations can be very
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useful to envision such value during communication.
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Figure 3: A model for value co-creation management based on interlinked value processes.
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ACCEPTED MANUSCRIPT 6.
Conclusions and implications for research and practice
The concept of value co-creation is and has been at the center of practice and theory in economics and in management. The assumption that value matters for the behavior of various market actors is commonly held as a prerequisite for explaining any
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business activity. Nevertheless, we have shown that existing research provides only a partial elaboration on the definition of relationship value activities for different value processes and their interconnections. Our findings thus respond to extant studies
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calling for more research on how value co-creation is associated with other value processes (see Aspara & Tikkanen, 2012; Gummeros, 2013; Salomonson et al., 2012).
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This paper contributes to theory by showing that enabling value co-creation implies considering many activities of another nature that can strongly influence it, both directly and indirectly. Value activities identified mostly refer to five relationship value processes: co-creation, communication, appropriation, measurement, and value
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representation. Overall, we showed how value co-creation works together with other relationship value processes to form a theoretical model for value co-creation management.
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Managers should consider these processes to gain a comprehensive view of value co-
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creation management in business relationships. Consequently, notwithstanding the complex nature of value co-creation as interactional, networked, and in continuous change, its management should lead to define specific activities related to this scope. Currently, managers pursue such actions mostly in a disconnected way and without recognizing value activities as a system. For these reasons, our study adopted the term “activities” rather than “strategies,” as strategy passes through managers’ realization of them and thus their coordination. The results of this study also highlight that value appropriation activities are very
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ACCEPTED MANUSCRIPT central in the model proposed as it is directly associated with all other value processes; opportunism frequently characterizes business relationships, and trust is often only a facade. Therefore, it should be better understood how to combine contractual-based mechanisms with trust-based ones to limit the effects of
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opportunism on value appropriation and, in turn, on value co-creation.
Similarly, value representation emerges as an interesting concept for future research as quite an under-investigated in the literature but very recurrent in our analysis.
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Value representation is key for both the purpose of co-creating value between the supplier and customer and achieving better coordination in the network. Moreover,
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value representations strongly influence value appropriation by entailing that representations are shared, at least partially, between parties. In a specific timeframe, it means adapting existing representations or generating new ones when the previous representations are no longer effective. This process is crucial, as the network can
for value co-creation.
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reorganize itself around new representations, thereby generating novel opportunities
This study also has some limitations. First, while we considered value activities
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recurrent in business relationships, we do not exclude the existence of others. Second,
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our analysis has been retrospective; it would be worthy to observe mechanisms that lead to change in value patterns in a longitudinal stance. Further research could then be aimed at moving beyond the customer and supplier perspective to gain an even richer picture on joint (common) value activities with respect to value co-creation, value communication, value appropriation, value measurement, and value representation. This could be of particular interest in the light of service-dominant logic stream of research, according to which the difference between customers’ and suppliers’ activities is diminishing as “all actors are
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ACCEPTED MANUSCRIPT fundamentally doing the same things, co-creating value through resource integration and service provision” (Vargo & Lusch, 2011, p. 211). In addition to that, this study provided a theoretical model, which could be further elaborated and tested quantitatively through proper scales.
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With regard to managerial implications, the paper is already oriented in a practical stance by identifying activities and actions to manage value processes. Overall, we highlighted the need for managers to think of value co-creation management in more
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strategic terms, which in turn implies defining a coordinated plan including different value activities and how they interconnect. This could expose to the necessity for a
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new figure in both customer and supplier organizations, which one could suggest as the “relationship value architect,” responsible for designing the different value processes and making them available to specialized value process managers. Different from the existing role of the relationship manager, who recalls more the relationships
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portfolio manager, the “architect” should have a whole picture of all value processes and their bonding. This role should be strategic and not limited to mere collectors of information, becoming an intermediate one between top management and specialist
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functions. Related to that, and given the growing importance of value representations,
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information design and data visualization provide interesting practical tools for the shaping of ideas, so that representations can be more straightforwardly realized, shared, and modified by interacting parties.
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Appendix
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Table 1: Customer companies interviewed divided by industry and key informants
Company
ABT
Aggiustami.it Alessandro Raspagni Anon Birino Calighting Santa Ceresoli Cleaf Dietan Digi International
Customer companies Industry Technologies for energy and automation Digital marketplace for car repairs Jewelry company Banking group Global specialist in electrical and digital infrastructures for home automation solutions Manufacturer of lighting solutions Health Services, service, and trade Production and tool sharpening Furniture Digital marketplace for home delivery services System integrators
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Interlocutor interviewed Senior sales engineer Owner Owner Network manager Buyer manager
CEO CEO Buyer Buyer Franchising manager Purchasing manager
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MFG.com Moraglione 1950 Omira OVV Picchiotti srl Scheinecker Suhner Su-Matic SRL
Owner Purchasing manager Supply chain manager Owner Buying manager Production assistant
Founder Member of the purchasing group Procurement manager Buying manager Raw materials buyer CEO, CAD manager Founder Buyer
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Tattid.com Tam Srl Technifond Teknos SRL TMP SRL Vartel Ventieventi
Technical manager Buyer Owner Technician Purchasing manager Vice-President Product quality responsible CEO General director Purchasing manager Owner Owner
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Manufacturer of sewing threads Industrial fastening systems Retail clothing and accessories Metal cutting Geotextile industry, China reseller Pharmaceutics Turbine manufacturer Distributor of ICT solutions Digital marketplace, food delivery Wind energy Jewelry company Online marketplace for CNC machining and plastic injection molding Jewelry company Mechanics Retail chain, clothing Jewelry company Cutting tools Manufacturer of mechanical components Digital marketplace for jobs Automatic lathes Foundry Technologies for hospitals Turning and milling precision Mechanics, speed reducers Events organization Technologies for energy efficiency, security, globalization, and productivity Toolmaker ICT distributor
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Filpproject Pisher Fratelli srl Gaillard SA Gootextile Gura Harbin Turbine Co. Ltd Isead Iate Kit Luca Carati srl
Wumi precision Machinery
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YY-1 Italia Yoram
CAD manager General director, Buyer
Table 2: Supplier companies interviewed divided by industry and key informants
Supplier companies
Industry Precision tools Management systems for big data System-based composite materials Cloud computing technologies High-precision cutters Digital intelligence Company Clothing Solutions for imaging Buttons producer Consulting services on export Industrial robotics Sales training Strategic consulting and marketing Market research Producer of fibers for industrial applications Energy Energy Cured meats Medical imaging Precision tools Strategic consulting Ropes and cables for marine applications
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Company Alfa Globat Altilia Arsea Progetti e Sistemi Akai Burga Buzza Cangiari Cani Casta System Co-tark Carau Dale Dialogica Dota Metrics DSM Dyneema B.V. Eno Fedayo Beretta Ginara elec Gibas Tools Giotto Maffioli
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Interlocutor interviewed Key account manager CEO CEO Country manager Key account manager Founder Owner Service line manager Owner CEO Business developer Business developer CEO CEO Consultant Sales business intelligence Country manager Channel manager Sales specialist Sales manager CEO General director
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Miller Miracle
Strategic consultancy Data management systems
Primavera & Partners Reput Sacel SRL
Consulting Market research-consulting Design and construction of progressive dies for production details CRM software provider Distributor of high precision tools
Sopforce SEF Meccano Tecnica Salesbot Sigi Skorpion
Software house Design and development of industrial prototypes Endpoint and network security China reseller
Network manager Sales manager CEO, business developer, and sales manager Consultant Sales executive middle-sized market Owner Sales director Project manager
Vice-President Italy General director Country manager Owner
Purchasing Manager Sales manager
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Sophos Summit Precision Engine Products Tecnica Tormatic Srl
Marketing and sales manager CEO Marketing manager General director Sales assistant
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Mechmet MG Sanders Mivron Tools
Renewable energies Products for hydraulic applications Science and technology park Toy manufacturer Construction of molds, sheet metal stamping, and turning Network of companies in mechanics Precision engineering Mechanics, high precision tools
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Innovamec Hytac Kilotetro Fitos Meccanica Franchin SNC
Producer of special cables Production of components for turning high-precision mechanics Document management company and business process outsourcing Digital marketplace, online shopping 3D printing and service
Zeto
Top account manager
Country manager Sales manager
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Zolata 3DP
Channel manager CEO
Table 3. Supporting data for second-order concepts.
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First order concept
Secondorder concept
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“The ability for relational adaptation is important in increasingly changing contexts. This could also boost people to co-create value by developing solutions outside the box.” (Business Developer, Carau) “We try to manage the complexity of the organization in order to simplify the relational experience of customers and employees”(Country Manager, Zolata)
Adapting
“Our organizational structure allows us to easily adapt to changing customer needs.” (Owner, Aggiustami.it) “The problem lies in motivating salespeople to invest their time in training and coaching other people” (CEO, Hytac) “Our persons try to combine different pieces of knowledge to better manage relationships and seek out opportunities unused.”(Oracle, Sales Executive) “We are introducing the figure of the ‘global account manager full portfolio’, which manages single customers and develops for them a full portfolio of services. In this way, sales managers deal with a greater number of heterogeneous business areas. This change was obviously destined to influence the figure of the buying manager whose responsibilities would become less parceled as well.” (Dota, Top Account Management)
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Bridging
ACCEPTED MANUSCRIPT “The customer company should also verify who is going to appropriate the value inside the supplier firm primarily: if the company, the business unit or the individual. This would allow understanding how to bridge collective and individual interests of the counterpart.”(Reputation Institute, Sales Director)
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“Digi recently introduced a modeling team and a new role, the modeling engineer, responsible for building and offering models to customers by drawing upon information from all the divisions involved: sales, operations, finance and so on.” (Digi International, CEO) “Customers expect their supplier to be a trusted advisor”(CEO, Dialogica) “Selling complex solutions almost always requires a customization of the sales process itself, and salespeople are required to play the role of entrepreneurs when they develop their territories for such solutions” (Alfa Tool International, Key account Manager)
Advising
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“We developed sophisticated software to allow salespeople to elaborate in realtime offerings tailored to customers’ needs. As such, during the first meeting the presence of a technical person is not required anymore.” (Marketing and Sales Manager, Innovamec) “It’s mandatory to connect with the customer at any time the customer journey, granting a fluid and consistent experience through each channel”(Primavera &Partners, Owner) “We should not learn to play individual instruments, but conducting an orchestra”(Dietan, Franchising manager)
“In the new organization, too many persons can express an opinion on an issue, but then it is not clear who undertake the final decision. Sometimes I ask: Who is the responsible for such activity? And no one knows” (Dale, Sales Director).
Managing multiple touch points
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“Many times dysfunctionality are not managed by the top management, letting the time to harmonize them; but often time only exacerbates them.” (Isead, CEO) “Systems of artificial intelligence should understand and interact with the client in a way even more intuitive and closer to human intelligence; they should be able to provide personalized recommendations for each customer, in each channel and circumstance (ABT, Senior sales engineer)
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“All our offices worldwide are exactly the same in terms of spaces, furnishings, colors, layout, so that employees and visitors so that people are facilitated when moving from one site to another”. (LEGO, General Director). Translating
“What is the language of your interlocutor? Because it is useless to explain the technical or the advanced technological aspects if he/she does not understand the topic.” (CEO, Vartel).
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“When more individuals are involved in negotiations, it is a positive action to informally confront each other about what the parties understood by repeating the main points of the content of the conversation, and then prepare a formal written summary of each meeting to be shared with the parties involved”(Reput, Founder) “ICT support, phone calls, presentations sent by email, teleconference…they are all useful, but none of this can ever substitute for a motivated, prepared and passionate person in reducing perceived uncertainty.” (Miracle, Supply Chain Quality Director) “To align people need to trust each other, they need to talk face to face; they are ‘soft’ aspects which are very important and can determine the failure of the whole process of change. Putting a name in the organization chart is definitely not sufficient”. (DSM Dyneema B.V, Consultant).
"I have friends among suppliers and I tend to promote them. Since I know how they work, I’ll save relational costs." (Digi International, Marketing Manager). “When I succeeded my father in running the business, the customer snubbed me for 53
Developing interpersonal interactions
ACCEPTED MANUSCRIPT a long time due to perceived insecurity.” (Luca Carati srl, Owner) “Our products have not been present in the Italian Auchan retail chain for five years simply because our Sales Director and Auchan’s Buyer did not like each other on a personal level” (Omira, General Director).
RI PT
“Establishing the right attitude implies knowing people otherwise the risk is that you spend a great deal of time and energy trying to overcome resistances.”(Dale, Business Developer) “Bigger companies will tend to exploit their power and appropriate higher part of the value created by their sub-contractors” (Fedabo, County Manager) “Stakeholders with misaligned power have dissimilar access to relationships and resources. This misalignment may even lead stakeholders to view the appropriation of value as an allocation—something that is not chosen deliberately, but assigned by others.”(Venti Eventi, Owner)
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“The longer the relationship, the more likely a party will pretend to appropriate a higher portion of value, for the customer in terms of new services, reduction in prices, more favorable payment conditions” (Primavera & Partners, Owner)
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“An agent that works for the company is a person who is almost dangerous: it is always a balance between working for the company and for himself.” (General Manager, Calighting). “We accidentally discovered that the customer attached to our product a mark-up equal to our margin, and also applied incredible pressure on us to reduce prices ....” (Vartel, CEO) “Before you run out to create content for your potential clients to research, understand that your content is useless if it lacks honesty and transparency. You should always be looking out for their best interests, whether or not that means making a sale.”(Casta system, Owner)
Limiting opportunism
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“Why should I promise to the others what I am not even able to keep to myself? It seems to me too much, so I try to make the best of the current situation. Parties should try to be both at ease without forcing the relationships and generating, in turn, a state of embarrassment” (CEO, Calighting).
EP
“Tio, the distributor, disregarded the rules of the channel and dealt directly with us, the customer, skipping the reseller. Nevertheless, this is not our problem; the channel model is sometimes imperfect. When the distributor knows the solution better than the reseller, we can even benefit from this kind of misconduct.” (Digi International, Purchasing Manager).
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“People should not feel too locked into contractual constraints that can limit new forms of value co-creation”(Yoram, Buyer) “If you give your client the choice to renew or leave every month, then you’ll have your finger on the pulse of your market.” (Eon, Sales Business Intelligence) “Value should be verified periodically, some shared control points implemented, and, when goals are not achieved or an unequal value appropriation is realized, a back plan implemented.” (Co-tark, CEO) “Suppliers limit clients’ tendency to ask for the lowest price, rather boosting them to look at the potential of the relationship as a whole.” (Burgmaier, Key account manager) “The ICT distributor Esprinet considers the system integrator Digi as a partner, while Magirus sees it as a competitor, limiting the opportunities for value cocreation”(Anonymous, Network manager) “In applying for collective tenders, there are companies who propose prices that don’t cover expenses even though they win! Can they really provide the service under such conditions? In the long term, will the customer be really satisfied with 54
Collective anchoring
ACCEPTED MANUSCRIPT these suppliers?” (General Director, Dota Metrics). “Whereas 80% of senior executives felt that their company provided a superior customer experience, no more than 8% of their customers agreed.” (Dialogica, CEO) Aligning metrics
RI PT
“Traditional metrics, such as sales and pipeline-generation, are not considered sufficient metrics to measure the success of the business. The importance of measuring intangible assets, such as the customer experience, is strategic.” (Kilotetro, Consultant)
SC
“The use of KPIs could make communication less ambiguous and more anchored to elements that parties can easily represent and therefore around which to organize discourses.”(Mechmet, Channel Manager) “Measuring relationship value in supplier firms is linked to the measurement of salespeople's performance. To avoid salesmen focusing only on short-term financial results, multiples metrics evaluations should be implemented, such as teamwork competencies, self-management, adaptability, problem solving, communication skills, client focus, and many others”(Akamai, Country Manager)
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“It is time to start tracking the customer experience along with ability to generate revenue: Analytics is a beneficial tool for understanding customer sentiment even in btob and not only btoc” (Business Developer, Carau).
“Traditional metrics such as sales and pipeline-generation are not considered sufficient to measure the success of the business. In other words, quota-related metrics are not effective in measuring relationship value, leading to the need for new KPIs”. (Zolata, Country Manager)
Contextualizing
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“The use of standardized examples by the supplier should be limited in favor of attempts to support customers and retailers in calculating the performance of the solutions offered, beginning with the measures that are familiar to them” (Fisheritalia, Buyer)
EP
“Unfortunately nowadays the economic part of the offering has a much higher weight than the technical one. Quality was not valorized compared to price”(Dotametrics, General Director) “Compare the risk with return and therefore represent the cost of inaction versus action benefit. This representation should be memorable in order to generate not only rational but also emotional involvement, create a sense of urgency, and avoid procrastination.” (Teknos, Procurement manager) “If you want your entire message to be consumed, video tends to be the preferred medium.” (Wuxi Wefuautocam precision Machinery, Buyer)
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“In the 3D printing case, architects, designers, inventors, craftsmen, but also individuals can more easily see translated their ideas into a physical product. Interest groups are built around ideas and projects giving rise to a new form of entrepreneurship that exceeds the logic of traditional marketing and becomes more social.” (3DP, Sales Manager) “Inside of social media it is important to not only listen to conversations, but try to give a shape to perceptions.” (Ate, General Director) “By accessing our CRM by mobile device we can be in contact with our customers whenever and wherever. When reps have data, analytics, and automation in their hands, they can interact with customers, collaborate, and close deals from anywhere, at any time.” (Salestop, Vice President Italy) “Today, you have to add and show value during the sales process, not just when the contract is signed.”(Sophos, Purchasing manager) “We realized that many consumers and doctors establish negative associations with the ‘homeopathic medicine’ as not being effective. They thus developed the
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Confronting representations
Changing representations
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concept of ‘low-dose medicine’ instead of homeopathy. This change has allowed the creation of more value in the entire value chain, including doctors and pharmacies” (GURA, President)
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