The relationship between value co-creation and customer perceived value

Abstract

This research considered the relationship between Customer Perceived Value, ultimately a measurement of a firm's Value Proposition, and Value Co-creation, a recent development in Service Science that considers the joint creation of value between customers and firms rather than the traditional exchange value logic of marketing. The Value Proposition was broken down into elements of functional value (Price and Quality), Emotional Value and Social Value; while Value Co-creation was understood across the two dimensions of Value-in-use and Co-production. A descriptive research design using a quantitative methodology was employed, collecting data from 297 respondents who form part of an online opt-in research panel through the use of an online survey. Perceptions of value and Value Co-creation were collected through the use of two existing measurement instruments proposed in the academic literature, asking respondents about the service interaction they can best recall with a major South Africa clothing retailer in the past three months. Four research hypotheses were tested through the use of regression analysis, and statistically significant relationships were found between Perceived Value and Value Co-creation as well as Perceived Value and the dimensions of Co-creation, namely Value-in-use and Co-production. Moreover, Value-in-use was found to have a statistically significant greater effect on Perceived Value than Co-production. The research could not establish a differential impact of the dimensions of Co-creation on the dimensions of Perceived Value, i.e. the data did not support that Co-creation has greater impact on certain elements of the Value Proposition than others. The fourth research hypothesis considered Value-in-use as the ultimate customer outcome rather than a predictor of Perceived Value, and the statistically significant regression model provides support that Co-production can be considered an integral part of a firm's Value Proposition, rather than an underlying construct of Value Co-creation considered separately from the Value Proposition. The research contributes to the academic literature in validating two research instruments, establishing additional positive consequences of Value Co-creation and adding to the Service Innovation stream of the Value Co-creation literature. Its business implications suggest relooking the way Value Propositions are designed by adding conscious Value Co-creation as a dimension of the firm's Value Proposition, leading to enhancing the customer's Value-in-use which ultimately circles back to improve perceptions of the firm's Value Proposition.