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Value co-creation through interaction

The how’s and why’s of B2B e-commerce

Written by J. Andrén, D. Sjöberg

Paper category

Master Thesis

Subject

Business Administration>Management

Year

2020

Abstract

Master Thesis: From value creation to value co-creation Traditionally, value creation is the process by which companies sell products to customers and receive payment. According to Grönroos (2007), value is embedded in the products or services created by the company and consumed by customers. By following this logic, the providing company can be regarded as a value creator, and the customer is placed outside the company and therefore completely decoupled from the value creation process. Therefore, the company is considered to be the person who decides what products and services to produce, which means that they determine the value to the customer (Prahalad & Ramaswamy 2004b). By following this traditional approach, customers have little or no role in the value creation process. However, since then, new ways of explaining value creation have emerged, in which products and services are judged by the value of customer experience (Grönroos 2007; Vargo & Lusch 2004). Grönroos and Voima (2012) further developed this idea by explaining that different types of values ​​can be created. Use value, also known as actual value, refers to the value that can be created by customers independently, or the value that can be created by suppliers to help customers in the process of value creation. Grönroos (2007) and Grönroos and Voima (2012) further explain that providers can only act as value promoters and create potential value. Therefore, the real value is created by the customer, and the supplier can only create potential value or act as a co-creator. The theory that supports value creation by customers is that if a product or service is purchased from a supplier and never used, it is useless (Grönroos 2007; Vargo & Lusch 2004). This highlights the view of Grönroos and Voima (2012) that suppliers only create potential value, not real value. In the theory of value co-creation, research puts interaction at the core of the process. According to Prahalad and Ramaswamy (2004b) and Grönroos and Voima (2012), value co-creation occurs through the interaction between suppliers and customers. By participating in these interactions, the company and customers can help each other and jointly create more value than other means. Customers can also actively participate in interactions and jointly build products or services to meet the specific requirements of each company (Prahalad & Ramaswamy 2004b). Understanding value co-creation is necessary in order to understand what happens when suppliers and customers interact with each other. It can also help companies better understand how to satisfy their customers. 2.2 Domain of value creation In order to understand the roles of suppliers and customers in the process of creating value, a model containing three domains was used, which was proposed by Grönroos and Voima (2012). Therefore, the relationship between the supplier and the customer and the value created depends on the position of the process in the field. The model includes the supplier field, the joint field and the customer field, as shown in Figure 1 below (Grönroos & Voima 2012). Different types of values ​​(potential value and real value) are also located in the figure. The supplier field is where suppliers create potential value. When this potential value is transferred to the customer, it can be transformed into use value, also known as actual value (Grönroos & Voima 2012). In this area, providers perform activities related to, for example. Manufacturing, design and development, and then produce output, that is, potential value. When creating potential value, suppliers must understand the customer's own value creation process (Grönroos 2007; Grönroos & Voima 2012; Heinonen et al. 2010). In the customer field, customers are independent of suppliers to create value for themselves. In this area, suppliers are passive in the value creation process, and customers only interact with the resources they obtain, not the supplier process (Grönroos & Voima 2012). It is in this field that customers create use value from the potential value provided by suppliers. The joint field is where suppliers and customers interact. Here, suppliers can help customers in their value creation process, so as to create value together. In this field, the value creator is still the customer and determines what constitutes value (Grönroos 2007). However, by interacting with customers in the dialogue process, it is possible for the supplier to help the customer's value creation process, leading to the co-creation of value (Grönroos & Voima 2012). In order for suppliers to help customers create value together, the most basic criterion is that they must interact. If there is no interaction between them, it is impossible to create value together. When providers and customers interact in a joint field (Grönroos & Voima 2012), they can collaborate in two ways. Either the supplier helps the customer in its value creation process, thereby becoming a value co-creator, or the customer helps the supplier in their production process, thereby becoming a co-producer. However, the question remains about where and how this happens in a physical sense. The interface that can be used for this purpose is through e-commerce, which will be further developed later. Read Less