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Conceptualising value co-creation: Ajourney to the 1970s and back to thefutureChristian Grönroos aa Hanken School of Economics, FinlandVersion of record first published: 05 Nov 2012.

To cite this article: Christian Grönroos (2012): Conceptualising value co-creation:A journey to the 1970s and back to the future, Journal of Marketing Management,DOI:10.1080/0267257X.2012.737357

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Journal of Marketing ManagementiFirst, 2012, 1–15

Conceptualising value co-creation: A journeyto the 1970s and back to the future

Christian Grönroos, Hanken School of Economics, Finland

Abstract Service-Dominant (S-D) Logic asserts that firms and customers alwaysco-create value. This article argues that the co-creation of value term, as usedby Vargo and Lusch (2008), is strongly metaphorical in its construction, and thismetaphoric form acts as a barrier to focused empirical analysis. An alternativeconceptualisation is offered. It is argued that value co-creation can be definedas the joint actions by a customer (or another beneficiary) and a service providerduring their direct interactions. Value creation in such interactive contexts wasstudied as early as the 1970s in the early days of modern service marketingresearch. This article relies on two models from that time to develop a valueco-creation logic and a conceptual model of value co-creation as an alternativeschema to S-D logic.

Keywords value co-creation; value-in-use; service logic; Service-Dominant Logic

Introduction and purpose

It is challenging to develop analytical, operational models of value co-creation.To meet this challenge and further develop service logic literature, this articledefines value creation for a customer as the customer’s creation of value-in-use.1

Consequently, co-creation of value relates only to those stages of a value-creationprocess where the firm is present together with the customer. In the present article,value co-creation is defined as joint activities by parties involved in direct interactions,aiming at contributing to the value that emerges for one or both parties. Theseactivities are only part of total value formation, because the customer’s otherexperiences in direct interaction and with their outcomes also contribute to totalexperienced value (value-in-use).

Value creation is a fundamental cornerstone of the service perspective onmarketing (i.e. service logic and Service-Dominant (S-D) Logic).2 Discussions on S-D

1‘In-use’ not only denotes physical use but also mental use and even possession. Hence, value-in-use canemerge from both physical and mental use of a resource or from mere possession of it.2Because it is a perspective on business and marketing that is not only dominated by but also based onservice, this article features the term service logic. Service is the mental model or dominant logic (Prahalad& Bettis, 1986) that guides the use of this perspective.

ISSN 0267-257X print/ISSN 1472-1376 online© 2012 Westburn Publishers Ltd.http://dx.doi.org/10.1080/0267257X.2012.737357http://www.tandfonline.com

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2 Journal of Marketing Management, Volume 00

logic frequently indicate that all value creation is co-creational and that both serviceproviders and customers are always co-creators of value (e.g. Vargo & Lusch, 2004,2008). But service logic literature notes that co-creation requires direct interactionbetween the co-creating parties which is a consequence of joint activities (e.g.Grönroos, 2011; Grönroos & Ravald, 2011). Regardless of the perspective, researchacknowledges that the components of value co-creation require further study. At thesame time, researchers note the difficulty of studying this phenomenon analytically(Payne, Storbacka, & Frow, 2008).

Therefore, this article aims to develop a conceptual model of value co-creationthat includes all the elements needed to understand, plan, and respond to customer–firm interactions in a way that supports both the customer’s and the service provider’svalue creation. This model evolves from service research that goes back to the 1970sand offers an alternative view on value co-creation to that of S-D logic. Value is anelusive concept (Woodall, 2003). In the literature, value is understood in a numberof different ways (Grönroos, 2008, pp. 281–282; see also Ramírez, 1999), and valuecreation has been described as one of the most ill-defined and elusively used conceptsin service marketing (Carú & Cova, 2003). Therefore, for the purpose of the presentarticle, we consider value creation as a process through which the customer becomesbetter off (or worse off) in some respect (Grönroos, 2008, p. 303) or which increasesthe customer’s well-being (Vargo, Maglio, & Akaka, 2008).3 The term ‘creation’implies that the effect on value of customers’ experiences is positive, but customers’co-creation experiences may also have negative, destructive effects (Echeverri &Skålén, 2011).

Moreover, the term ‘value creation’ indicates that value is always instrumentallycreated (e.g. driving a car to a certain destination), though in many situations valuesimply emerges (e.g. a feeling of freedom when driving around in a car). Because theexpression ‘value creation’ is so generally accepted in extant literature, this articleretains it, with the recognition that its connotations are not necessarily accurate,and use it and value emergence interchengeably. In the context of this article,value co-creation explicitly may have both positive and negative impacts on valueformation for customers, and it may be instrumentally created or just emerge fromcustomers’ experiences.

To develop a value co-creation model, a clear definition of value co-creation is aprerequisite. Management literature uses co-creation metaphorically to emphasisethat suppliers need to recognise the role of customers in value creation.As Ramaswamy (2011) points out in his analysis of co-creation concepts, the phrase‘co-creation of value’ serves as an all-encompassing expression to denote mutual valuecreation by the actors, such that, in the business engagement, both (or several) partiescontribute to the value being created (Normann & Ramirez, 1993). Some actionsmay be independently value creating, some facilitate value creation for anotherparty, and others are joint value-creating activities or value co-creation togetherin direct interactions. Yet the common term ‘co-creation’ is used to represent allthese varied activities. A metaphor is not literal; thus the expression ‘the customer

3Grönroos (2008) defines value for customers in the following way; ‘Value for customers means that afterthey have been assisted by a self-service process (cooking a meal or withdrawing money from an ATM) ora full-service process (eating out at a restaurant or withdrawing cash over the encounter in a bank) theyare or feel better off than before’ (p. 303).

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Grönroos Conceptualising value co-creation 3

is always a co-creators of value’ (Vargo & Lusch, 2008) should not be interpretedliterally either.4

Co-creation as a metaphor or analytical concept

Morgan (1986) advocates the use of metaphors to create perspectives onorganisational issues: ‘The use of metaphors implies a way of thinking and a wayof seeing’ (p. 12; emphasis in original) and provide ‘. . . a means of enhancingour capacity for creative and disciplined thought’ (p. 17). As Cornelissen (2004,pp. 705–706) notes, metaphors may provide new insights into the reality of whatis studied. When using metaphors, ‘. . . participants actively and collectively createa representation of their strategic territory’ (Heracleous & Jacobs, 2008, p. 310).On the other hand, as Morgan (1980) observes, an object that is studied may alsobe ‘. . . imprisoned by its metaphors’ (p. 605).5 We can conclude that metaphorscan be used as a means of stimulating thinking and helping researchers look at aphenomenon in new ways but not to predict how a phenomenon will function in itsentirety.

To emphasise the importance of activities by firms and customers (and possiblyother actors in a network) to ensure value for the customer ultimately, withoutaddressing the specific roles of the actors involved, this metaphorical usage of theexpression ‘value co-creation’ works well. A reader’s attention is effectively drawnto the recognition that value for customers cannot be created by the firm alone(Normann & Ramirez, 1993). To say that value is collaboratively created also guidesresearchers to remember that value does not emerge by actions by one party but thatactions by several parties are required. However, it does not specify the roles of theseactors during the process.

Although the co-creation metaphor thus offers guidance for further analyticaldevelopments by asserting that the customer is involved in a process that resultsin value for the customer, it cannot define the roles of the various actors and theexistence of unique elements and sub-processes. For this effort, analytical conceptsare required. The firm as a service provider produces resources and provides themto the customer who uses the resources by integrating them with other availableresources during a usage or consumption process. In parts of this process, thefirm and customer act jointly in direct interactions. Therefore, the value-formationprocess includes three distinct sub-processes: (1) the firm acts alone and facilitatesthe customer’s creation of value-in-use; (2) the customer acts alone by integratingavailable resources in a process that is closed to the firm (Grönroos & Ravald, 2011),thus experiencing the resources and creating value-in-use for him- or herself; and(3) the firm and the customer act together in a merged, coordinated, dialogical, and

4As described in the Collins English Dictionary (1999), a metaphor is ‘a figure of speech in which a wordor a phrase is applied to an object or action that it does not literally denote in order to imply resemblance’(p. 928), and Oxford Dictionaries (online edition 2012) defines a metaphor as ‘the application of a nameor descriptive term or phrase to an object or action to which it is imaginatively but not literally applicable’.An often-used example of a metaphor is ‘he is a lion in battle’ (see, e.g., Collins English Dictionary), whichdoes not mean that the person is literally a lion. In the same vein, the expression ‘customers and firms arealways co-creators of value’ should not be interpreted literally, such that the parties literally create valuetogether in time and space.5For alternative discussions of metaphors in organisation and management research, see, for example,Oswick, Keenoy, and Grant (2002) and Pinder and Bourgeois (1982).

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interactive process that creates value for the customer, and for the firm as well – usingthe strictly analytical meaning of the expression, they co-create value (Grönroos,2011).

An analytical approach would set out to develop models of collaborativevalue creation, including independently occurring value-creation efforts, activitiesfacilitating the other party’s value creation, and joint collaborative activities duringdirect interactions between two (or more) parties. As part of this overall model,the joint value-creating activities during direct interactions could be studied anddeveloped conceptually. This article makes such joint value-creating activities themain focus (see also Grönroos, 2011; Grönroos & Ravald, 2011). Thus theexpression ‘value co-creation’ is reserved for this phase within an overall range ofpossibilities for collaborative value formation. That is, co-creation of value is definedas joint collaborative activities by parties involved in direct interactions, aiming tocontribute to the value that emerges for one or both parties.

As noted, in many situations, value is not instrumentally created but rather emergesfrom customer experiences. Following Ravald and Grönroos (1996), this article usesthe term ‘value formation’ to denote the process by which value either emerges or iscreated for customers (Echeverri & Skålen, 2011). However, for the joint activitiesof several parties (e.g. service provider and customer), which influence the value-formation process, such that value reflects the parties’ direct actions, this article usesthe expression ‘co-creation of value’.

According to Gupta and Lehman (2005), in a business engagement, value getscreated for all parties. Referring to insights from the French nineteenth-centuryeconomist Frédèric Bastiat (1848), Vargo and Lusch (2008) point out that whenproviding service to a customer, the service provider potentially receives some servicein return, such as information that customers provide that can be used to develop newservices or systems. Consequently, any model of value co-creation must account forthis reciprocity of value creation.

Co-creation in early service marketing research

An analysis of service marketing literature shows that joint interaction-relatedco-creational aspects of service processes – that is, simultaneously occurring serviceproduction and consumption processes – were thoroughly studied in the 1970s inthe very earliest days of modern service research. Service marketing publicationsdeveloped conceptual models of how service is co-produced and emerges indirect interactions between service providers and customers through co-creationalprocesses. In the 1970s, co-production between service providers and users wasalso discussed in economic analysis (see Hill, 1977), where service was defined asa change in the conditions of a person or a good belonging to a person caused by theactivities of another party (Hill, 1977). Elaborating on Hill’s definition, Delaunayand Gadrey (1987) defined a service activity as an operation aiming at bringing abouta change of state in the condition of a user effected by a service provider, and oftenin collaboration between the user and the service provider (Delaunay & Gadrey,1987; for an extensive discussion, see Gadrey, 2000). Implicitly in Hill’s argumentsfor his definition and explicitly in Gadrey and Delaunay’s definition, service is seen asan interactive process. In service management, the decisiveness of interactions wereemphasised by using a moments-of-truth metaphor, introduced by Richard Normann

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(1984) and made popular by Jan Carlzon (1987). Co-creation and value conceptswere unknown in service marketing research at that time, so the models of the1970s aimed to analyse how service emerges. However, they also include an implicitunderstanding that the service that emerges and is experienced by customers shouldbe appreciated by them. To use today’s terminology, value should emerge, or becreated, in interactive processes.

Therefore, it may be possible to develop a conceptual model of value co-creationin service, consisting of resources and actions present in direct customer–firminteractions, on the basis of early service marketing research, such as the servuctionmodel developed in France by Eiglier and Leangeard (1975, 1976) and the interactivemarketing model developed in Finland by Grönroos (1978, 1984).6 The servuctionmodel focuses on value-creating resources; the interactive marketing model is moreinterested in how such resources function in direct firm–customer interactions.In North America, Shostack (1977) presented a molecular model that resembled bothEuropean models; it proposes that services consist of bundles of elements that existin a molecular fashion.

By similarly combining the models from the French and Nordic schools of thought,this study derives a model of value co-creation. Continued research after the 1970scertainly details various elements of the service encounter, and more recent studiesinclude service as a perspective on marketing and business, for both service- andgoods-based firms. However, because the purpose of this article is to study howvalue co-creation can be understood and operationalised using the foundation ofearly modern service marketing research, it excludes later research.

The servuction model

The French school model7 categorises resources required for co-production andco-creation activities during direct firm–customer interactions. The model adopts theview that the service is co-produced in interactions. Thus service emerges throughthe process and is experienced by the customer. In value-creation terminology, theseresources can be described as the value-creating resources that appear in directinteractions between parties. As illustrated in Figure 1, the model divides theseresources into four categories: contact employees (e.g. service personnel), physicalresources (artefacts, systems), focal customer (Customer A) and fellow customers(Customer B, who is also present during the service process). The active role ofcustomers as service production resources and participants in the service processwas noted not only by Eiglier and Langeard (1975, 1976) but also, for example,by Gummesson (1979), Lehtinen (1983), and Normann (1984).

Because services are partly open processes, a customer interacts in a serviceenvironment, which Bitner (1992) labels the servicescape, with other people,artefacts, and systems that appear in that environment. The group of people canconsist of two types: employees acting on behalf of the service provider and fellowcustomers present in the environment. The servuction model emphasises the need torecognise the role of fellow customers and their influence on the service experienceof a focal customer. Originally, the model also included physical resources, but thiscategory must be interpreted broadly to include not only resources as such but also

6For a discussion of the French and Nordic schools of service marketing thought, as well as the NorthAmerican school, see Berry and Parasuraman (1993).7The term ‘servuction’ was actually introduced somewhat later to denote this model (Langeard & Eiglier,1987).

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Figure 1 The servuction model by Pierre Eiglier and Eric Langeard (1975, 1976).

Service for Customer A is a function of interactions between

- Physical resources and A- Contact employees and A- Customer B and A

Physical resources(goods, tangible items,

systems)

Contact employees

Customer A

Customer B

Servicefor

Customer A

InternalSupportSystem

systems of various kinds. In the decades since, the types of systems have developedto include, among others, Internet-based and mobile systems.

Somewhat later, Lehtinen (1983, 1986) studied the interdependence among thevarious resources active in the service process, as indicated in the original model,and noted the importance of a fit across resource categories. In that context, hehighlighted the concepts of a contact person’s style of performing and the customer’sstyle of consuming, such that physical resources influence these styles in any givensituations (Lehtinen, 1983). Gummesson (1979) also emphasised the active roleof service employees in shaping customers’ perceptions, whom he subsequentlylabelled part-time marketers (Gummesson, 1991). In his service management system,Normann (1984) pointed to the importance of employees who have not just theright skills but also personalities that fit the nature of the service encounters and thefirm’s business norms (see also Normann, 1977). Service firms are not just personnelintensive but also personality intensive.

Behind the line of visibility (Shostack, 1981), an internal support system aims tosupport the resources for the parts of the service process that are visible to customersand in which they take part. From a value co-creation point of view, the supportsystem is not directly of interest. Only when considering value for the firm does itbecome important.

The interactive marketing model

The Nordic school model demonstrates how the value-creating resources of theservuction model function in direct collaborative interactions between a serviceprovider and a service user. Again using value-creation terminology, the modeldevelops activities of action variables that function in the directly interactive partof the value-formation process. As illustrated in Figure 2, the model dividesthese variables into three main categories: accessibility, interactive communication(between contact employees and customers, as well as between customers), andcustomer influence (by the focal and other customers present) on the serviceprocess (later termed customer co-production or customer participation in the serviceprocess).

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Figure 2 The interactive marketing model by Christian Grönroos (1978).

Service Concept

Acccessibilityof Resources

CommunicationCustomer -Employees

Consumer Influence(customer participation;

and co-production;peer communication)

(Auxiliary services)

The experiences with the service is dependant of-The accessibility of resources-Communication in customer –employee interactions-The customers and fellow customers influence on the process-Peer communication between customers

The action variables are clearly interrelated. For example, fellow customersmay alter the accessibility of a service by creating queues and longer wait times.They also may interfere with communication in the interactions between the focalcustomer and a contact employee. As Echeverri and Skålén (2011) argue, valuecreated in interactions results from value practices, such as informing, greeting,delivering, charging, and helping. Value also may be destroyed during customer–firm interactions, so it is necessary to create fit between value-creating resources andthe way they function, because ‘interactive value formation – value co-creation aswell as value co-destruction – derives from providers and customers drawing oncongruent . . . and incongruent elements of practices’ (Echeverri & Skålen, 2011,p. 370). Lehtinen (1983) emphasised this concept as well. Therefore, the valueconcept implicit in both the servuction and interactive marketing models allows forpositive and negative service experiences, or value creation and value destruction.

The many accessibility resources are varied, as listed by Grönroos (1990):Accessibility of the service depends, among other things, on:

– The number and skills of the personnel;

– Office hours, time tables, and the time used to perform various tasks;

– Location of offices, workshops, service outlets, etc.;

– Exterior and interior of offices, workshops, and other service outlets, etc.;

– Tools, equipment, documents, etc.; and

– The number and knowledge of consumers simultaneously involved in theprocess. (p. 76)

In addition, the way websites and mobile interfaces can be accessed and navigated,as well as how they respond to customer actions, has an impact on accessibility.Depending on how they experience these and other factors, customers considerit easy, acceptable, difficult, or, in the worst case, impossible to access the service

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process, which determines how the service emerges for them. The more positive theeffect, the more strongly the perceived accessibility in customer–firm interactionscontributes to value formation. Negative experiences instead may lead to valuedestruction.

Interactive communication takes place in all dialogical situations betweencustomers and contact employees. Drawing on the observation that all types ofinteractions between customers and the representative elements of the firm alsocommunicate something – namely, that all interactions are sources of communicativemessages (Duncan & Moriarty, 1997) – interactive communication should stem fromsituations in which customers react to the performance or mere existence of sometype of accessibility resource, including artefacts, processes, systems, and fellowcustomers. Interactive communication thus includes (Grönroos, 1990):

• Dialogue between contact employees and customers, depending on the attitudes,behaviours, and communication skills of the employees, what they say, and howthey say it;

• Interactions of customers with physical resources and tangible items in theservice process;

• Interactions of customers with systems of various kinds; and

• Interactions with fellow customers who are simultaneously present in the serviceprocess.

Finally, customer influence and participation8 include customers’ capability andwillingness to co-produce the service. Customers must have the knowledge, skills,and insight required to perform their tasks for the service to be performed. They alsomust be motivated to do so. Depending on how customers perform their tasks, theservice that emerges differs. Customers who are prepared and willing to performa task, such as preparing a complex document required to advance the serviceprocess, will probably receive better service. From a value-formation perspective,these customers’ impact will be co-creative. In cases in which customers cannot or donot want to perform tasks, the interactions will suffer, and the value impact will beco-destructive.

A synthesis: Value co-creation model

By combining the resource categorisation from the servuction model with theresources-in-action variables of the interactive marketing model, it is possible toderive a model of value co-creation in service. This model is based on the notionthat customers create value through usage as value-in-use and that the co-creation ofvalue therefore takes place in joint collaborative activities during direct interactionsof the parties. The content of the resource categories has evolved over time, but thesame categories still hold, as do the action variables. New accessibility resources and

8Customer participation was used by Richard Normann (1984) in his service management system to denotethe customer’s role in the system and by Jarmo Lehtinen (1986) in a study of the range of service firms todefine how customers’ activities influence the service they receive.

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Figure 3 Conceptual model of value co-creation in service.

PhysicalResources

(goods, tangibles,systems)

Contactemployees

Focalcustomer

Fellowcustomers

Accessibility Effect(physical, mental, virtual)

InteractiveCommunication

PeerCommunication

SERVICECONCEPT

EXPERIENCEDSERVICE

(Outcome + Process)

RESOURCECATEGORIES ACTIVITIES

Notes: The area inside the dotted circle denotes the value co-creation platform. Depending on howactively and successfully it is used by the parties, the co-created value effect differs.

new means of creating accessibility have emerged, as have new communication tools,but the basic structure of the model holds, as illustrated in Figure 3.

Co-created value for the customer

The service concept, or what the service provider wants to achieve and for whom, isthe starting point for developing a service offering, and the service process is wherethe service emerges for customers. A service concept should include a statement ofbenefits for customers. According to the perceived service quality model (Grönroos,1984), consumers assess the quality of a service according to their experiences ofboth what they get as an outcome of the service process (technical quality) andhow they experience the interactive part of the process (functional quality; see alsoLehtinen & Lehtinen, 1991). Customers’ value formation follows the same pattern.During the interactive part of the service process, value is co-created jointly by theservice provider and the customers. The service concept is the starting point; theexperienced service is the end point. However, though the outcome of the serviceprocess is experienced at the end of the process, the process itself, as part of theservice experience, is experienced throughout its progress. Between the starting andend points, various direct interactions that constitute value co-creation opportunitiestake place. The interactions are only a platform for co-creation that must be used bythe parties in a way that influences the value-formation process. In the worst case, itis mishandled and leads to the destruction of value for customers.

The middle part of Figure 3 depicts the value co-creation platform. The resourcesavailable for co-creation activities are to the left, and the activities enabled by use ofthese resources are to the right. As previously noted, the servuction model definesfour categories of co-creation resources: physical resources, contact employees, focal

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customer, and fellow customers. The arrows in the middle of the figure denote whichco-creation activities these resource categories trigger. Depending on the progressof the interactions between the focal customer and the other types of resources,the service becomes shaped in various ways, and value formation takes differentforms. As Grönroos (2011) points out, ‘value(-in-use) is accumulating, or destroyed,throughout this (service) process. It is not determined at the end of the processonly’ (p. 287). Therefore, value creation and destruction can occur during the sameinteractive process. Moreover, independent value creation based on experiences withthe outcome of the service process may contribute favourably or unfavourably to thecustomer’s assessment of value.

The value co-creation model, as suggested by the service logic, is also applicablein contexts in which firms supply physical products (goods) as the core of theirofferings. The products form one physical resource in the process, such as artefactsand systems, together with employees and possibly fellow customers. As Giarini(1999/2000) states, ‘for each product we buy, be that an automobile or a carpet, costof production or of manufacturing is very seldom higher than 20 per cent’ (p. 3). Therest of the cost stems from various services, such as logistics, maintenance, customertraining, invoicing, engineering, software upgrading, and recycling – all of which arepart of what customers experience and which influence the value that emerges forthem. Some experiences with the product take place in direct interactions with otherresources (e.g. test driving a car accompanied by the salesperson), but many of themprobably take place afterward, during independent value creation activities beyondthe value co-creation platform (e.g. driving the purchased car).

In the interactive marketing model, the activities or action variables in theco-creation process are the accessibility effect of interactions with various kindsof resources, interactive communication between the focal customer and contactemployees, and peer communication among customers. Accessibility effects areoften physical, but they may be virtual or even mental. Thus, stemming from theaccessibility of resources and systems, both physical and emotional effects arise, bothof which may affect the value-formation process and are caused by actions that takeplace on the value co-creation platform.

Interactive communication between customers and contact employees can takemany forms and be initiated by either party. It is dialogical in nature, but it maynot always lead to a dialogical process. It could have a positive effect on thevalue-formation process, leading to value creation, or it may have a negative effect,leading to value destruction. Finally, peer communication only takes place betweencustomers, but actions by fellow customers could interfere with communicationbetween the focal customer and a contact employee.

Co-creation-based value for the service provider

Value created for the service provider through direct interactions with its customers,or co-creation-based value, follows the same direct interaction process, illustrated inFigure 4.

In this figure, the value-creation process flows from right to left. The startingpoint is a customer participating in the service process, which enables directcollaborative interactions. The resource categories in action are physical resources,contact employees, and the customer. The customer may be a single person or a groupof customers simultaneously present in the service process. The amount of customer

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Figure 4 Conceptual model of value co-creation in service: value for the serviceprovider.

ACTIVITIES

Accessibilityof CustomerFeedback

InteractiveCommunication

RESOURCECATEGORIES

Physical Resources

and Systems

Customer

ContactEmployees

InternalSupportSystem

CustomerFeedbackInput

CUSTOMER PARTICIPATION

ACTIONABLEINFORMATION

Notes The area inside the dotted circle denotes the platform for value co-creation. The level of customer feedbackinput varies, depending on how effectively the firm manages to make use of it.

input the firm receives depends, primarily, on how well the service provider managesto gain access to customer feedback, which reflects how willing customers are toprovide feedback during the service encounter. It depends further on how well serviceemployees are prepared, receptive, and willing to register such customer input.Behavioural feedback is easier to access because it appears in normal interactions,but the receptiveness of contact employees is critical in this case. Customer inputemerges during interactive communication processes with contact employees, andalso as observations of how customers relate to physical resources and systems in theservice process. By enabling customers to provide feedback, using Internet-based andother systems, the service provider creates accessibility to customer feedback as inputfor the firm’s developmental processes. Provided that the customers decide to makeuse of such systems, the firm can get access to useful feedback in this way as well.The arrows in the figure denote how resource categories influence the various wayscustomer input emerges.

The interplay between the resource categories and activities or action variablesin the model determine how much input from customers is acquired and how it isacquired. However, to create value effects for the service provider, this input alsomust be registered, processed, and turned into actionable information that producesdevelopments through an internal support system. Typically, this system includesreporting systems, monitored by supervisors and managers, who register, evaluate,and use customer input. If improved resources and systems that contribute to betterfuture value experiences by the customers arise, the value for the firm as co-creation-based value has emerged from the same value co-creation process that generatedcustomer value. However, in this case, the customers are value facilitators, and thefirm is the value creator.

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Conclusion and discussion

When value co-creation is related to direct collaborative customer–firm interactionsand not used just to denote actors’ unspecified roles in the value-formation process,models from the early days of modern service marketing research can help clarifyand conceptually shape the notion of value co-creation. These models demonstratehow service emerges in interactions between sets of resource categories, as well ashow such interactions function to influence customers and value formation. Theresource categorisation of the servuction model (Eiglier & Langeard, 1975, 1976)and the action-oriented interactive marketing model (Grönroos, 1978) offer a strongfoundation for developing a model of value co-creation that includes both co-creationresource categories and co-creation activity categories. However, the model is a valueco-creation platform only. The strength of the influence on the value-formationprocess by activities taken by the parties depends on their willingness, motivation,and skills to perform in a way that contributes to value formation. Furthermore,value can be influenced negatively by destructive actions on the platform.

Using the reciprocity of value creation in service, the same interactive processthat contributes to the emergence of value for customers has the potential to createco-creation-based value for the service provider. To do so, the resources in serviceencounters representing the service provider, especially service employees, must bereceptive to registering valuable feedback from customers and their reactions, andthrough an internal support system that processes this input the firm must be able touse it for developmental activities. The firm must be prepared to receive customerinput and make use of it.

Early service marketing models provide a solid base for understanding anddeveloping value co-creation further. More recent research has added otheraspects, such as the servicescape concept (Bitner, 1992), but without changing thefundamentals of the model. New technologies and communication opportunitieshave expanded ways of working and communicating, such as peer communicationduring a service process using Twitter and other technologies. But again, thesechanges do not alter the basic nature of the model.

Research and management implications

To understand the total value-formation process analytically, it is necessary to assessthe actions taken by the firm, value facilitation, and independent value-creatingactivities taken by the customer, as well as joint collaborative value-creating activities,separately. Only the last sub-process is studied herein. The proposed conceptualmodels of value co-creation can enable researchers to analyse the value effects ofthe joint, directly interactive phase of value formation that takes place during serviceencounters. By studying how effectively the accessibility of various resources inservice encounters enhance value for the customer, and for the service providerin a reverse model, as well as how well interactive communications support valuecreation for the service-providing parties, it becomes possible to assess how well theflow of the process in a service encounter contributes to value-formation processesand its impact on the value that emerges. Moreover, researchers can assess howpeer communication between customers simultaneously present in the service processaffects value creation.

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The model of value for the firm emphasises that customer feedback that emergesfrom the service encounter does not automatically materialise as value for the serviceprovider. A preparedness to use customer feedback must exist, and an effectiveinternal support system is required, which manages to process the input and turnit into actionable information. The model indicates the importance of managingsuch a support system, which should trigger further research into this mediatingphenomenon in the use of customer feedback.

Indirectly, the model also enables investigations of how service providersfacilitate creation of value as value-in-use. The resource categories in the modeldemonstrate which elements support value co-creation, favourably or unfavourably.Thus researchers and managers can assess the effectiveness of service encounters.Moreover, they should trigger studies of how the accessibility of resources andsystems, interactive communication between service employees and customers, andpeer communication between customers influence the flow of the service processes, aswell as how value for customers emerges in the service encounter through co-creationactivities. From a managerial perspective, the proposed model demonstrates wheremanagers should direct their attention when planning and implementing serviceencounters to ensure a positive co-creational impact on customers’ value creation.

Finally, value co-creation during direct interactions of service encounters is onlypart of a customer’s value-creating process; the model connects value co-creationto the customer’s independent value creation. Thus it enables analyses of how thevalue outcomes of the co-creation activities of the direct collaborative interactionsinfluence the continuation of value formation. Customers use resources provided tothem during service encounters and integrate them into continued usage processes(e.g. wearing a clean shirt retrieved from the cleaners, driving a car bought from acar dealership or serviced by its workshop).

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About the author

Christian Grönroos is professor of service and relationship marketing at Hanken Schoolof Economics, Finland, and founder of its research and knowledge centre, CERS (Centrefor Relationship Marketing and Service Management). He is a pioneer of modern servicemarketing research. His research interests also include service management and marketing,relationship marketing, and marketing theory. He has been selected as a Legend in Marketing.

Corresponding author: Christian Grönroos, Department of Marketing, CERS Centre forRelationship Marketing and Service Management, Hanken School of Economics, Finland.

E [email protected]

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