Exploring value co-creation behavior and service innovation with service dominant logic to measure business performance

Abstract

The current developments in the behavior of marketing thinking have transformed the traditional style of observing consumers and producers separately to the involvement of customers in producing goods and services. This transformation shows that the values generated by consumers together with the organizations in developing innovative services are through active collaborations. Traditionally, product values are generated by the manufacturer, which mainly focus on customer satisfaction after purchasing the product rather than by the experience of using the goods and services that are brought by the customers. On the contrary, service dominant logic suggests that customers can be involved in generating the needed services with the organizations thereby enabling a significant influence on the process of value creation. In the past decades, numerous researchers have studied the ideas relating to the value co-creation in different perspectives, in particular to the processes and effects of value co-creation; however, it is lacking study relating value co-creation with customers' behavior, and their linkages with the performance of services and business outcome. This research aimed to fill these gaps and has identified the relationship between value co-creation behavior and innovation in services with dominant service logic. It also examined the individual customer interactions among the value co-creation behavior, innovation in services and service dominant logic. Additionally, this research also investigated the contributions of co-creation behavior in service innovation to performance; how the use of service innovation and value co-creation behavior can be impacting the business performance; and the relationship between service dominant logic and the performance of the organizational business. This research focused on the service industry, the organizations in this industry are concerning about the quality of their services and customer relationships are the key factors affecting their performance. By utilizing service dominant logic for value co-creation behavior and service innovation as a framework, this research conducted an empirically study to investigate how the value co-creation behavior with customers can affect the business performance for service industry. Furthermore, this research also identified the factors which significantly affect the performance of service innovation. The results from this research indicate that the service dominant logic not only plays an important role during value co-creation process but also mediate the relations for innovating services and business performance. Customer value co-creation behavior has significant influence on the factors relating to service innovation performance, which ultimately triggers the novelty of services in organizations. The findings from this research have both theoretical and managerial impactions that engaging customer in value co-creation through communication and understanding of customer behavior will lead to have a better service innovation and performance, and ultimately lead to a better business performance.