TAPPING INTO THE MIND OF THE CONSUMER – Antecedents and consequences of value co-creation and the influence of dialogue

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TAPPING INTO THE MIND OF THE CONSUMER – Antecedents and

consequences of value co-creation and the influence of dialogue

By

Meryl Melissa Jilde Simone Schotanus

University of Groningen, Faculty of Economics and Business Supervisor: H.A. Ritsema

Student Number: 2142376

Newcastle University Business School Supervisor: E. Alamanos

Student Number: 6023969

Submission Date: December 5th, 2016 Word Count: 14586

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ABSTRACT

This research examines antecedent motives and consequences of value co-creation from the perspective of the consumer. The literature review distinguished two types of value co-creation behaviour: customer participation behaviour and customer citizenship. The main contributions from this study relate to the improvement of knowledge on the factors that precede and follow value co-creation behaviour. So far, little knowledge exists on the different dimensions and their antecedents and consequences. This study uses regression analysis as a method, with a sample of 117 customers that have had an engagement with a service. The results show the existence of significant relationships between intrinsic motivation and different perspectives of value co-creation behaviour, and a relationship between the two types of value co-creation behaviour and attitudinal loyalty. Dialogue was not found to have a significant interaction with the relation between value co-creation behaviours and attitudinal loyalty. Firms can make use of the insights from this research to target customers for engagement into value co-creation activities effectively. The paper contributes to theory by extending knowledge on the topic of value co-creation.

Keywords: Value co-creation, customer value, customer participation behaviour, customer citizenship behaviour, service-dominant logic, attitudinal loyalty, dialogue, consumer

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Master Dissertation

Antecedents and consequences of value co-creation and the influence of

dialogue

Meryl (Melissa, Jilde, Simone) Schotanus Prinsenstraat 12, 9711 CM, Groningen m.m.j.s.schotanus@student.rug.nl Tel: +31(0)6 42160510

Student number RUG: S2142376 Student number NUBS: B6023969

Word count: 14586 (excluding referencing and appendices)

December 5th, 2016

DD-MSc. Advance International Business Management & Marketing

Supervisor & assessor: Dr. H.A Ritsema (University of Groningen) h.a.ritsema@rug.nl

Supervisor & assessor: Dr. E. Alamanos (Newcastle University) eleftherios.alamanos@ncl.ac.uk

University of Groningen, Faculty of Economics and Business Nettelbosje 2, 9747 AE

Groningen Tel: +31(0)50 3633741

Newcastle University Business School 5 Barrack Road,

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ACKNOWLEDGEMENTS

This dissertation project marks the end of my Master at both the University of Groningen and Newcastle University Business School. This thesis is the final proof of competence for obtaining the Master of Science (MSc) double degree in Advanced International Business Management and Marketing

I would like to express my sincere gratitude to everyone who supported me during my studies and especially during the past months. First and foremost, I would like to thank my supervisors, Eleftherios Alamanos from Newcastle University Business School and Henk Ritsema from the Faculty of Business and Economics of the University of Groningen. I am grateful for your patience, valuable feedback and support.

A special thanks to everyone that participated in the survey and to those who have helped me in distributing it. I would also like to thank my fellow students, friends, and family who often helped me clear my mind and advised me on different matters. Last but not least, I would like to thank Ben for his encouragement during my academic career, but especially during the last months. I deeply appreciate your support and belief in me.

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LIST OF TABLES

Table 3.1 Overview of scales used 38

Table 3.2 Survey items 39

Table 4.1 Sample demographics 46

Table 4.2 Descwriptives 47

Table 4.3 Cronbach’s Alpha 47

Table 4.4 Correlation H1-H4 49

Table 4.5 Correlation H5-H8 49

Table 4.6 Regression H1 and H3 50

Table 4.7 Regression H2 and H4 51

Table 4.8 Regression H5-H8 52

Table 5.1 Outcome hypotheses 55

Table A1 Overview research questions and hypotheses 69

Table A2 Multicollinearity testing for H1 and H3 72

Table A3 Multicollinearity testing for H2 and H4 72

Table A4 Multicollinearity testing for H5-H9 73

LIST OF FIGURES

Figure 2.1 Conceptual model 33

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LIST OF ABBREVIATIONS

AL Attitudinal Loyalty

CA Cronbach’s Alpha

CPB Customer Participation Behaviour CCB Customer Citizenship Behaviour

DL Dialogue EM Extrinsic Motivation H Hypothesis IM Intrinsic Motivation IV Independent Variable RQ Research Question SD Standard Deviation

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1 1. INTRODUCTION

1.1 Background

As markets evolve, firms must continuously adapt their strategy to the changing market. An all-compassing strategic approach in managing the business is therefore important. To determine the right strategy, a firm must know what factors have an impact on the processes and profitability of the business. Management must understand how the environment is influencing the firm and understand how changes are unfolding (Papulova and Papulova, 2006). One of the things that changed in recent years, is the increased involvement of the consumer in the strategy of the firm. This resulted in a shift from a product-centric approach towards a more consumer-centric view. Consequently, in the academic marketing literature, this area of consumer focus has recently received increased attention (Fernandes and Remelhe, 2016).

In fact, with the rise of the internet, customers are no longer perceived as passive actors in the strategy of the firm. The worldwide web is shifting the balance of consumer and firm power, and consumers are given many opportunities to be forceful with firms (Pitt, Watson and Zinkhan, 2002). Consumers do not only have access to accurate, recent and unbiased information, online platforms such as Facebook give consumers the opportunities to talk to many other consumers and discuss problems. Also, consumers have more choices of products and services than ever before (Prahalad and Ramaswamy, 2004b). This means that consumers have an active role in today’s markets and also have a desire to play a role in the business of the firm (Fernandes and Remelhe, 2016; Hoyer et al., 2010). Consumers are now looking for ways to exercise their influence in all parts of the business system. Armed with their new tools and potential dissatisfaction about available products or services, consumers wish to interact with firms and co-create value.

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is a process through which the user becomes better off in some respect, and it may ultimately even increase the well-being of the consumer (Grönroos, 2008; Vargo, Maglio and Akaka, 2008).

However, despite the increasing importance of value co-creation, marketing scholars have paid relatively little attention to the theoretical development of a multidimensional model. Prior research about the blurring boundaries between firms and consumers mostly deals with value co-creation behaviour as a holistic concept (Alexander and Jaakkola, 2015; Fernandes and Remelhe, 2016; Nambisan and Baron, 2009). A distinction in types of value co-creation behaviour can help to improve understanding of more detailed aspects associated with value co-creation behaviour. The service marketing literature distinguishes two types; customer participation behaviour and customer citizenship behaviour (Groth, 2005). Subsequently, Yi and Gong (2013) proposed that it not only consists of customer participation behaviour, and customer citizenship behaviour, but that these two types also consist of different dimensions such as responsible behaviour, information searching, feedback or advocacy (Yi and Gong, 2013). Customer participation behaviour is related to in-role behaviour, whereas customer citizenship behaviour consists of voluntary behaviour that goes beyond consumer role expectations (Yi, Nataraajan, and Gong, 2011). These different dimensions have different patterns, antecedents and consequences, making it complicated but necessary for researchers to separate behaviours in assessing customer value co-creation behaviour (Yi and Gong, 2013).

This article continues the efforts of Yi and Gong (2013) of conceptualising antecedents and consequences of value co-creation behaviour. Taking into account all the dimensions proposed by Yi and Gong (2013), antecedents but also consequences of the two types of value co-creation behaviour are identified. First, this research conceptualises customer value co-creation behaviour as a multidimensional concept that consists of two higher-order factors, customer participation behaviour and customer citizenship behaviour, each made up of multiple dimensions.

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incentives such as career prospects, monetary compensation, or recognition by others (Fernandes and Remelhe, 2016).

Third, the discussion on consequences is focused on customer loyalty and the influence of dialogue. Several studies have shown the possibility of the connection between value co-creation and customer loyalty (Vega-Vazquez, Revilla-Camacho, and Cossío-Silva, 2013; Grissemann and Stockburger-Sauer, 2012). By co-creating value, customers can experience a sense of belonging to the firm, and display more loyalty and satisfaction (Grissemann and Stockburger-Sauer, 2012; Haro et al., 2014). Therefore, this study examines the effects of the two dimensions of value co-creation on loyalty. Just as important, is the notion that dialogue between consumers and the firm is one of the essentials in successfully co-creating value (Prahalad and Ramaswamy, 2004b). Failing to sufficiently implement dialogue in the value co-creation process may not only be important in the value co-co-creation process itself but can also impact the relation between value co-creation and customer loyalty. Consumers may feel neglected and offended when the firm does not respond to their suggestions (Prahalad and Ramaswamy, 2004b). The focus is here on the attitudinal viewpoint of customer loyalty, which is a personal attitude derived from different emotions of consumers toward the firm (Vega-Vazguez et al., 2013).

1.2 Research aim and research objective

Following the theory observations and practices mentioned in the previous paragraphs, the purpose of this study is to improve understanding of the dynamic concept of value co-creation. The aim is to conceptualise the antecedents and consequences of value co-creation behaviour from a consumer perspective. Especially, by looking into the different types of value co-creation behaviour proposed by Yi and Gong (2013). Therefore, the research objective is to understand what the antecedents and consequences of value co-creation are. To achieve this research objective, and to explore the gap in research, the following research question is proposed:

What are the antecedents and consequences of value co-creation and to what extent is dialogue important?

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2004b). Consequently, key issues identified such as consumer motivation, attitudinal loyalty and dialogue are considered to be important when studying antecedents and consequences of the different types of value co-creation behaviour. Therefore, to answer the research question, and to research this topic more in-depth, different sub-questions are identified:

(1) Are both intrinsic motivation and extrinsic motivation antecedents of customer participation behaviour and customer citizenship behaviour?

(2) Do customer participation behaviour and customer citizenship behaviour lead to attitudinal loyalty?

(3) Does dialogue moderate the relationship between customer participation behaviour and attitudinal loyalty?

(4) Does dialogue moderate the relationship between customer citizenship behaviour and attitudinal loyalty?

These questions provide the foundation for this research and guide the decisions about the research design, methods used, and conclusions.

1.3 Research contribution and focus

1.3.1 Theoretical relevance

Many previous studies have identified different consumer motivations in value co-creation (Hoyer et al., 2010; Nambisan and Baron, 2009; Füller, 2006), these studies mostly focused on the holistic perspective of value co-creation behaviour. So far, the distinction made between the two dimensions proposed by Yi and Gong (2013) has not been connected to consumer motivations, customer loyalty and dialogue.

Also, despite the considerable importance of the consumer loyalty for firms, and the increasing interest in the concept of consumer participation in marketing literature, empirical research is mostly focused on the role of the service provider (Chen and Raab, 2014). Research focusing on the service receiver is scarce and needs to be developed. Understanding consumer behaviour and understanding its effect on co-creating value successfully, is relevant for a successful business strategy and necessary for the reputation of firms (Palma and Hong, 2014).

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learn as much as possible about the consumer by engaging in dialogue. In the same way, Ballantyne and Varey (2006) conclude that dialogical orientation is needed to co-create value through dialogue and learning. Instead of only showing the importance of dialogue within the co-creating process itself, this study focuses on the idea dialogue is also essential in creating subsequent advantages next to value, more specifically, consumer loyalty.

So far, there is no all-encompassing construct that includes the different types of value co-creation behaviour distinguished by Yi and Gong (2013), the motivations that drive consumer value co-creation behaviour, the consequences of value co-creation such as consumer loyalty, and the impact of other essential aspects for brand loyalty, more specifically dialogue.

1.3.2 Managerial relevance

Over the past few years, practitioners have increasingly used value co-creation in their strategy (Haro et al., 2014). Hence, the Marketing Science Institute has declared value co-creation activities as a priority topic for investigation.

Practitioners need to understand consumers in order to co-create value with consumers. A multidimensional approach on what motivates consumers can help them in making strategic choices for the firm. Firms within the service industries can use the results from this research when setting up a value co-creation project and eventually successfully co-create value.

1.4 Structure of the dissertation

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2 2. LITERATURE REVIEW

2.1 Introduction

This chapter presents background information on value co-creation, provides an overview of relevant literature, and explains constructs and their implications for value co-creation. First, an explanation on service-dominant logic and subsequently value co-creation is provided, and the dimensions and underlying elements proposed by Yi and Gong (2013) are explained. Subsequently, the constructs consumer motivations, consumer loyalty, and dialogue are described. Each section first provides an explanation of the construct, after this, implications for literature are provided. Directly after each section the related hypotheses are formulated. These allow for measuring and answering research questions formulated for this research. Appendix 1, table A1 provides an overview of how the formulated hypotheses are related to the research questions for this research. Hypotheses 1 to 4 are proposed as the foundation of this study, illustrating the antecedents and the distinction between the two types of value co-creation behaviour. Further, hypotheses 5 to 8 are formulated to clarify value co-creation and its consequences more in-depth.

2.2 Service-dominant logic

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that value is always co-created with the client (Wennerholm, 2012). In service-dominant logic the value is therefore co-created by the mutual effort of not only companies but also personnel, stakeholders, clients, government agencies, and all other entities that are connected to the given exchange, in the end, the value is always decided by the receiver (in this case the consumer) (Vargo et al., 2008). Therefore, value co-creation can be defined as the process that allows the individual customer to determine the design of future products and services, the marketing messages and distribution channels where the products will be available in the context of experiential marketing (Prahalad and Ramaswamy, 2004b).

Now that consumers are not passive actors anymore and consumers have become resources that actively participate in the process, intangibles such as connectivity, interactivity and ongoing relationships are important (Vargo and Lusch, 2004). This line of reasoning is central in the service-dominant logic. In most publications of service-dominant logic, value creation has always been treated as co-creational. That is, value creation is treated as an all-encompassing process which includes not only the customer actions but also the actions of the service provider (Grönroos and Voima, 2013), thus; both parties are co-creators of value.

2.3 Value co-creation

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2.3.1 Perspectives of value co-creation

Although the views on value co-creation may differ, it is often seen as an experience oriented concept which focuses on the interaction between the firm and the consumer (Ramaswamy and Gouillart 2010). This implies that there are three aspects to the concept: the firm, the consumer, and the interaction between the firm and consumer. This research mostly focuses on the consumer and the interaction between the firm and the consumer, in the form of dialogue.

The perspective of the firm in value co-creation is about interactions between people everywhere in the firm’s system to create value (Terblanche, 2014). It is important for a firm to be structured when finding opportunities to co-create value with consumers while dealing with these different interactions. Most literature about the firm perspective focuses on creating environments that can facilitate value co-creation and the implications for employee roles in value co-creation. Prahalad and Ramaswamy (2004b) highlight that firms should create a platform where customers and employees can interact with each other. That is, employees should be well-trained and resources and information infrastructure should be established (Terblanche, 2014).

With customer empowerment on a level higher than ever before, the consumer now has an active role in the business of the firm (Fernandes and Remelhe, 2016). Due to new technologies and the internet, the consumer is able to co-create value with firms. Previous literature in the customer perspective domain of value co-creation has looked into aspects such as participation motivations, stages before participation, participation styles and their specific roles in value co-creation (Terblanche, 2014). For firms, the customer perspective in value co-co-creation can also be used as a tool to improve business.

Furthermore, understanding interaction is critical for understanding value co-creation (Prahalad and Ramaswamy, 2004b). Prahalad and Ramaswamy highlight that interactions should be of high quality in order to unlock new sources of competitive advantage. Hence, low levels of interaction are often seen as undesirable.

2.3.2 Value co-creation behaviour

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participation behaviour and customer citizenship behaviour. Yi and Gong argue that only few studies have explored customer value co-creation behaviour in depth, leading to an unclear composition and understanding of the concept. Not only does this distinction provide more clarity about the construct of value co-creation, it is also stated that these different dimensions have different patterns, antecedents and consequences (Groth, 2005).

2.3.2.1 Customer participation behaviour

Customer participation behaviour is in-role behaviour that is needed for successful co-creation (Yi and Gong, 2013). Emphasized are the four dimensions: information seeking, information sharing, responsible behaviour, and personal interaction. `

2.3.2.1.1 Information seeking

Customers seek information in order to clarify service requirements and to satisfy other cognitive needs. Customers want to understand the nature of the service and seek information on what their roles are in the value co-creation process (Yi and Gong, 2013). Consumers can seek for information in multiple ways. Information seeking can, for example, be done by directly asking persons for information, or gather information by monitoring behaviour of experienced customers.

2.3.2.1.2 Information sharing

Customers should provide resources in order to co-create value successfully. It is key that customers provide the right and essential information. Without the correct information, employees cannot be successful in performing their tasks. Information sharing with employees is essential in aligning the service with the needs of the consumer (Ennew and Binks, 1999). Subsequently, if consumers fail to provide essential and correct information, the quality of value co-creation can be low. Hence, Yi and Gong (2013) note that information sharing is key to successfully co-create value. Information sharing can, for example, occur when a patient shares information about their condition with a physician. The patient needs to provide essential and correct information, in order for the physician to make an accurate diagnosis.

2.3.2.1.3 Responsible behaviour

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Again, without the consumer behaving responsibly, Yi and Gong (2013) argue that little value co-creation occurs. Moreover, customers must be physically present and obey the orders of the employees in order to successfully co-create value.

2.3.2.1.4 Personal interaction

Ennew and Binks (1999) have defined personal interaction as the interpersonal relations between employees and customers, which are needed for successful value co-creation. When the social environment is more congenial, pleasant and positive, consumers are more likely to engage in value co-creation (Yi and Gong, 2013). Examples of aspects that can influence interaction between employees and consumers are; respect, courtesy, and friendliness.

2.3.2.2 Customer citizenship behaviour

Customer citizenship behaviour can be identified as more extra-role, and thus as voluntary behaviour that is not necessary for value co-creation but can provide extra value to the firm (Yi and Gong, 2013). This extra-role behaviour consists of four dimensions: feedback, advocacy, helping, and tolerance.

2.3.2.2.1 Feedback

According to Groth, Mertens, and Murphy (2004), feedback consists of solicited and unsolicited information provided by consumers to the employee. This feedback helps both employees and the firm in improving value co-creation in the long term. Arguing from the consumer perspective, consumers are experts due to their experiences with the service. This means that they can offer guidance and ideas to the employees. This behaviour can be valuable for the firm; however, it is not a requisite for successful service delivery (Yi and Gong, 2013). This illustrates the extra-role behaviour that characterizes feedback. An example of a situation in which the consumer provides feedback, is at a service provider such as the hairdresser. The customer provides his or her feedback after, or even during the haircut. This can be done already in the shop itself, but also through online channels.

2.3.2.2.2 Advocacy

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(Yi and Gong, 2013). Through positive word-of-mouth, advocacy can be an indicator of customer loyalty. Moreover, it helps for developing a good firm reputation and helps in promoting products and services of the firm (Groth et al., 2004). Extra-role behaviour is also relevant for advocacy, as advocacy is voluntary behaviour that is not mandatory for successful value co-creation (Yi and Gong, 2013). Additionally, advocacy can, for example, take place at a meeting with friends of family, where the consumer actively recommends a business to the rest of the group.

2.3.2.2.3 Helping

Helping indicates consumer behaviour that is aimed at assisting other customers (Yi and Gong, 2013). Due to the fact that consumers often behave in ways that are consistent with their expected roles, consumers mostly direct helping behaviour at their fellow consumers rather than at employees (Groth et al., 2004). Often consumers show a sense of social responsibility by helping other consumers that experience difficulties. The majority of consumers have experienced difficulties themselves and thus are willing to help fellow consumers. Helping can, for example, occur when a fellow customer has questions about the procedures at a service provider, and the helping customer notices this and assists.

2.3.2.2.4 Tolerance

Tolerance is about the willingness of the customer to be patient; this is relevant when for example customer’s expectations of adequate service, is not met, for example when there are delays (Yi and Gong, 2013). It is indicated that service encounter failure is one of the largest causes of customer switching behaviour (Keaveney, 1995). Switching behaviour can impact profitability negatively; customer tolerance is therefore important for the overall condition of the firm. Tolerance is present when there are delays at a public transport company, and the customer is maybe willing to wait for a few hours, minutes, or possibly not even at all.

2.4 Consumer motivations

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are directed and provoked. Consequently, in order tap into the mind of the consumer, it is important to find out what motivates them initially to co-create value. There are a number of studies that have identified different consumer motivations in value co-creation. Maslow’s theory of Human Motivation (1943) looks at different motivations. Maslow classifies them according to if they meet the basic, lower-order, psychological needs, consisting of food, water, safety and security, or if they meet higher-order needs linked to social activities, such as self-actualization, continuous self-improvement or esteem-building. Furthermore, Füller (2010) argues that consumers can be motivated by their personality and thus argues that consumers have heterogeneous motives. On the other hand, Prahalad and Ramaswamy (2004a) suggest that consumers are experimental by nature, and feel encouraged to take part in value co-creation due to a preference or passion for a particular brand. Equally important is the study by Vivek, Beatty, and Morgan (2012), which shows that customers’ motivation to engage is related to their goals, resources and expectation of value outcomes. Numerous other studies have looked into consumer motivations in value co-creation (Hoyer et al., 2010; Nambisan and Baron, 2009), a common approach however is to make a distinction between extrinsic and intrinsic motives to explain why consumers engage in value co-creation behaviour (Martínez-Cañas et al., 2016).

2.4.1 Intrinsic motivation

According to the self-determination theory, proposed by Deci and Ryan (1985), human behaviour consists of different underlying types of motivations. Self-determination is about a true sense of choice; the individual experiences a sense of feeling free in the thing that one has chosen to do. Because of the fact that the relationship between intrinsic and extrinsic motivation is not interactive, these constructs have to be assessed independently from each other (Guay, Vallerand, and Blanchard, 2000).

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curiosity and interest. In this case, the student does the homework mainly out of intrinsic motivation (Deci and Ryan, 2000).

Previous studies have identified intrinsic motivation mostly as an antecedent for value co-creation behaviour as a holistic construct (Martínez-Cañas et al., 2016; Vivek et al., 2012). The distinction between co creation-behaviour discussed by Yi and Gong (2013) is relevant to take into account when studying consumer motivations. Because both participation behaviour and citizenship behaviour can be the result of different intrinsic motivations. In the same way, the different dimensions identified under customer participation behaviour and customer citizenship behaviour can play a role in the different motivations for consumers to engage in the types of value co-creation behaviour.

Building on the idea that intrinsic motivations are inherent to the person experiencing them and the fact that intrinsic motivation is often a trigger for the general concept of value co-creation, intrinsic motivation is expected to be an antecedent for the separate types of customer behaviour proposed by Yi and Gong (2013). That is, a consumer might be looking for the need for competence and thus engage in co-creation behaviour (Füller, 2006), this aspect of intrinsic motivation makes them ready and happy to share essential and correct information in the value co-creation process in order to improve competence. This leads to the following assumption:

H1. The customers’ intrinsic motivation has a positive effect on their customer

participation behaviour

The second component of value co-creation behaviour identified by Yi and Gong (2013) is typified as consisting of dimensions that are all extra-role behaviour. Moreover, this behaviour is voluntary and thus not necessary. Consumers experience intrinsic motivation to engage in customer citizenship behaviour. As explained by Hoyer et al. (2010), high involvement with the service or being dissatisfied with the product can be an antecedent for value co-creation engagement. Subsequently, high involvement may be associated with a form of advocacy, where involved consumers actively refer to the service to their friends or family. In the same way, dissatisfaction could be a trigger for consumers to express their issues through advocacy. This can be an internal feeling that the customer experiences, an intrinsic motive.

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involvement, they are happy to help other consumers that experience difficulties, and are interested in improving things over the years. Providing adequate feedback to the firm will benefit both parties in the long run. Based on the idea that the separate types of customer behaviour proposed by Yi and Gong (2013) relate to intrinsic motivations, the next proposition is formulated:

H2. The customers’ intrinsic motivation has a positive effect on their customer

citizenship behaviour 2.4.2 Extrinsic motivation

Conversely, extrinsic motives are activated by the intention of obtaining a specific outcome or avoiding an undesired outcome. Extrinsic motives are associated with external incentives. This can be monetary compensation but also recognition by others, for example by verbal support (Fernandes and Remelhe, 2016). A day to-day example can be found again in a student doing homework. A student may do his or her homework because of the fear that his or her parents will sanction him/her for not doing it, or because he or she believes that it is valuable for the future career. Both reasons show that the student is extrinsically motivated, as the student is doing it for the instrumental value rather than for finding it interesting (Ryan and Deci, 2000). Moreover, consumers driven by external motives need external factors to motivate them to engage in co-creation behaviour (Martínez-Cañas et al., 2016). Füller (2006) argues that extrinsic motivations are often related to additional benefits, both socially as well as economically. Based on the idea that extrinsic motivation is proposed as an antecedent for leisure activities such as co-creation (Martínez-Cañas et al., 2016; Füller, 2006; Füller, 2010), extrinsic motivation is expected to be an antecedent for value co-creation as well. Moreover, specifically, it is an antecedent for the separate types of customer behaviour proposed by Yi and Gong (2013) as well.

Both participation behaviour and citizenship behaviour can be the result of extrinsic motivations. In the same way, the different dimensions identified under customer participation behaviour and customer citizenship behaviour can play a role in the motivations for consumers to engage in the types of value co-creation behaviour.

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can be expected that personal interaction has a role when consumers are aiming for recognition by others resulting from verbal support (Fernandes and Remelhe, 2016). The interactional aspect associated with personal interaction such as respect, courtesy, and friendliness also play a role in extrinsic motivations such as the aim for recognition by others. Furthermore, it is possible that customers are motivated to share information because they want to get recognition by others or if there is a monetary reward. This leads to the following hypothesis:

H3. The customers’ extrinsic motivation has a positive effect on their customer

participation behaviour

In light of the extra-role behaviour identified as citizenship behaviour, it is expected that consumers might experience extrinsic motivation to engage in customer citizenship behaviour. In this case, an essential aspect to look at is again the need for recognition by others (Fernandes and Remelhe, 2016). The helping dimension in customer citizenship behaviour proposed by Yi and Gong (2013) explains that consumers are often willing to help the other consumers. This helping behaviour is consistent with their expected roles. Foundational to this is the idea that fulfilling the roles that are expected can be a way of living up to the standards and creating recognition by others. Similarly, recognition by others can be created by showing a sense of social responsibility by helping out other consumers that experience difficulties.

Also, the extrinsic motivation of financial rewards demonstrates that driven by incentives such as money, consumers are more willing to engage in value co-creation behaviour (Martínez-Cañas et al., 2016). Therefore, it can be expected that monetary compensation also plays a role in the customer citizenship behaviour dimension proposed by Yi and Gong (2013). Based on this, the following hypothesis is formulated:

H4. The customers’ extrinsic motivation has a positive effect on their customer citizenship

behaviour

2.5 Customer loyalty

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do not only buy from the same service supplier over and over again, loyal customers also recommend those suppliers, and have a positive attitude towards them (Kandampully and Suhartanto, 2000). Sharing these positive experiences with fellow consumers can enable sales promotion, product quality improvement, and increase customer satisfaction (Di Gangi and Wasko, 2009).

With the benefits of customer loyalty being both crucial and wide-ranging (Rozensher and Fergenson, 2008), it is important to know if customer value co-creation can be identified antecedent for customer loyalty. Subsequently, firms can consider value co-creation as a tool for creating loyal customers.

2.5.1 Attitudinal loyalty

There has been constant debate about the relation between both attitudinal and behavioural loyalty, and also the importance of each in understanding consumer relationships (Liu-Thompkins, Williams, and Tam, 2010). Loyalty can be assessed on two dimensions, on attitudinal loyalty and on behavioural loyalty (Baloglu, 2002). Attitudinal loyalty encompasses beliefs of product superiority and brand knowledge, while behavioural loyalty only indicates that the consumer has intentions to repurchase the same brand and maintain the relationship with the particular service provider (Cheng, 2011; Liu-Thompkins, Williams, and Tam, 2010). Past research pointed out that defining loyalty based on repeat purchases is inadequate (Fournier, 1998). This is because customers decide to repeatedly purchase a product either based on their positive brand evaluation, or just because of an automatic process based on contextual factors. The latter has nothing to do with the brand or company (Huang and Yu, 1999). This means that looking at repeat purchases to define loyalty may contain noise and thus has little to do with true loyalty (Liu-Thompkins, Williams, and Tam, 2010). Liu-Thompkins et al. (2010) also illustrate that attitudinal loyalty can function as a motivation for repeated purchase. Thus, behavioural loyalty can be an outcome of attitudinal loyalty. Focusing on attitudinal loyalty is therefore an adequate approach for addressing consumer understanding in this study.

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consumers, the attitudinal loyalty is clear (Kursunluogly, 2011). Furthermore, attitudinal loyalty does not necessarily guarantee that consumers buy the products or services, rather it focuses on the psychological element (Vega-Vazguez, 2013). That is, it focuses on the identification with a particular service provider and preference of a product or service over alternatives (Jones and Taylor, 2007).

An issue with the behavioural approach is that repeat purchases are not always the result of psychological commitment towards the brand (TePeci, 1999). Thus, this behavioural focus on loyalty does not always include the inherent psychological feelings such as commitment. As mentioned in the previous paragraph, attitudinal loyalty does reflect the emotional and psychological attachment and engagement inherent in loyalty. Therefore, in order to capture the psychological reasoning in value co-creation, only attitudinal loyalty is included.

Value co-creation behaviour is expected to be an antecedent of attitudinal loyalty, as consumers are already engaged in the processes of the firm and co-create value with the firm. When consumers participate in creating and development of a new product or service, they gain a sense of belonging to the firm, this does not only often lead to more satisfaction, it also increases their level of loyalty (Grissemann and Stockburger-Sauer, 2012).

Another point of interest is the idea identified by Gustafsson, Johnson, and Roos (2005). They argue that commitment presents the strength of a relationship, and that this can mean that consumers have the devotion to go forward. Value co-creating consumers are expected to have a certain level of commitment in the value co-creating process and thus will be more loyal to the firm. It is expected that both consumer co-creation behaviour dimensions will lead to a loyalty. These considerations lead to the following hypotheses:

H5. A positive relation exists between the customers' participation behaviour and their

level of attitudinal loyalty with the firm

H6. A positive relation exists between the customers' citizenship behaviour and their

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2.6 Dialogue

2.6.1 The influence of dialogue

Dialogue is presented as one of the key features of co-creation theory and it implies interactivity, ability and willingness to act on both sides and deep engagement (Prahalad and Ramaswamy, 2004b). It has been described as a set of conversations between the customer and the firm (Levine et al., 2011). Dialogue is not just listening to the customers; it implies shared learning and communication between both value co-creating parties. The communication involved in the traditional value-creation process moved solely from the company to the consumer (Haro et al., 2014), whereas current interactions between companies and consumers entail continuous dialogues. Both the firm and the consumer are active and engaged. Haro et al. (2014) also argue that these interactions can cause consumers to co-create unique experiences. Next to creating unique experiences, dialogue can create and maintain a loyal community (Prahalad and Ramaswamy, 2004b). Conversely, failing to have conversation and responding to customers is likely to interfere with the positive associations of the customer (Keller, 1993). This shows that dialogue is important in value co-creation and that lack of dialogue can even lead to value co-destruction (Terblanche, 2014).

2.6.2 The moderating effect of dialogue

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H7. When there is a low degree of dialogue, customer’s participation behaviour will

have a weaker effect on attitudinal loyalty, compared to when there is a high degree of dialogue

H8. When there is a low degree of dialogue, customer’s citizenship behaviour will have

a weaker effect on attitudinal loyalty, compared to when there is a high degree of dialogue

2.7 Conceptual model

The developed hypotheses capture the relationships that are expected between the concepts. Figure 2.1 visualizes the conceptual model that was created to present the concepts and their relations. It is proposed that intrinsic motivation has a positive effect on both customer participation behaviour, (H1) and customer citizenship behaviour, (H2). Furthermore, extrinsic motivation is expected to have a positive effect on customer participation behaviour (H3), and customer citizenship behaviour, (H4). This part of the conceptual model can be seen as consisting of direct relationships between the constructs. Consequently, correlation and regression analysis can be appropriate for data analysis.

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3 3. METHODOLOGY

In the literature chapter, hypotheses are developed based on discussion of the relevant literature. In this chapter, the method of testing for this research is described. To answer the research question and test the hypotheses, the research design is presented here. First, the research strategy is explained, this section elaborates on how this research is viewed. Second, the primary data collection discusses the techniques used, a description of the sample, relevant measurements and validity issues. And third, data analysis provides an insight into the means by which the results will be analysed and the chapter is concluded by considerations regarding ethics and limitations that can impact the study.

3.2 Research strategy

3.2.1 Research philosophy and approach

An over-arching research philosophy is used to underpin the research strategy and the methods that are used in a study (Saunders, Lewis, and Thornhill, 2012). It influences the way in which the research process is viewed. Research philosophy can be classified into two different considerations: ontological and epistemological (Bryman and Bell, 2011). The first consideration looks at the nature of reality, it raises questions of the assumptions that researchers have in terms of how the world operates. Different philosophical positions in this view consist of either objectivism, known as positivism or subjectivism, known as interpretivism. The objectivism view holds that social entities exist in reality external to the social actors concerned with their existence. This means that reality cannot be affected by investigating it and thus cannot be influenced by the researchers (Saunders et al., 2012; Collis and Hussey, 2014; Bryman and Bell, 2011). The subjectivism view portrays that perceptions and consequent actions of social actors result in creation of social phenomena (Saunders et al., 2012). This indicates that reality is in our minds and is therefore seen as subjective (Collis and Hussey, 2014).

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2011, p. 15). This view also consists of two different philosophy positions: positivism and interpretivism. The first position stipulates that knowledge is developed by looking at social reality by means of observation of objective facts. Whereas the second position advocates that knowledge is developed by constructing ideas, which are initiated from the observed and interpreted social constructions. This means that interpretivism is based on the truth and the fact that social reality is of meaning to human beings if the human action is meaningful (Bryman and Bell, 2011, p.18).

This research focuses on existing theories and uses these theories to develop hypotheses. Considering the above explanations, this study adopts a positivist philosophy to the development of knowledge. A structured methodology is relevant for a positivist approach. In addition, a conceptual framework is developed in the literature review. This means that the research approach adopted in this study is abduction. In the abductive approach, existing theories are modified and tested with data (Saunders et al., 2012).

3.2.2 Research design

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3.3 Primary data collection

3.3.1 Data collection technique

Literature distinguishes two types of data that can be collected: primary and secondary data. In this research, only primary data is collected to find evidence for the hypotheses proposed. Primary research is necessary to acquire data that is related to all the variables in the construct mentioned in the previous sections. Primary data is collected by using a survey. Moreover, a self-administrated online survey will be used to collect empirical data from participants. Surveys can be used for explanatory research and can support examination and explanation of relationships between variables by collecting the data necessary for testing the hypotheses (Saunders et al., 2012).

The online survey is collected by means of Qualtrics at one specific moment in time. This cross-sectional approach provides the opportunity to gather data in a relatively short period. Qualtrics allows us to send the participants a link via platforms such as Facebook with a request to participate in a study that is conducted on behalf of the University of Groningen and the Newcastle University Business School. A survey will be used because it has the potential to reach a large audience and is also accessible for most participants (McIntyre et al., 2004). Moreover, cross-cultural samples are more easy to access via online surveys, due to the ease of the internet. Also, using a survey allows for acquiring a large amount of data which supports the reliability of the statistical analysis.

3.3.2 Population and sample

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Young consumers are the main target of this study since they reflect the highest amount of value co-creation participants (EY, 2014). Consumers within the age group of 15-29 are seen as most active in participation in product and service development. In order to make this research internationally valid, an international sample is drawn. This cross-country sample is useful, as the nature of value co-creation can also be highly international. Firms are no longer bound to their home country, and with the power of the internet, co-creating value with consumers is a globally relevant concept (Haro et al., 2014). Furthermore, social media gives the modern consumer worldwide the ability to find information about firms and engage with those firms. Implications for consumer value co-creation is not limited to specific countries only.

3.3.3 Variables and measurement

In order to establish validity, measures from existing scales are adopted in the questionnaire. The scales are modified to fit the style of this research. To measure the variables, researchers developed questions for the questionnaire. Sufficient internal reliabilities were tested for these questions. The usage of existing scales and questions are an excellent way to establish not only a reliable questionnaire, but also to manage time (Saunders et al., 2012). Table 3.1 shows the scales used per variable.

Survey item Source of survey item Variable characteristic

1. Intrinsic motivation Guay et al., 2000, Fuller, 2006 Independent

2. Extrinsic motivation Guay et al., 2000, Fuller, 2006 Independent

3. Customer participation behaviour

Yi and Gong, 2013 Dependent (Model part 1),

Independent (Model part 2) 4. Customer citizenship

behaviour

Yi and Gong, 2013 Dependent (Model part 1),

Independent (Model part 2)

5. Attitudinal loyalty Yi and Jeon, 2013 Dependent

6. Dialogue Mazur and Zaborek, 2014 Moderator

Table 3.1 Overview of scales used

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‘’interaction with a service’’. All items were captured on a 7-point likert scale, which was anchored at 1=’Strongly Disagree’, and 7=Strongly Agree’.

One of the first questions in the survey was used to determine what type of consumer was participating. The question: ‘Have you ever had an experience with a service provider?’ determined whether the consumer would be answering questions based on a true experience, or based on imagining they had an experience with a service provider. The variable intrinsic motivation was measured through twelve items, consisting of four items proposed by Guay et al. (2000), and eight items proposed by Füller (2006). Extrinsic motivation was measured by using scales of the same research; it was measured through thirteen items in total, eight from Guay et al. (2000), and five items from Füller (2006). The variables customer participation behaviour and customer citizenship behaviour are adapted from the scale proposed by Yi and Gong (2013) and are measured on multiple dimensions. Customer participation behaviour is measured through sixteen items which consist of: information seeking (3), information sharing (4), responsible behaviour (4), and personal interaction (5). Customer citizenship behaviour is measured through thirteen items, which consist of: feedback (3), advocacy (3), helping (4), tolerance (3). After this, the variable attitudinal loyalty is measured through four items proposed by Yi and Jeon (2013). Finally, dialogue is measured by a nine-item scale proposed by Mazur and Zaborek (2014). All the items used in the survey can be found in table 3.2. The final questionnaire distributed can be found in appendix 3.

Constructs Items

Intrinsic motivation

Guay et al., 2000  Because I thought the activity would be interesting

 Because I thought that the activity would be pleasant

 Because the activity is fun

 Because I feel good when I do this activity

Fuller, 2006  Because I was curious

 Because I enjoy engaging in this activity  To experience new and different things  Because for me value co-creation is rewarding  Because I wanted to gain new knowledge/expertise  Because I wanted to meet others with similar interests

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Extrinsic motivation

Guay et al., 2000  Because I was doing it for my own good

 Because I thought the activity would be good for me  By personal decision

 Because I believe that the activity is important for me  Because I was supposed to do it

 Because it was something that I have to do  Because I did not have any choice

 Because I felt that I had to do it

Fuller, 2006  Because I was interested in the offered reward

 To gain a sense of accomplishment

 Because I hoped to get a monetary compensation  Because I expected a compensation in return  To become known as a co-creator of value

Customer participation behaviour

Yi and Gong, 2013

Information Seeking  I have asked others for information on what this service offers

 I have searched for information on where this service is located  I have paid attention to how others behave to use this service well

Information sharing  I clearly explained what I wanted the employee to do

 I gave the service provider proper information

 I provided necessary information so that the service provider could perform his/her duties

 I answered all the service related questions

Responsible behaviour  I performed all tasks that are required

 I adequately completed all the expected behaviours  I fulfilled responsibilities to the service provider  I followed the service providers’ directives or orders

Personal interaction  I was friendly to the service provider

 I was kind to the service provider  I was polite to the service provider  I was courteous to the service provider  I did not act rudely to the service provider

Customer citizenship behaviour

Yi and Gong, 2013

Feedback  If I have a useful idea on how to improve the service, I let the service

provider know

 When I receive good service from the service provider, I let the service provider know

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 When I experience a problem, I let the service provider know about it

Advocacy  I said positive things about the service provider to others

 I recommended the service provider to others

 I encouraged friends and relatives to use the service provider

Helping  I assist other customers if they need my help

 I help other customers if they seem to have problems  I teach other customers to use the service correctly  I give advice to other customers

Tolerance  If the service is not delivered as expected, I would be willing to put

up with it

 If the service provider makes a mistake during service delivery, I would be willing to be patient

 If I have to wait longer than I normally expected to receive the service, I would be willing to adapt

Attitudinal loyalty

Yi and Jeon, 2003  I like services from this service more so than other services

 I have a strong preference for this service

 I give prior consideration to this service, when I have a need for a service of this type

 I would recommend this service to others

Dialogue

Mazur and

Zaborek, 2014

 This service maintains a multichannel dialogue system engaging with the consumers in production and consumption processes  This service encourages customers to enter dialogue leading to

enhancing their experiences with their services

 This service gives the customers ample opportunities to share with them their ideas for increasing their satisfaction with service experience

 This service supports a dialogue with their customers to foster their preference for their services over services of competitors

 This service enhances their credibility by holding a dialogue with customers who are not satisfied with their service

 This service is actively involved in discussions on internet forums and social media (e.g. on Facebook)

 This service actively supports user groups of the services

 This service has an open and sincere dialogue with all their partners

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3.3.3.1 Control variables

Age and gender, are used as control variables in this study. These variables are included to gain knowledge about the profile of the sample. Furthermore, previous literature suggests that value co-creation behaviour affects attitudinal loyalty, but the strength of the relationships vary across different studies and situations, suggesting that there may be other variables that influence attitudinal loyalty. To reduce the possibility of unmeasured influences, this research controls for age and gender. Each variable is measured with one item by asking ‘What is your gender?’, and ‘What is your age?’.

3.3.3.2 Pre-test

The testing procedures in this study consist of two phases. A pre-test in which the questionnaire is evaluated for fit, and a regular test, in which the variables related to the hypotheses are tested. For the pre-test, a small sample of five people participated to find out if everything is understandable. This is done to find out if all instructions, explanations, questions and scale items are understood by participants. The questionnaire was slightly adapted based on the comments made in the pre-test. First, the story explained in the first section of the questionnaire was confusing, long, and perceived as not relevant. This story was deleted and another short, more appropriate, explanation was added. Second, results of the pre-test show that most participants have experienced an engagement with a service. Thus, the option to answer ‘’NO’’ to this question was not completely necessary. However, it is decided to keep this in the survey, to see if a larger sample size possibly leads to some participants answering ‘’NO’’, all options should be considered. Third, items explaining interaction with employees was changed to having interaction with a service. No additional changes were made.

3.3.4 Validity and reliability

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3.4 Data analysis

Due to the quantitative nature of this study, statistical analysis is needed to test the data collected. The data is analysed in IBM SPSS 23.0 (IBM SPSS, 2015). Initially, the dataset was screened to prepare it for the analysis and validate it. All incomplete responses were deleted, also all respondents answering ‘no’ for the control question for experience with a service were not taken into account. This question was used to check if the participant indeed had an experience with a service and thus was a fit for the sample. A question that plagues most researchers is what sample size is needed for their research. However, there is no clear-cut answer to this question. If researchers wish to use some form of statistical analysis on their data, the sample size of thirty is held to be the minimum amount of cases (Cohen et al., 2000). Moreover, the rule of thumb for correlation or regression analysis stipulates that the sample size can be no less than fifty participants, also it increases with larger numbers of independent variables (IVs) (Green, 1991). Green suggests N> 50 + 8 m (m is the number of IVs) for testing correlation. In this study this implicates that a sample size of N> 50 + 8 x 4 = 82 participants is necessary to have statistical power.

3.5 Ethical considerations

When conducting a research study, researchers need to be aware of the ethical concerns that could arise in relation to the conduct of the research project (Saunders, 2012). Prior to this study, The University of Newcastle gave approval in terms of ethical considerations. An area that needs extra consideration is the distribution of the online survey. Due to concerns about the privacy, confidentiality and anonymity of the participants, and data processing and storage, careful considerations should be taken into account (Saunders, 2012). Before distribution of the survey, all participants were informed about the nature of the study. Subsequently, they were informed about their voluntary participation and anonymity, and the researchers email address was specified if any questions would arise. All participants were aware that the collected data was recorded and stored. Eventually, participants gave their consent to participate.

3.6 Limitations

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4 4. FINDINGS

This chapter will summarize the findings gathered by the survey and test the hypotheses. This is an extension of the previous chapter, which provided foundations for methodology and analysis. First, the data is checked for incomplete responses and these responses are deleted from the sample. Second, descriptive statistics and reliability for the variables and the sample are provided. Finally, the main findings and the statistical procedures for testing the hypotheses are provided to be able to interpret the results.

4.2 Preliminary analysis

The data was first screened for non-responses and abnormal and incomplete responses. These responses were deleted from the final data set. Responses were gathered over a period of 14 days, this resulted in a data set of N = 186. People who did not have an experience with a service were also deleted from the data set. After deleting all incomplete and unneeded responses, a dataset of N = 117 remained. This sample size allows for testing and still yields reliable results when doing correlational research (Cohen, Manion, and Morrison, 2000).

4.2.1 Sample characteristics

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Variable Category Frequency Percentage

Gender Male Female 51 66 43.6 56.4

Age 21 and below

22-25 26-35 36-45 46-55 55-64 65 and older 9 71 26 4 1 4 2 7.7 60.7 22.2 3.4 0.9 3.4 1.7 Education Nationality No formal education Primary school

Secondary school or equivalent Higher education/University other Dutch German British Swedish Taiwanese Malaysian American Indian Italian Romanian Finnish Greek Belgian Czech Slovakian - 1 17 96 3 90 6 1 4 5 1 1 1 1 1 1 1 1 1 2 - .9 14.5 82.1 2.6 76.9 5.1 .9 3.4 4.3 .9 .9 .9 .9 .9 .9 .9 .9 .9 1.7

Table 4.1 Sample demographics 4.2.2 Descriptive results

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Schindler, 2011). By looking at table 4.2 it can be concluded that all constructs are normally distributed. As such, no problems with normality are expected when testing the hypotheses.

Survey item Mean SD Skewness Kurtosis

Intrinsic motivation 4.45 1.16 -.76 .30

Extrinsic motivation 4.11 .78 .29 1.05

Customer participation behaviour 5.34 .68 -.47 .76

Customer citizenship behaviour 4.96 .74 -.24 .36

Attitudinal loyalty 5.05 1.15 -1.09 1.54

Dialogue 4.86 .87 -.28 -.47

Table 4.2 Descriptives 4.2.3 Reliability

Several variables that measure the same concepts are summated to a new variable (Hair et al., 1995). This can only be done when the scale is highly reliable and has high validity. As such, Cronbach’s alpha (CA) was used to test for reliability and validity (Saunders, 2012). Table 4.3 displays the results of Cronbach’s Alpha coefficients. DeVellis (2003) points out that Cronbach’s Alpha should not be below 0.7. No construct in this study has a Cronbach’s Alpha coefficient below 0.7. therefore, there are no issues with the internal consistency in the measurement.

Construct Cronbach’s Alpha Number of items

Intrinsic motivation .91 12

Extrinsic motivation .78 13

Customer participation behaviour .87 16

Customer citizenship behaviour .82 13

Attitudinal loyalty .90 4

Dialogue .86 9

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4.3 Hypothesis testing

Chapter 2 explained the developed hypotheses for this study. These hypotheses are the foundation for the statistical tests performed in this section. The hypotheses are divided into two parts, that is, hypotheses 1-4 measure antecedents of value co-creation, and hypotheses 5-8 measure consequences of value co-creation. The first part focuses on direct relationships between constructs, whereas the second part involves an interaction effect with dialogue. Therefore, both parts will be tested separately.

The hypothesis testing will consist of two main steps. First, a correlation test is performed to assess the strength of the relationship between the variables (Saunders et al., 2012). More specifically, the main variables are tested by looking at Pearson correlation coefficient and can be found in table 4.4 and 4.5 below. Secondly, a regression analysis is used for this research design, as it is a tool to study the relationships between both dependent and independent variables, and the influence of a moderating factor (Cohen, Manion, and Morrison, 2000). Therefore, hypotheses 1-4 are tested with regression, and hypotheses 5-8 are tested with regression with moderation.

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Correlations IM EM CPB CCB Intrinsic motivation 1 .168* .270** .356** Extrinsic motivation .168* 1 .125 .161* Customer participation behaviour .270** .125 1 .324** Customer citizenship behaviour .356** .161* .324** 1 Table 4.4 Correlations H1-H4

Correlation is significant at the level of 0.05 and 0.01 respectively denoted as * and **. Significance levels are one-tailed

Correlations CPB CCB AL D Customer participation behaviour 1 .324** .445** .281** Customer citizenship behaviour .324** 1 .583** .607** Attitudinal loyalty .445** .583** 1 .598* Dialogue .281** .607** .598** 1 Table 4.5 Correlations H5-H8

Correlation is significant at the level of 0.05 and 0.01 respectively denoted as * and **. Significance levels are one-tailed

4.3.1 Antecedents of value co-creation

TAPPING INTO THE MIND OF THE CONSUMER – Antecedents and consequences of value co-creation and the influence of dialogue