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Value cocreation in service interactions: Dimensions and antecedents Carmen Neghina, Marjolein CJ Caniëls, Josée MM Bloemer and Marcel JH van Birgelen Marketing Theory published online 13 October 2014 DOI: 10.1177/1470593114552580 The online version of this article can be found at: http://mtq.sagepub.com/content/early/2014/10/10/1470593114552580

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Article

Value cocreation in service interactions: Dimensions and antecedents

Marketing Theory 1–22 ª The Author(s) 2014 Reprints and permission: sagepub.co.uk/journalsPermissions.nav DOI: 10.1177/1470593114552580 mtq.sagepub.com

Carmen Neghina Open University of the Netherlands, the Netherlands and Institute for Management Research, Radboud University Nijmegen, the Netherlands

Marjolein CJ Canie¨ls Open University of the Netherlands, the Netherlands

Jose´e MM Bloemer and Marcel JH van Birgelen Institute for Management Research, Radboud University Nijmegen, the Netherlands

Abstract The purpose of this article is to further develop the conceptualization of value cocreation by discussing its dimensions and antecedents. We propose that in service interactions, value cocreation should be understood as a joint collaborative activity between service employees and customers, consisting of six dimensions, which correspond to simpler joint actions (individuating, relating, empowering, ethical, developmental, and concerted joint actions). Furthermore, we derive propositions about nine antecedents of value cocreation labeled as communicating, relating, and knowing factors. This article is among the first to propose a conceptually richer understanding of value cocreation illustrated via an analytical framework, which can drive both future research and guide managers interested in implementing the service-dominant logic (S-D logic) principles within their service providing firms. Keywords Customers, service-dominant logic, service employees, service interactions, value cocreation

Introduction Recent years have seen a surge in research in the field of S-D logic, which has been influential in reshaping the key elements of marketing. A key concept within this field is that of value cocreation, the idea that value is not solely being created for the customer by the provider of a service but

Corresponding author: Carmen Neghina, Faculty of Management, Science and Technology, Open University of the Netherlands, Valkenburgerweg 177, 6401 DL Heerlen, the Netherlands. Email: [email protected]

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for and by both parties throughout the time of their interaction. Since Vargo and Lusch’s (2004) seminal article that first introduced the premises of the S-D logic, more than 890 articles mention cocreation in their title,1 yet this literature is marred by significant conceptual confusion and ambiguity. Building consensus around the conceptualization of value cocreation is becoming increasingly important, as the concept has been named a research priority by the Science of Service (Ostrom et al., 2010). A better conceptualization of value cocreation could eliminate ambiguities regarding the locus of value cocreation, its dimensions, the actors, and their interrelationships as well as the relationship between the process and activities involved in value cocreation and their outcomes. Originally, value cocreation was seen as a common practice, in lieu of Vargo and Lusch’s (2004, 2008) propositions, which considered all customers to be value cocreators, a view that has been recently refined by Gro¨nroos (2012), who distinguishes between customer value creation, which relies on the activities of customers as economic actors, and value cocreation, which requires the interaction of two or more economic actors (customers and providers). This conceptualization is also in line with earlier work by Prahalad and Ramaswamy (2000, 2004) as well as Ballantyne and Varey (2006). While this distinction has been useful in setting some boundaries for value cocreation (Gro¨nroos and Voima, 2013), there are nevertheless further questions to be answered. For instance, several researchers consider value cocreation to be a complex concept consisting of several dimensions, yet there is little agreement as to what these dimensions are. Randall et al. (2011) argue that connection, trust, and commitment are the possible dimensions of a larger concept of cocreation; and Yi and Gong (2013) discuss the customer perspective on cocreation and consider it to be a third-order factor consisting of two main dimensions, customer citizenship, and customer cocreation behaviors. These articles are not always clear in explaining the reasoning for deriving these dimensions and lack clear definitions of cocreation or its dimensions, making it difficult to assess their validity, therefore, leaving an important gap in the literature on value cocreation. At the same time, some articles equate cocreation and coproduction (Vargo and Lusch, 2008), cocreation and codesign (Ple´ and Ca´ceres, 2010), or cocreation and co-innovation (Schau et al., 2009). Alexander (2012) even argues that value cocreation has become a hypernimic term used to describe a wide range of activities and interactions, including but not limited to codesign, co-innovation, shared inventiveness, co-conception, copromotion, co-pricing, co-disposal, prosumption, and coproduction. This, in turn, has made it difficult to understand what researchers and practitioners refer to when discussing value cocreation, as various groups of researchers make different paradigmatic assumptions regarding the nature of value, service, and of course, value cocreation (Tronvoll et al., 2011). Moreover, to date, most studies of value cocreation have focused on either the meso (Lusch, 2011) or macro perspectives (Layton, 2008; Lusch, 2006; Lusch and Webster, 2011; Vargo and Lusch, 2011; Wieland et al., 2012) rather than the micro level of service interactions (Chandler and Vargo, 2011), therefore, providing few answers regarding how customers and employees engage in value cocreation at the basic level of direct interactions. This is especially concerning, as the micro level of value cocreation analysis can set the building blocks for better understanding value cocreation in more complex settings with a higher number of interacting economic actors as well as longitudinal, repetitive interactions, or different interdependencies between the interacting actors. As highlighted by Lusch (2006), useful insights for the development of a detailed macro-marketing perspective emerge from fundamental, micro building blocks. Therefore, understanding the basics of value cocreation at the micro level of customer-service employee interactions can provide useful

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insights for the development of a more general macro-marketing view of value cocreation that can complement the higher analysis levels of service ecosystems and complex service networks (Vargo, 2011). This article is a continuation of the latest efforts of conceptualizing value cocreation. While the extant literature seems quite disparate at points, we argue that these conceptualizations of value cocreation share a common theme, that of cocreation as a joint activity between two or more economic actors with the purpose of creating value beyond what each actor can achieve independently. First, we propose that value cocreation (at the micro level) can be understood as a joint activity consisting of six dimensions, corresponding to simpler joint actions: individuating, relating, empowering, ethical, developmental, and concerted joint actions. These dimensions have been originally discussed as part of an S-D logic firm orientation by Karpen et al. (2012) and, in this article, are adapted to the micro level of service interactions between service employees and customers. Second, we continue the search for conceptual clarity by differentiating these dimensions from a set of nine antecedents pertaining to relating, communicating, and knowing, which have been identified as fundamental facilitators of value cocreation (Ballantyne and Varey, 2006). The discussion of the antecedents strengthens our conceptualization as it sets the boundaries of value cocreation by distinguishing the activity itself from the factors that facilitate it, therefore, developing the nomological network of the central concept (the representation of the concepts of interest in the study and its relationships with interconnected concepts). By discussing both the dimensions and deriving propositions regarding the antecedents of value cocreation, we develop a conceptually richer understanding of value cocreation, which clarifies the boundaries of the concept and can drive fruitful future research (Gilliam and Voss, 2013; MacKenzie, 2003). This framework is also valuable for practitioners interested in adopting an S-D logic strategy and encouraging value cocreation as a means of developing a competitive advantage (see e.g., Prahalad and Ramaswamy, 2004). To summarize, the purpose of this article is to provide a conceptual framework of relevant dimensions and antecedents of value cocreation at the micro level of service interactions by expanding on the framework proposed by Karpen et al. (2012). We do so by first conceptualizing value cocreation as a complex joint collaborative activity between customers and employees, consisting of six dimensions corresponding to simpler joint collaborative actions. We then address the role of communicating, relating, and knowing in driving value cocreation via nine antecedents. We conclude by deriving corresponding propositions about the impact of each antecedent on value cocreation. The value cocreation framework guiding this article is presented in Figure 1.

Conceptualizing value cocreation Since its introduction, the concept of value cocreation has undergone a series of reconceptualizations and refinements, simultaneous with the development of academic thought on critical marketing concepts such as value, service, markets and the roles of customers and service providers, which has led to a rather disparate literature (Tronvoll et al., 2011). A summary of key articles driving these changes is presented in Appendix 1, highlighting the intensification of cooperation between firms and customers from a means of increasing firm productivity, efficiency, and intensifying customer involvement in firm processes (Normann and Ramirez, 1994; Wikstro¨m, 1996) toward a means of

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Figure 1. Value cocreation conceptual framework. Note: (1) Gustafsson et al. (2012); (2) Randall et al. (2011); (3) Yi and Gong (2013); (4) Karpen et al. (2012).

creating more value for both customers and firms in a synchronic, interactive manner (Ramirez, 1999; Vargo and Lusch, 2004, 2008) through resource integration (Gro¨nroos and Voima, 2013; Hilton et al., 2012) during direct interactions (Gro¨nroos, 2012; Gro¨nroos and Voima, 2013) and extending beyond the purchase throughout the entire product or service life cycle (Gro¨nroos and Voima, 2013; Lusch and Vargo, 2006; Prahalad and Ramaswamy, 2000, 2004). Gro¨nroos (2012: 6) conceptualizes value cocreation as ‘‘joint collaborative activities by parties involved in direct interactions, aiming to contribute to the value that emerges for one or both parties.’’ This conceptualization builds upon the earlier work of Wikstro¨m (1996), Ramirez (1999), and Ballantyne and Varey (2006) to highlight the importance of setting the boundaries of value cocreation by emphasizing that value is not always cocreated (Vargo and Lusch, 2008) but rather is only cocreated in direct interactions (Gro¨nroos and Ravald, 2011; Gro¨nroos and Voima, 2013). While value is the ultimate outcome and goal of the interaction, it is realized via the output of these interactions, namely the service that is being exchanged among interacting actors. This definition of value cocreation emphasizes two key aspects. First, the purpose of cocreation is to create value via the exchange of service. Within the S-D logic, value is understood as value in use, and is a phenomenological experience, defined as an ‘‘interactive, relativistic, preference experience’’ (Holbrook, 2006: 715). Second, cocreation is a joint collaborative activity. Joint activities have been the subject of current research in the fields of behavioral sciences, where the focus has been on deciphering the psychology of joint activities (Knoblich et al., 2011), or on the coordination mechanisms required for successful joint activities (Klein et al., 2005; Sebanz et al., 2006) and their philosophical implications (Bratman, 1992).

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A joint activity is defined as ‘‘a social interaction whereby two individuals coordinate their actions in space and time to bring about a change in the environment’’ (Knoblich et al., 2011: 60). A distinguishing characteristic of joint activities is shared intentionality, which ‘‘can be realized by multiple ordinary individual intentions and other attitudes whose contents interlock in a distinctive way’’ (Knoblich et al., 2011:60). Value cocreation can be seen as planned coordination, as the actors’ behaviors are driven by representations of the desired outcomes of the joint activity (the value that the actors are striving to achieve) and the actor’s own role in achieving this value (Knoblich et al., 2011) and is not a mere spontaneous occurrence, as in the case of emergent coordination (e.g., synchronizing walking patterns among pedestrians or mimicking another person’s mannerism). During a planned coordination, actors behave according to representations that fit their desired goals and the actor’s part in achieving these goals (in line with role theory literature, e.g., Solomon et al., 1985). According to joint activity research, value cocreation, at its most basic level, requires the following three elements: (1) a plan that specifies the cocreation outcome (desired value), (2) the roles the actors are playing in the joint activity, and (3) awareness that the desired outcome can only be achieved with the support of another actor(s) (Knoblich et al., 2011). Joint activities require rather complex mechanisms of joint attention (knowing what other actors perceive), action observation (knowing what other actors will do), task sharing (knowing what other actors should do), action coordination (attuning to achieve a common goal), and agency (which actor is responsible for which action) (Sebanz et al., 2006), which work together to characterize a cocreation activity. While the idea of value cocreation is rather new, the interaction between customers and service employees is addressed in earlier marketing literature as service interactions (see Chandon et al., 1997; Solomon et al., 1985), which discusses the different roles customers and employees assume during service interactions (Solomon et al., 1985), or how each participant’s role expectations influence the outcome of the interaction (Broderick, 1999). In service interactions, participants have been shown to distribute tasks among themselves (e.g., customer orders and waiter provides) and adjust their own behavior to fit the behavior as a response to the other actor’s (Clark, 1996). Therefore, successful service interactions require the cooperation of both customers and employees (Vargo and Lusch, 2004, 2008). In services, joint activities that require customer and service employee interactions can be considered complex as they include several discrete joint actions. Within a single cocreating activity, we can distinguish between actions aimed at a single purpose, such as empowering the customer to make a decision, ensuring honesty, or establishing a personal relationship, which combined create the overall cocreation activity. These joint actions create value in different ways, that is, empowering customers can increase their sense of self-worth, while developing a relationship can nurture a feeling of belonging to a group. Although the discrete joint actions have distinct objectives and outcomes, together they compose the value cocreation activity and independently contribute to the overall goal of creating value for at least one of the participating actors. To conclude, we consider value cocreation to be a multidimensional concept.

Value cocreation dimensions Three previous articles consider value cocreation to be a multidimensional concept (Gustafsson et al., 2012; Randall et al., 2011; Yi and Gong, 2013)2. Randall et al. (2011) discuss a set of

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potential dimensions of value cocreation, namely connection, trust, and commitment, while Yi and Gong (2013) investigate the customer perspective and conclude that value cocreation is a thirdorder construct, consisting of customer citizenship behavior and customer cocreation behavior as second-order dimensions. The most recent article to discuss value cocreation dimensions is that of Gustafsson et al. (2012), which addresses four dimensions of communication (frequency, direction, modality, and content) as potential dimensions of value cocreation within an innovation context. It is obvious that there are few similarities between these three studies, mostly caused by the lack of a unifying conceptualization of value cocreation. The most significant problem is that the aforementioned studies do not address the locus of value cocreation (service interactions) or its conceptual boundaries, therefore, adding to the confusion surrounding the activity of value cocreation and its dimensions. The only article to date that addresses value cocreation dimensions from an S-D logic perspective is that of Karpen et al. (2012). Their conceptual article—based on an in-depth literature review and S-D logic expert interviews and surveys—identified six types of value-creating interactions between customers and service providers, namely individuating, relating, empowering, ethical, developmental, and concerted interactions. Value cocreation is implied within the article of Karpen et al. (2012), but not directly addressed, the authors preferring to discuss interactions at the firm level and focusing on firm capabilities rather than manifestations of these capabilities within service interactions, or the roles of customers and service employees in these joint interactions. However, customers and employees are the enactors of these capabilities, and it is through their actions that value is cocreated in these interactions. We, therefore, argue that an understanding of value cocreation should commence with an understanding of the actions customers and employees engage in during direct interactions, with the goal of generating value for at least one of the participants, in line with Gro¨nroos (2011, 2012). We continue by adapting the interactions identified by Karpen et al. (2012) to the micro level of customer–employee service interactions and discuss them as joint collaborative actions that constitute the dimensions of value cocreation.

Individualizing joint actions At the organizational level, Karpen et al. (2012: 25) defined a firm’s individuating interaction capability as ‘‘an organization’s ability to understand the resource integration process, contexts, and desired outcomes of individual customers and other value network partners.’’ Therefore, at the service interaction level, we define individualizing joint actions as collaborative actions between customers and employees aimed at establishing a mutual understanding of each other’s resource integration processes, roles, and desired outcomes. For customers, individualizing joint actions can include actions such as explaining personal preferences, consumption history, previous service experiences, describing their individual hierarchy of needs or preferred means of interacting, or voicing the desired outcome of the interaction. For service employees, individualizing joint actions can include active listening to consumer narratives, describing potential solutions that would take into account the customer’s individual resources, an explanation of the desired interaction outcome as well as the limitations of the service employee’s role. These joint actions result in content and customization value (Berthon and John, 2006) and are central to the S-D logic foundations, as they reinforce the belief that firms should provide value propositions in tune with their customers’ individual and dynamic needs

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(Homburg et al., 2009; Vargo and Lusch, 2004) consequently taking into consideration customers’ operant and operand resources. While customization literature is focused on the outcome of the service interaction (e.g., customer value, satisfaction, and loyalty) (Bettencourt, 1997; Bettencourt and Gwinner, 1996; Bitner et al., 1997; Homburg et al., 2009), the scope of individualizing joint actions is on the customer and employee actions that allow participants to understand each other’s needs, resources, and preferred means of collaboration that can later translate into a customized value outcome. Hence, joint actions bring value to customers as well as service providers.

Relating joint actions Any interaction involves a relational element. While relating can be seen as a necessary condition for interactions to occur (Ballantyne and Varey, 2006), relating actions are also part of the value cocreating activity. Relationship marketing has also been widely acknowledged as a significant source of customer value (Gro¨nroos, 1997). While discussing a firm’s relational interaction capability, Karpen et al. (2012: 25) defined it as ‘‘an organization’s ability to enhance the connection of social and emotional links with customers and other value network partners.’’ Consequently, within a service interaction, this dimension would translate into actions aimed at establishing or enhancing a social and emotional connection between employees and customers. These connections can vary in intensity between mere agreeableness to sometimes friendship. Relationships, emotions, and the social context of service interactions are the intensively discussed topics within marketing literature. Our goal is not to provide an extensive literature review of all relational and social aspects of interactions but to focus on the customer and employee actions that generate social, emotional, or contact value during service interactions. Relating joint actions can comprise exploring the similarities between the two participants, sharing mutual interests, perspective taking, or establishing a personal bond that creates a mutual base of understanding between partners. Although customers do not always interact with the same employee and cannot always build a long-term personal relationship, they nevertheless have certain expectations about the employee from previous interactions with the service provider, brand image, or their personal history (Gutek et al., 1999). Relating joint actions are considered a powerful source of value (Berthon and John, 2006).

Empowering joint actions Power is a recurrent topic in social and marketing studies, including in the S-D logic stream, where it is considered a means of explaining the changing relationships between service providers and customers, in which customers are increasingly taking charge of their value creating activities. The S-D logic asserts that power is no longer in the hands of a single participant but is rather negotiated (Fisher and Smith, 2011). Joint activities are built on the premise that both participants have the power to influence the outcome of the interaction. At the firm level, this translates into the firm’s ‘‘ability to enable its customers and other value network partners shape the nature and content of exchange’’ (Karpen et al., 2012: 28). Therefore, at the service interaction level, we define empowering joint actions as collaborative actions aimed at negotiating the power to influence the outcome of the interaction among customers and service employees. During cocreation, empowering joint actions would result in the actors assuming responsibility for

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the outcome of the interaction and intervening whenever they would believe that it would be for the benefit of the overall goal. In this case, empowering also becomes a matter of ownership and agency. Empowering joint actions, therefore, potentially create value for all actors involved.

Ethical joint actions We consider ethical joint actions to be collaborative actions aimed at setting fair, honest, and moral guidelines between interacting participants. Ethical behavior is a key element to collaboration, as successful interactions require that participants are working toward a shared goal and hold no conflicting hidden agendas (personal gains). Without an agreement on the shared intentionality to create value for both parties, the premise of the joint activity can be compromised, leading to opportunistic behaviors and a general lack of trust and commitment to the joint activity. Value cocreation implies a certain degree of transparency, integrity, and shared risk (Randall et al., 2011). One of the reasons customers switch service providers is related to the service provider’s unethical or dishonest behavior (Keaveney, 1995) such as communicating false information, inflating product claims, or trying to cheat customers can be considered unethical. Previous research has repeatedly indicated that customers do expect to be treated equally and fairly by service employees (Williams and Aitken, 2011) and that when this is not the case, they become hostile and engage in retaliative (Groth and Grandey, 2012) and vindictive actions such as physical or verbal abuse (Huefner and Hunt, 2000) in order to reestablish justice. For service employees, being treated unfairly by customers has been shown to contribute to employee emotional exhaustion and workplace stress (Grandey et al., 2004). Employee ethical activities include truthfully presenting the service provider’s offer, treating the customer with respect, and ensuring transparency and full disclosure during the interaction. For ethical joint actions, customers also need to treat service employees fairly, provide accurate information, and be respectful during the interaction. Ethical actions are an implicit component of the S-D logic as they emphasize symmetric information exchanges and a humanistic approach toward services (Lusch and Vargo, 2008).

Developmental joint actions A firm’s developmental interaction capability is defined as its ‘‘ability to assist customers and other value network partners’ knowledge and competence development’’ (Karpen et al., 2012: 29). Within service interactions, developmental joint actions are those actions aimed at improving the customers’ and employees’ operant and operand resources. Operand resources are tangible in nature and can include products being exchanged (Vargo and Lusch, 2004), while operant resources are intangible and include knowledge, skills, and networks (Madhavaram and Hunt, 2008; Vargo and Lusch, 2008). While operand resources are also being exchanged during service interactions, the focus is mostly on operant resources, with customers and employees sharing knowledge with the goal of improving each other’s resource base. From the customer perspective, this aspect of value cocreation has been addressed in customer learning literature (Hibbert et al., 2012), while for service employees as bottom-up learning (Ye et al., 2012). Developmental actions can also focus on expanding the participants’ value networks by introducing them to

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external partners who can help or facilitate further value creation, such as consumer groups or brand communities.

Concerted joint actions Concerted joint actions are collaborative actions aimed at the synchronization between customers and service employees through either relevance or timing. At the firm level, Karpen et al. (2012: 30) defined concerted interaction capability as ‘‘an organization’s ability to facilitate coordinated and integrated service processes with customers and value network partners.’’ In service interactions, concerted joint actions include adapting participants’ behaviors to one another, engaging in movement coordination, and establishing agreements and coordination. Synchronization is impacted by the pace of the conversation, the distance between the participants, or the timing and relevance of the information exchanged (Clark, 1996). Concerted joint actions do not only require symmetry (ensuring a constant tone or rhythm to the interaction), but also require complementarity (Knoblich et al., 2011) of meeting the actions of the participating actor. To summarize, we have discussed value cocreation as a joint activity and have adapted the six interactions identified by Karpen et al. (2012) to the micro level of customer–employee service interactions and discussed them as joint collaborative actions that represent the dimensions of value cocreation. We continue by discussing the antecedents of value cocreation and deriving corresponding propositions.

Value cocreation antecedents and propositions To the authors’ knowledge, the only article to discuss value cocreation antecedents is that of Ballantyne and Varey (2006), which examines the role of communicating, relating, and knowing. These three overarching concepts are considered fundamental for the occurrence and success of most joint activities (Clark, 1996) as they provide the structural support for the actions of the interacting customers and employees, improve the coordination of their actions, and intensify their cooperation (Ballantyne and Varey, 2006). Communicating, relating, and knowing are basic coordination mechanisms and as such have the potential to enhance collaboration. Communicating, for instance, facilitates the creation of shared meaning (Lievrouw and Finn, 1990), allowing the interacting actors to establish common ground and commence their collaborative activities. Similarly, relating has a bonding purpose that can enhance the social ties between actors and, therefore, smoothens collaborative activities. Last, knowing allows participants to share relevant information, that allows them to understand what information each actor has access to, or what information needs to be shared in order for the actors to reach their shared goals, thus, developing shared mental models. We continue by discussing a set of nine antecedents labeled as communicating, relating, and knowing in order to provide the boundaries of value cocreation. Conceptualizing value cocreation as a complex joint activity implies that the actions between customers and employees lie at the core of the concept. Factors such as the frequency of communication between participants, the trust participants have when entering the interaction, or the extent to which participants give each other feedback are necessary factors that trigger or intensify the cocreation activity and should, therefore, be considered antecedents. The nine antecedents discussed in this section serve the role of illustrating the breadth of communicating, relating, and knowing in value cocreation and have been derived from three

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previous studies on value cocreation, namely (1) Gustafsson et al. (2012) that addresses aspects of communication as potential dimensions of value cocreation in the context of innovation; (2) Randall et al. (2011) that investigates trust, connection, and commitment as possible dimensions of a higher order construct of value cocreation; and (3) Yi and Gong (2013) that discusses value cocreation from the customer perspective as a third-order construct. Although in the existing literature, the nine antecedents discussed in this article have been categorized differently, in view of our conceptualization of value cocreation, they should be regarded as antecedents. We continue by discussing the nine antecedents and deriving corresponding propositions regarding their effect on value cocreation.

Communicating Communicating—passing on information with the purpose of creating an understanding of thoughts and feelings—lies at the foundation of most service interactions. Ballantyne and Varey (2006) supported an interactional view of communication, arguing for a dialogical mode of communicating, which supports value cocreation by helping develop relationships and generate knowledge between interacting participants. Frith and Frith (2008: 506) have stated, that in order ‘‘to achieve successful group action, we need to know what other people know and, in particular, what other people don’t know.’’ Communicating is one of the means of uncovering both similarities and differences in knowledge bases by allowing customers and service employees to align their goals (Frith and Frith, 2008). In analyzing the communication dimensions of customer value cocreation in service innovation, Gustafsson et al. (2012) focused on the following four aspects: frequency, direction, modality, and content. Their findings indicated that the frequency, direction, and content of communication influence the success of incremental innovations. While the article interchangeably refers to these dimensions as pertaining to both communication and value cocreation, there are nevertheless preliminary insights regarding the effect of different aspects of communication on value cocreation. First, the frequency of communication is expected to improve the cooperative actions between customers and employees, therefore, having a positive effect on value cocreation (Vargo and Lusch, 2008). Frequent communication between customers and employees during a service interaction leads to a more intense exchange of information that allows participants to discover each other’s resource capabilities, to understand their needs and roles in the interaction, their preferred means of interacting, and even to establish a shared ground onto which they can better relate to one another. The frequency of communication also sets the pace of the interaction, determining the speed at which customers and service employees are comfortable interacting at. Therefore, we expect that: Proposition 1: Communication frequency positively influences value cocreation. It is not only the intensity of the communication, but also its direction that we expect to influence value cocreation between participants. In this regard, we distinguish between bidirectional and unidirectional communication and expect interactions with bidirectional communication to be more beneficial to value cocreation (Ballantyne and Varey, 2006). This assumption is based on the participatory nature of value cocreation (Vargo and Lusch, 2008), that is, if either the customer or the employee is being left out of the conversation,

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then value cocreation is inhibited, whereas if both are able to communicate and influence the direction of the communication, then value cocreation is being promoted. This element of communication is especially important, as value cocreation is promoted by dialogical communication in which the voices of both the customer and the employee are being heard (Ballantyne and Varey, 2006). Although customers and service employees assume different roles during the service interaction (Solomon et al., 1985), their ability to communicate preferences and indicate problems is essential to value cocreation. In situations where the direction is balanced, both customers and employees would be able to influence the content of the communication, establish shared goals, negotiate power, and ensure transparency, and, therefore, they will be more likely to engage in value cocreation. Proposition 2: Bidirectional communication positively influences value cocreation. The third element identified by Gustafsson et al. (2012) is that of content relevance. While communicating is generally beneficial, not all information is equally valuable within a joint action, and some might only be relevant at a specific point in time (Sebanz et al., 2006). Therefore, the relevance of the content of the communication between customers and employees is expected to improve their value cocreation. Relevant content—timely information that contributes to the goal of the interaction—is important for the improving participant skills and knowledge as well as participant coordination and synchronization (Knoblich et al., 2011; Sebanz et al., 2006). Proposition 3: Communication content relevance positively influences value cocreation.

Relating Ballantyne and Varey (2006) have emphasized the critical role of relating—having or establishing social bonds—in value cocreation. Relationships provide a structural support for generating knowledge, as they include information about previous interactions, their success levels, personal information about the participants, and their preferred working methods. Not all services allow customers to interact with the same employee and, therefore, build strong relationships. Relating can also increase the amount of communication participants engage in by conveying a sense of security during the service interaction. Feeling a connection between participants increases the chances of pro-social behavior during the interaction (Mochon et al., 2012). Relating also enables a shared representation of the individual tasks participants need to conduct to reach their goal. In order to know what the other participant should do to achieve a particular goal, participants need to put themselves in the role of the participating person, taking their perspective into account. Perspective taking is enabled by a relational bond that allows us to deduct what information the other person might need and communicate it earlier in the task (Knoblich et al., 2011). In terms of relating factors, we address those of connection, trust, and commitment, as they have been previously discussed as pertaining to a higher concept of value cocreation by Randall et al. (2011). We disagree with the stance of Randall et al. (2011) that originally discusses them as potential dimensions of value cocreation, and instead consider the three factors to be relating antecedents influencing the extent to which value cocreation occurs. Our diverging view stems from the perspective change from an abstract all encompassing definition of value cocreation,

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which was used in the original article, toward the more analytical joint activity perspective advocated by Gro¨nroos and Voima (2013). This change in research perspective allows us to continue the discussion of trust, commitment, and connections as factors that can positively influence value cocreation. First, trust can be defined as ‘‘confidence in an exchange partner’s reliability and integrity’’ (Morgan and Hunt, 1994: 23) and has been discussed as a main factor in building relationship commitment (Bitner et al., 1990; Morgan and Hunt, 1994), generating value for customers by increasing the relational benefits of the interaction, reducing stress and uncertainty in exchanges (Morgan and Hunt, 1994), helping shape customer expectations of different interactions (Sirdeshmukh et al., 2002), and promoting collaboration (Morgan and Hunt, 1994). Interpersonal trust during service interactions promotes honesty and fairness among participants, thus increasing the level of cordiality as well as the participants’ motivation to cooperate and coordinate their efforts. Therefore, we propose that: Proposition 4: Interpersonal trust between customers and employees positively influences value cocreation. Randall et al. (2011: 7) also discussed the idea of commitment, describing it as ‘‘an enduring desire and willingness to work at maintaining the relationship.’’ We also agree that a minimum level of commitment is important to promoting any joint activity, acting as a trigger for value cocreation. Similar to trust, commitment can also increase the level of engagement in the joint activities by promoting a sense of devotion to the goal of the interaction, the motivation to achieve a mutually satisfactory goal, and the propensity to act ethically (Morgan and Hunt, 1994). Therefore, we conclude that: Proposition 5: Commitment between customers and employees positively influences value cocreation. The last factor discussed by Randall et al. (2011) is that of connection understood as the level of emotional attachment customers and employees report having toward one another. Within our framework, we specifically discuss connection as the attachment reported at the beginning of the interaction between service employees and customers. This sense of connection can build familiarity, volunteerism (Garbarino and Johnson, 1999), and intimacy (Westbrook, 1981), therefore contributing to the overall relationship quality between participants. Unlike trust and commitment, connecting is built on affect rather than cognition (Randall et al., 2011) and ensures that interacting customers and employees understand each other and care for the other’s well-being, therefore treating each other fairly, synchronizing better during the interaction. Proposition 6: A connection between customers and employees positively influences value cocreation.

Knowing Ballantyne and Varey (2006) discuss knowing—having or reflecting knowledge—as the third element relevant to value cocreation and distinguish between tacit and explicit knowledge, with tacit knowledge being seen as an operant resource residing in individuals that can be used by employees and customers to directly create value, and explicit knowledge being considered an operand resource that acts as a knowledge repository that can be accessed

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with the goal of creating value. Knowing is discussed as important to value cocreation as it gives participants common knowledge bases on which to start collaborating (Ballantyne and Varey, 2006). Yi and Gong (2013) highlight information seeking, information sharing, and feedback seeking as important for value cocreation. We will address these three antecedents in more detail below as they relate to knowing. Information seeking can be used as a means of eliciting information about the other interaction participant, thus allowing participants to learn about their goals, or communicate information about their resource bases or preferences as a means of aligning their expectations and behaviors. This is a key antecedent in joint action, as it allows participants to better coordinate and, therefore, improves cooperative activities (Clark, 1996). Information seeking allows interacting customers and employees to fill in gaps in their knowledge base, therefore, contributing to the establishment of a shared mental model that takes into consideration the other participant’s resources and resource integration activities, therefore promoting value cocreation. Proposition 7: Information seeking positively influences value cocreation. In order for the exchange of information to be successful in a service interaction, information seeking is beneficial, yet not sufficient: the extent of the information sharing (whether demanded or not) is also a key determinant. In fact, while employees are expected to mostly acquire input from customers, in the form of customer knowledge (Gwinner et al., 2005), their roles may also include active information sharing about possible service customization offers, risks, or alternative courses of action. Customers as well can volunteer or share information that was not specifically required, but they themselves deem relevant for the success of the interaction. Information sharing ensures that participants have an understanding of each other’s problems and roles and can actively discuss solutions as well as negotiate or coordinate during the interaction. Information sharing increases the level of mutual understanding during service interactions and contributes to value cocreation. Proposition 8: Information sharing positively influences value cocreation. The third factor—feedback—is a specific type of knowledge transfer that focuses on finetuning knowledge bases and synchronizing joint actions, therefore promoting value cocreation (Sebanz et al., 2006). Feedback allows customers to inform employees about potential mistakes, or positively reward them for certain actions they preferred and vice versa. Feedback is especially relevant in establishing coordination between interacting participants as it has been shown to improve both the timing and synchronization of participants (Sebanz et al., 2006). We propose that: Proposition 9: Feedback positively influences value cocreation.

A synthesis: value cocreation dimensions and antecedents By taking a critical look at the concept of value cocreation at the micro level, it is possible to start discussing its dimensions and antecedents. This analysis is based on the notion that at its basis, value cocreation is a joint collaborative activity between a customer and a service employee. The

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goal of these collaborative activities is to create value for at least one of the participants during the service exchange. Value is assessed individually by the participating actors. A joint activity comprises of several discrete joint actions and is, therefore, considered a multidimensional concept. Specifically, we have discussed six types of collaborative joint actions that can be combined to create a more complex and value cocreation concept, namely individualizing, relating, ethical, empowering, developmental, and concerted actions. These dimensions are assumed to be independent of one another. This article also elaborates on the nine antecedents that positively impact value cocreation. With this regard, we have discussed three relating antecedents (trust, commitment, and connecting), three knowing antecedents (information sharing, information seeking, and feedback), and three communicating antecedents (frequency, direction, and content), and developed propositions regarding their effect on value cocreation. Communicating, relating, and knowing contribute to the success of value cocreation activity (Ballantyne and Varey, 2006) by enabling participants to align their goals, establish an emotional connection, negotiate power, establish ethical guidelines, and coordinate their actions, thus achieving successful value cocreation. The value of this conceptual effort is the delineation between value cocreation dimensions and its antecedents, which is particularly useful in defining the boundaries of the cocreation concept and investigating the factors needed for successful value cocreation interactions. While most studies have tried to explain the benefits of cocreation, none have gone in-depth by first providing a comprehensive conceptualization of its dimensions, investigating its antecedents, or analyzing the dimensions from the perspective of interactivity in value cocreation. Our discussion of the dimensions of value cocreation is especially relevant, as the absence of any of the six dimensions would provide an incomplete understanding of the scope of value cocreation. Furthermore, our microlevel analysis of value cocreation sets the basis of developing a better understanding of the phenomenon at both meso and macro levels by allowing us to identify similar patterns of interaction and value creation that can be transferred from one level to the other, thereby expanding the previous work of Karpen et al. (2012). While joint activities sometimes come naturally to collaborating individuals, the same cannot be said about large groups or organizations, where group dynamics, power balances, and networks of influence become difficult to monitor, and complexity significantly increases with the number of involved actors. However, by understanding the dimensions of cocreation at the micro level, we can start analyzing whether the same value cocreating actions also take place at higher levels of analysis, and the influence of various antecedents at different levels of analysis (e.g., network strength, proximity, and group coherence). Additionally, by discussing which actions are part of the value cocreating activity versus their antecedents sets the basis of a future, more analytical, and transparent dialogue about the nature of value cocreation and its manifestations, which previous literature had failed to provide. The development of propositions regarding the effects of the nine antecedents on value cocreation also sets the basis for further empirical investigation and helps develop a nomological network that connects value cocreation to existing concepts.

Future research As the aim of this article was to conceptualize value cocreation and discuss its dimensions and formulate propositions regarding its antecedents, the proposed framework is conceptual and, therefore, in need of empirical validation. This empirical validation would first benefit

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from a number of qualitative studies investigating the interactions between customers and service employees by employing methods such as observations, monitoring, as well as interviews with both actors and narratives of the interactions, which would generate a rich amount of data that can shed light on the motivations, interaction patterns, and micro behaviors of customers and service employees during the cocreation process. Qualitative longitudinal studies could also investigate the relevance of the six dimensions across a longer relationship with the help of diary studies and narratives. The next logical step for further empirical validation would be the development of a scale that can be used to measure value cocreation activities between customers and service employees. Moreover, since value is contextually determined, it is safe to assume that different service contexts might be more reliant on some dimensions more than others and, therefore, future research should investigate value cocreation across different industries; similarly, the relevance of the six dimensions might change depending on the type of customer—firm relationship, the length of this relationship as well as the roles of customers and service employees. Therefore, having identified the six dimensions, we can proceed to analyze their relative importance across different service contexts in order to develop more meaningful typologies that take into account the different types of interactions and how they impact value cocreation activities. Moreover, the discussion of the antecedents of value cocreation has also served the purpose of better delimitating the concept from previously thought dimensions in the attempt to provide clarity and eliminate vagueness from the extant literature, therefore, contributing to a stronger definition of value cocreation (Gilliam and Voss, 2013). The discussion of the antecedents also sets the basis for the development of a nomological network of value cocreation, thus providing a better understanding of the interrelationships between value cocreation, communicating, knowing, and relating. This is especially important since most studies have so far focused on value cocreation outcomes (customer satisfaction, loyalty intentions, or perceived service quality), without yet explaining which concepts precede the activity of value cocreation itself. This article is limited to making propositions regarding the antecedents of value cocreation, which have been derived from the few studies that have addressed value cocreation as a multidimensional concept, therefore, providing the initial framework for the testing of these antecedents. Future research could, additionally, have a more detailed examination of these antecedents’ effects on the six dimensions of value cocreation, thus contributing to a classification of the value cocreation antecedents in terms of relative impact on the overall activity as well as the individual dimensions. Additional experimental studies could also shed light on the exact causal relationships within our framework as well as additional contextual factors. Future research should also go beyond singular interactions to investigate the potential circular and longitudinal effects of the antecedents on the six dimensions as value cocreation can be considered an iterative process, where, for instance, communicating could enhance the developmental aspect of value cocreation in T0, which in turn could influence the knowing aspect in T1 and so forth. The antecedents and dimensions discussed in this article are not static in nature. They evolve and influence each other in a larger frame that should be investigated with the help of in-depth case studies and scenario analysis. Third, future research should also investigate the differential effect of customer motivators on value cocreation, from both the customer and the service provider perspectives. Consumers are motivated to cocreate by their personal needs and desires, which can vary greatly and will influence their willingness to engage in cocreation activities. Similarly, service providers

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also pursue different goals within cocreation activities, which can influence how they interact with respective customers. In-depth observational and narrative studies could shed more light on these complex dynamics and answer questions such as what motivates customers or providers to cocreate, is there a hierarchy of needs or motives, and how do these influence the cocreation activity? Fourth, while this framework includes the dimensions and antecedents of value cocreation, it does not cover the outcomes of this joint activity, in terms of new knowledge generated, customer satisfaction, service experience, or loyalty intentions. Similarly, while service interactions are moving toward higher levels of value cocreation, the effects of this change on employee wellbeing, job autonomy and satisfaction, or turnover intentions have yet to be explored. Finally, future studies are also encouraged to aim for depth in explaining value cocreation with the help of qualitative methods that are suited to explore the experiential aspect of value cocreation: ethnographic studies could help understand the role of value cocreation in customer culture as well as the differential roles customers assume during value cocreation; observational studies could investigate the dyadic perspective of value cocreation by observing cocreating interactions; in-depth interviews can highlight potential problems between the process and the outcome of value cocreation (Ma and Dube´, 2011) by analyzing the process in light of the participants’ individual goals, resources, networks, and personal history.

Managerial implications Understanding the different value cocreation dimensions and antecedents is a critical first step in implementing strategies aimed at encouraging value cocreation activities and contributing to their success, especially for service providers interested in using value cocreation as a competitive advantage. Value cocreation has long been praised as the next source of competitive advantage for service providers in the 21st century. The value of focusing on value cocreation as a source of competitive advantage lies in the interactions service providers develop with their customers and their potential to generate value for their customers. These interactions present a certain level of intimacy with the service provider’s customers, ensuring that they are difficult to replicate for competitors, and can yield long-term benefits such as customer loyalty and high lifetime share of wallet (Prahalad and Ramaswamy, 2004). By understanding cocreation as a joint activity, and having an overview of its comprising dimensions, managers can start tracking their own service interactions and identify how to strengthen their own portfolios. Moreover, identifying the antecedents of value cocreation in service interactions allows managers to understand how they and their employees can contribute to successful value cocreation interactions. Last, raising awareness about the important role that both customers and service employees play in value cocreation will require significant changes in training programs across the service industry that focus on encouraging communication, relating, and knowing. Overall, we argue that this conceptual effort has opened an avenue for a deeper understanding of value cocreation and its dimensions and antecedents. This article has taken the first step toward helping managers understand what actions constitute value cocreation during service interactions as well as the antecedents that can enhance these actions in order to generate more value for either customers and/or the service provider itself.

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Appendix 1. Value cocreation thought evolution Article Normann and Ramirez (1994)

Wikstro¨m (1996)

Ramirez (1999)

Prahalad and Ramaswamy (2000, 2004)

Vargo and Lusch (2004, 2008)

Lusch and Vargo (2006)

Hilton et al. (2012)

Key assumptions - Within the value creating system, different economic actors—suppliers, business partners, allies, and customers—work together to coproduce value. - The goal of business is to mobilize customers to create value for themselves. - Companies create value when they make not only their offerings more intelligent but their customers (and suppliers) more intelligent as well. - Customers can enter the value-creating process in different points (design, production, marketing, consumption, and/or destruction). - Consumers now take part in activities and processes that used to be seen as the domain of the companies. - Companies also enter the domain of the customers and take part in their consumption of the product and even their scrapping of what is left over. - Coproduction (collaboration, consumer cooperation, etc.) is a company—consumer interaction (social exchange) and adaptation for the purpose of attaining added value. - Both customers and companies are active participants in the value creating process. - The concept of interaction is critical because the most efficient way of increasing knowledge base seems to be through interactive processes or rather through collaboration with a view to learning. - Value cocreation is synchronic, interactive, and best described in ‘‘value constellations’’ - Values are coinvented, combined, and reconciled; values are ‘‘contingent’’ and ‘‘actual’’ (established interactively) - Value is coproduced, with customers, over time—for both coproducers (relationship) - Interactions (offerings) are units of analysis - Cocreation is about joint creation of value by the company and the customer. - Cocreation requires engaging customers as active participants in the consumption experience, with the various points of interaction being the locus of cocreation of value - Cocreation implies allowing the customer to coconstruct the service experience to suit his/her context. - Cocreation requires joint problem definition and problem solving. - The customer is always a coproducer. The enterprise can only make value propositions. - Interactivity, integration, customization, and coproduction are central to service-centered view and its inherent focus on the customer and the relationship. - Value can only be created with and determined by the user in the ‘‘consumption’’ process and through use or what is referred to as value in use. - Value occurs at the intersection of the offerer and the customer over time either in direct interaction or mediated by a good. - Service cocreation as a resource integration process undertaken by two or more actors with the purpose of realizing value propositions - Value is subjectively determined and is considered the outcome of the service cocreation process. (continued) Downloaded from mtq.sagepub.com by guest on October 14, 2014

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Appendix 1. (continued) Article Gro¨nroos (2012)

Gro¨nroos and Voima (2013)

Key assumptions - ‘‘Cocreation’’ is often used in a metaphorical form that hinders empirical analysis - Cocreation should be seen as a joint activity between customers and service providers during direct interactions. - Distinguishes between provider, joint and customer spheres, each with their own potential value creating activities - Value cocreation is a function of direct interaction between customers and providers - Value is cocreated when provider resources/processes interact with customer resources/processes (in a merged, dialogical process)

Notes 1. Number derived from Google Scholar search (October 2013), removing patents and quotes, from 2004 to 2013. 2. The three articles were identified following a series of searches on Web of Science for ‘‘value co-creation dimensions’’ (20 overall results) and Google Scholar for ‘‘co-creation dimensions’’ in article titles (3 results) and following article elimination after an examination of the article abstracts.

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Vargo, S.L. and Lusch, R.F. (2004) ‘Evolving to a New Dominant Logic for Marketing’, Journal of Marketing 68(1): 1–17. Vargo, S.L. and Lusch, R.F. (2008) ‘Service-Dominant Logic: Continuing the Evolution’, Journal of the Academy of Marketing Science 36(1): 1–10. Vargo, S.L. and Lusch, R.F. (2011) ‘It’s All B2B . . . and Beyond: Toward a System Perspective of the Market’, Industrial Marketing Management 40(2): 181–7. Westbrook, R.A. (1981) ‘Sources of Consumer Satisfaction with Retail Outlets’, Journal of Retailing 57(3): 68–85. Wieland, H., Polese, F., Vargo, S.L., et al. (2012) ‘Toward a Service (Eco) Systems Perspective on Value Creation’, International Journal of Service Science, Management, Engineering and Technology 3(3): 12–25. Wikstro¨m, S. (1996) ‘Value Creation by Company–Consumer Interaction’, Journal of Marketing Management 12(5): 359–74. Williams, J. and Aitken, R. (2012) ‘The Service-Dominant Logic of Marketing and Marketing Ethics’, Journal of Business Ethics 102(3): 439–54. Ye, J., Marinova, D. and Singh, J. (2012) ‘Bottom-Up Learning in Marketing Frontlines: Conceptualization, Process, and Consequences’, Journal of the Academy of Marketing Science 40(6): 821–44. Yi, Y. and Gong, T. (2013) ‘Customer Value Co-Creation Behaviour: Scale Development and Validation’, Journal of Business Research 66(9): 1279–84. Carmen Neghina is a PhD candidate within the Faculty of Management, Science and Technology at the Open Universiteit in the Netherlands, working in collaboration with the Institute for Management Research at the Radboud University in the Netherlands. She holds an MSc in business administration from the Nijmegen School of Management. Her main research interests lie in marketing and services, focusing specifically on the intersection of consumer and firm spheres and value cocreation. Her work has been previously published in Journal of Service Management, and she has presented her work at several international conferences such as QUIS, OLKC, and EURAM. Address: Open Universiteit, Faculty of Management, Science and Technology, Valkenburgerweg 177, Heerlen, the Netherlands. [email: [email protected]] Marjolein CJ Canie¨ls is a professor of organizational learning at the Faculty of Management, Science and Technology within the Open University in the Netherlands. Her current research addresses various aspects of organizational learning, sustainability and technological development, and economic growth. Her research aims at enhancing our understanding of knowledge management with respect to individuals, firms, supply chains, and regions. She has published her research in a range of journals, including Research Policy, Creativity and Innovation Management, International Journal of Project Management, Journal of Purchasing and Supply Management, Industrial Marketing Management and European Management Journal. Address: Open Universiteit, Faculty of Management, Science and Technology, Valkenburgerweg 177, Heerlen, the Netherlands. [email: [email protected]] Jose´e MM Bloemer is a professor of management with a focus on market analysis and relationship management at the Institute for Management Research of Radboud University, where she is the head of the marketing department. Her main research interests lie in the domain of customer behavior and focus on the relationship management of organizations with customers and employees, and the antecedents and the consequences of customer and employee loyalty, (dis)satisfaction, and quality. She has published in various journals, including International Journal of Human Research Management, Journal of Business Research, Journal of Service Research, and Journal of Economic Psychology. Address: Thomas van Aquinostraat 3.2.10, P.O. Box 9108, 6500 HK Nijmegen, the Netherlands. [email: [email protected]] Marcel JH van Birgelen is an associate professor of marketing at the Institute for Management Research of Radboud University Nijmegen. His PhD research at Maastricht University focused on the effectiveness of

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international service intelligence. His research interests include consumer behavior, services marketing, multichannel marketing, and relationship management. His work has been published in various academic journals, such as the Journal of Retailing, International Journal of Research in Marketing, Journal of Service Research, Journal of Service Management, Managing Service Quality, Journal of Economic Psychology, European Journal of Marketing, Journal of Air Transport Management, and Environment and Behavior. Address: Thomas van Aquinostraat 3.2.07, P.O. Box 9108, 6500 HK Nijmegen, the Netherlands. [email: [email protected]]

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