Examining Managerial Perspectives on Customer Co-Creation Through an Engagement Platform
Abstract
This exploratory research study investigates the motivations of UK businesses to participate in co-creation activities with customers through online engagement platforms. Semi-structured interviews were conducted with four senior managers from UK service organizations, and the data was analyzed using thematic and interpretative content analysis techniques. The study utilizes the absorptive capacity theory as a framework for analysis. The findings of the study highlight the importance of online co-creation for UK businesses and provide insights into their motivations. The motivations identified include gaining a deeper understanding of customer needs, improving service offerings, fostering customer loyalty, and enhancing the overall customer experience. The study contributes to the research areas of value co-creation and engagement platforms, emphasizing the significance of online co-creation and calling for further discussions and exploration within organizations. The managerial perspectives shared by the senior managers offer practical implications for organizations seeking to engage customers through online platforms. Overall, the study provides valuable insights into the motivations and benefits of co-creating with customers online, contributing to the understanding of co-creation practices.
Keywords: Customer Engagement, Co-Creation, Engagement Platform, Organisational Strategy, Social Media
Introduction
In light of recent events of hypercompetitive and contemporary modern economy within business environment across the globe, businesses are increased to seek value for their products (Christofi et al., 2020; Fernandes & Remelhe, 2016) and that has grown over the years. The reason why value is critically important is because the needs of becoming competitive and sustain in the market is essential. As ‘value dedicate for organisation is dependent on value that customer can create’ (Grönroos, 2006), has distressed some organisation. In modern economy, it is becoming extremely difficult to ignore the existence of social media systems (Zhao et al., 2019). Successful companies using social media to engage with the customer to co-create and capture the value. However, the needs to implementing co-creation in the organisations especially through engagement platform has now becoming a challenge because of there are lack of understanding the concept of co-creation at the first place. Although existing research recognizes the critical needs to implementing co-creation in the organisation, gathering value from constant engagement with the customers should clearly note. In addition, the role played by social media as part of engagement platform has sparks interest for most scholars to use as medium of communication. It is easy to access, ‘cheap’, broad coverage, crowd worthy and attractive motion to communicate.
Problem Statement
Previous research has demonstrated the successful implementation of customer co-creation through online platforms in the modern economy. The availability of social technologies across various platforms has prompted companies to strategically design and adopt co-creation practices. Prominent companies such as LEGO, Hallmark, and IBM, among others, have derived significant benefits from these practices, encouraging many other organizations to follow suit. Concurrently, the phenomenon of co-creation has brought about substantial synergies within organisations. Leveraging social technologies as facilitators for online discussions about products and services has provided numerous advantages, outweighing the potential risks associated with online interactions. Social technologies enable continuous communication, content addition, modification, and consumption between customers and organisations in the digital realm. Furthermore, the study of social media and co-creation represents an emerging field within the broader context of digitised communication. Although several studies have explored the relationship between co-creation and engagement platforms, the literature in this area remains limited. Examples of existing discussions on this topic include the works of (Brodie et al., 2013; Healy & McDonagh, 2013; Luo et al., 2015; Randall et al., 2011; See-To & Ho, 2014). Presently, most organisations employ social media as a popular means to effectively engage a large number of stakeholders, including consumers, businesses, and suppliers. This new business model enables organisations to capture value and achieve profitability through open innovation (Lichtenthaler, 2009). Consequently, co-creation within networks introduces new challenges concerning transformed processes and outcomes (Reypens et al., 2016).
Objectives
Based on the existing literature on co-creation and social media, this study aims to explore the significance of implementing co-creation efforts in organisations. Specifically, the study seeks to achieve two objectives: firstly, to examine the importance of engaging with customers on social media platforms, and secondly, to identify managerial perspectives on co-creating with customers online. By addressing these research objectives, the study aims to contribute to the understanding of the potential benefits and challenges of co-creation in social media, and provide insights for managers seeking to implement co-creation strategies in their organisations.
Literature Review
This section emphasizes the significance of understanding the importance of co-creation within social engagement platforms. It highlights that customer involvement in co-creation activities can provide valuable knowledge and information, leading to innovation and increased value for both the customer and the organisation. The use of social media as a platform for co-creation enables organisations to engage with customers continuously, strengthening the relationship and building trust. However, there are challenges associated with this process, such as the potential risk of information replication by competitors.
The Role of social media
Studies have shown that customers empowered with Social media are known as empowering customers to share ideas, be active collaborators and they become a marketable value (Zwass, 2010) for the organisation. According to (Grönroos, 2006) customers have the desire to engage and participate in order for the organisation pertaining to strategic success. This would allow the social media adoption in organisation level as more research on organisation-level collaboration with social media is clearly needed (Bharati et al., 2014).
Social media support co-creation activities in terms of content sharing, organise and society operates and collaborative works among consumers (Avram, n.d.; Ford & Mason, 2013). It is important for organisation to cope with the updated technology in order to increase and motivate customers (McIntyre, n.d.). Business value also can be created through the participation of customer in co-creation (Zwass, 2012) so that it becomes an enabler for business to sustain in a competitive environment (Lang & Li, 2013). Francis (2002) stated that one of the key aspects in customer’s value creation involves a series of activities through information, knowledge, skills and other accessible resources that customers use.
Social media opens up more opportunities for organisations to reach potential customers through different social media platforms (Rathore et al., 2016). The success of a business reputation is not solely depending on knowledge and expertise within the organisation, but also depending on active customer’s skilled, informed and mutual benefiting between them in social media (Saarijärvi, 2012).
Co-Creation of value
Co-creation is much more than building customer relationships. Making a strong relationship through engagement is focused on generated content and active participation (Kaplan & Haenlein, 2010; Kietzmann et al., 2011; Morrison et al., 2013; Zeng et al., 2010). UGC – User generated content is the most common term that is used by social media scholars (Goh et al., 2013) in engagement activities. Some scholars also describe customer active participation in social media as virtual communities (Brodie et al., 2013; Dholakia et al., 2004; de Valck et al., 2009; Hajli et al., 2018; Mai & Olsen, 2015). Hence, social media offered accessibility for customers to create, edit, access and link content in any platforms such as blogs, Wikis, social networks and user-generated content (UGC) (Cabiddu et al., 2014).
In service, Zwass (2010) viewed co-creation as ‘participation of consumers along with producers in the creation of value in the marketplace’. Accordingly, Prahalad and Ramaswamy (2004) refer to co-creation as ‘joint creation of value by the firm and the customer’ in terms of service experience. In further explanation, Zwass (2010) took co-creation in the notion of where the service took place, where it was able to extend and jointly between suppliers and receiving customers. Prahalad and Ramaswamy (2004) indicate that the collaboration between firms and customers can solve problems and create an active dialogue environment.
Consumers in online platform and co-creation activities (Zwass, 2010) build an interactive way to collaborate and communicate between business and consumers (Liang et al., 2011; Liang & Turban, 2011). Consumer participation also has been recognized by many years in developing products and services (Greer & Lei, 2012). The nature of the consumer used to be a passive audience, but now transformed to an active player in co-creation activities (Ramaswamy, n.d.) and active content generators (Hajli & Hajli, 2013) is one of the reasons why organisations need it. According to Chen et al. (2011), online communities are easily accessed by the internet as a platform in order for them to share information and knowledge. Social interaction among active users also allows them to be individually empowered in online communities (Hajli & Hajli, 2013). With the characteristic of customers in the modern economy has allowed businesses to take the opportunity to collaborate, getting new information and knowledge based on the customers experiences on products or services.
Theoretical development
Co-creation is a collaborative process between businesses and their customers where they work together to create a product, service, or experience. It involves actively engaging customers in the design, development, and delivery of offerings, with the aim of creating greater value for both the customer and the business.
Absorptive capacity theory is a concept that refers to a firm's ability to recognize, assimilate, and apply external knowledge to enhance its performance. It involves a firm's ability to acquire, assimilate, transform, and exploit external knowledge in order to improve its innovation capabilities and competitiveness. In other words, it is the capacity of a firm to learn from external sources and to use that knowledge to create new products, services, and business models. Bharati et al. (2014) describe a traditional view of an absorptive capacity theory as the ability of an organisation to identify, assimilate, and transform knowledge, in which merely highlight the critical role for an organisation in firm-level innovation. Zahra and George (2002) re-conceptualise the theory as a set of ‘organisational routines and strategic processes by which firms acquire, assimilate, transform and exploit knowledge for the purpose of value creation’. Absorptive capacity has been widely used in various fields such as in innovation literature (Zahra & George, 2002), institutional innovation (industrial studies, administrative studies and public policy) (Leahy & Neary, 2007). In the information system context, absorptive capacity contributes directly or indirectly (Lane et al., 2006; Lichtenthaler, 2009) towards the organisation. Studies also have shown that the theory uses to describe the ability of an organisation to acquire new knowledge from an external environment.
Therefore, we focus on the ability of an organisation to acquire new information and knowledge from co-creation in social media platforms. It is understood that the organization can achieve new ‘value’ from continuous engagement with customers if the organisation has successfully co-create. In addition, ACT allows us to understand the management exploration, transformation and exploitation (Lane et al., 2006) of new information gathered from the co-creation itself. By implementing this theory, we are able to learn the process of getting new knowledge from the customers and understand organization strategy to have new information capture value (new information) when collaborating with the customer. Given the role of this theory leads to explaining the ability of an organisation to be more ‘knowledgeable’ such as in innovation and new product development, it is very challenging to know how an organisation ability to capture value from the co-creation activity. According to McKelvie et al. (n.d.) argue that “the more knowledge that the firm is able to acquire, the greater the possibility for the firm to spot opportunities in the market and for its technology” (p. 165). We choose this theoretical work because the concept applied for this theory is useful as the foundation of an organisation to acquire new knowledge, and apply it in a practical way (Cohen et al., 2007).
Methodology
A qualitative research method was applied in this study. We conduct semi-structured interviews with four experienced senior managers in co-creation. The interviews were conducted online and being recorded for analysis purposes. We followed Gamble et al. (2016) work on identifying respondents who are knowledgeable, brainstorming and expertise in the current field. We carefully select the managers for the interviewing session against the criteria needed for this study because their understanding on co-creation is essential to meet the research objectives. As suggested by Priharsari et al. (2020), three steps of determining the research findings starting with the initiation and selection, followed by analysis and coding and lastly addressing the findings.
These managers have been involved in the co-creation process and the organization there worked for successfully implemented the co-creation activities with the customers. During the interviews, the respondents were asked a series of open-ended questions that related to social media and co-creation. At the beginning of the interview, the respondents were required to describe their understanding of the co-creation and their familiarities of the required term. Then, we proceed with exploratory on managers perspective in understanding the purpose of co-creation followed by the importance of co-creation initiatives in the organization. Each of the individual interview sessions is approximately between 10 to 20 minutes. We then compiled the data and transcribed using NVivo 11. We analyse using thematic and interpretive analysis. We carefully create nodes and themes to meet with our research objectives.
Results and Findings
This section presents the findings of our study, which were derived from the data collected during the interview sessions. Through the narratives provided by the interviewees, we gained valuable insights into the managerial perspective on co-creation with customers. Based on the information gathered, we identified four main factors of co-creation and their corresponding purposes, which are presented in Table 1. The data presented in this table provides further insight into the co-creation process and customer engagement, and contributes to a better understanding of the potential benefits and challenges associated with implementing co-creation strategies in organisations.
The study identified four main factors that organisations consider when engaging with customers online through co-creation. Firstly, co-creation is seen as a means to create new collaborative relationships with customers that strengthen mutual trust, needs and value. Secondly, engaging with customers online facilitates the process of strategizing innovation by allowing organisations to understand and respond to customer needs based on their experiences. This is seen as valuable knowledge that can be obtained through online engagement platforms. Thirdly, engaging with customers online can be used to validate customer assumptions and ideas and to identify patterns, designs or influential factors in organisational products or services. Lastly, the study found that online engagement platforms, such as social media, can be used to tap into the ‘pool’ of customer ideas and participation, which can help organisations to realise the importance of customer engagement in co-creation efforts. These findings provide valuable insights into the potential benefits of co-creation and customer engagement in online platforms for organisations seeking to enhance their innovation and competitiveness.
From these findings, it indicates that there are factors and reasons why organisations should co-create with customers. The enthusiasm of customer’s online in developing networked interactions with the organization has created a new phenomenon (Priharsari et al., 2020). Will continuously engage with customers associated with the innovation (Barnes, 2020; Pynnönen et al., 2014).
Discussions
Despite the growing interest in co-creation and customer engagement in social media, there has been limited attention given to the role of management in these activities. To address this research gap, there is a need for new managerial insights that provide actionable steps for evaluating and optimising the value of service, which can help businesses to remain competitive in the modern economy. The present study focuses on the proactive role of customers as collaborators in co-creation activities, facilitated by social media technology. Consumers are increasingly viewed as the main creators, collaborators, disseminators and sharers of social media content, representing the locus of value creation. However, the challenges of co-creation lie in the difficulty of understanding value transfer between different actors. Additionally, while social media has become more transparent, there are still risks involved. For example, the replication of ideas or information by competitors can result in the loss of value. Thus, value capture is determined by the economic actors involved and the perceived power relationships, as suggested by (Bowman & Ambrosini, 2000). These findings highlight the importance of considering management perspectives in co-creation and customer engagement efforts to maximise their potential benefits.
The integration of social media with co-creation (O’Cass & Ngo, 2011) has been found to have significant potential for improving organizational functions. However, the fast-paced advancement of digital technology and the unique features of social media pose several challenges to this process. The proactive involvement of customers in co-creation activities and the use of technology like social media are critical components of the innovation process for new ventures. Therefore, there is a need to develop effective strategies and frameworks for managing the integration of social media and co-creation to enhance the value creation process and achieve sustainable competitive advantage.
Our findings suggest that the role of management is critical in facilitating successful co-creation initiatives and identifying the most effective ways to engage customers in the co-creation process. The value potential index and the ease of value capture index are useful tools for measuring the potential value that can be created through constant engagement with customers. Social media plays an essential role as social technologies in enabling continuous engagement with customers.
Furthermore, the competition in modern economies affects the value creation process, and co-creation is a crucial strategy for organisations to stay competitive. Our study recommends that future research should focus on optimising the value created through co-creation with customers, particularly in the context of social media. By understanding the importance of engaging with customers in social media platforms, organisations can create new collaborative relationships, validate assumptions, authenticate customer ideas, and realise the importance of customer participation as a pool of ideas. Overall, co-creation with customers and the use of social media can bring significant benefits to organisations, making it a crucial area of future research.
Acknowledgments
We would like to extend our appreciation to Universiti Poly-Tech Malaysia for allowing us to conduct the research. We thank you to all the participants who contribute to the research findings. We are also thankful for the support that has been given to completing this research study.
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Ishak, N., & Ayop, S. (2023). Examining Managerial Perspectives on Customer Co-Creation Through an Engagement Platform. In N. M. Suki, A. R. Mazlan, R. Azmi, N. A. Abdul Rahman, Z. Adnan, N. Hanafi, & R. Truell (Eds.), Strengthening Governance, Enhancing Integrity and Navigating Communication for Future Resilient Growth, vol 132. European Proceedings of Social and Behavioural Sciences (pp. 11-21). European Publisher. https://doi.org/10.15405/epsbs.2023.11.02.2