Value co-creation as a strategic sense-making process in the public service

Value co-creation is an emerging concept in marketing and innovation management that has begun to attract increasing interest from the academic world. However, value co-creation also has a significance for the strategic level... [ view full abstract ]

Value co-creation is an emerging concept in marketing and innovation management that has begun to attract increasing interest from the academic world. However, value co-creation also has a significance for the strategic level of management. Business model development and value creation processes are interrelated and strongly linked. This relationship is particularly noticeable in the service industry. The service industry, contrary to a business based on physical products, requires formulation value proposition of the immaterial entity. The concentration on the intangibility of the product encourages the recognition of the underlying processes connected with the value creation. This study describes what strategic value co-creation means in the context of the business model theory and sense-making paradigm. The co-creation approach is a dynamic perspective that sees the interaction of customers, employees and other stakeholders as a forum for developing service. This concept is particularly valuable for developing public sector services. The core activity for the value co-creation is the sense-making process. This process is a fundamental issue for the deeper understanding of the value creation phenomenon. The purpose of the study is to gain a more comprehensive understanding of value co-creation as a sense-making process that allows for the development of the coherent public service system.

The core principle of value co-creation is engaging customers and other business partners to create valuable experiences together, and enhancing collaborative networks (Leavy and Brian, 2012). The value co-creation process is a source of unique value for organizations (Prahalad and Ramaswamy, 2004). Undoubtedly, the value creation is a social construct shaped by social forces. Without a thorough understanding of the social interaction, the nature and content of value co-creation cannot be identified (Grönroos and Christian, 2011). In the value creation process, the roles of consumer and producer become blurred (Heiko et al., 2010). Managers should not assume however that all customers want to work in strong collaboration with the service providers. According to Aggarwal et al., (2014) there are three factors that influence customer effort: personal goal clarity, service relevance, and employee interactions. Laamanen and Skålén (2015) describe value co-creation as the collective action that includes various actors, and emphasize a collective–conflictual perspective of interactions. The core activity for value co-creation is sense-making. Tytti and Halme (2015) claim that co-creation value entails collective and prospective sense-making; this process is very challenging due to sectoral and cultural boundaries, as well as social dynamism within the group. Sense-making is a process by which people make meaning from experience, and is connected with experience and tacit knowledge. Sense-making theory recognizes that individuals fit information into preconceived notions of the world (Weick, 1995). Individual recognition and interpretation of the offer has a crucial relevance for the creation and development of public services. However, this subject has not been adequately studied thus far.

The in-depth single case study methodology with focus group session was considered to be the adequate empirical approach to study phenomenon of the value co-creation process.