Value in Marketing; Retrospective and Perspective Stance 9780367209483, 9780429264337

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Value in Marketing The concept of value has been at the heart of marketing thought and practice. Marketers strive to develop a unique value proposition to satisfy the needs of customers in order to create a differentiated offering to targeted customers, be they end consumers or business users. It is the unique value delivered by products and services that defines firms’ competitive market positioning. Recent advances in marketing theory have enhanced the interpretation of value in terms of its types, manifestations and determinants. Value in marketing is delivered to customers, stakeholders, shareholders, ecosystems and society. While the literature has been unanimously emphasizing the economic interpretation of value, measured in money terms, marketing has been at the forefront of critical thinking bringing to the fore new meanings and interpretations of value that have unlocked the psychological, emotional, social and ecological value of products and services to customers. It is the marketing thought that has extended the understanding of value-in-use and has indisputably positioned value in context. Marketing has developed the notion of value delivered by intangible assets that can create much greater value than the tangible product and/or service. Marketing has unravelled the multilayered nature of value to the customer and thus augmented the meanings and interpretations, as well as the analytical and practical potential of this notion. Consequently, we see the need to revisit the concept of value in marketing in order to address its complexity. This book sets to provide an insight into the concept of value in marketing in its contemporary interpretation and level of development. The aim is to offer an overview of debates and developments in our understanding of value in marketing that can raise the awareness of the scholarly and business communities of its pivotal importance for businesses and consumers. Value in Marketing presents reflections and analysis of value in marketing by consecutive generations of scholars who have made theoretical contributions to the contemporary understanding of the concept, its interpretations, dimensions and importance. The chapters address various issues including: customer value development, implications and trajectories; intra-variable and inter-variable perspectives of value; the importance of the value concept in the international marketing context; and value developed in networks that is intrinsically associated with knowledge creation in the internationalization, meanings and interpretations of value in diverse contexts that help us develop further the dimensions of the concept. We trust the book will be of interest to researchers, scholars and students in the fields of marketing management and international business, and to people who wish to have a better understanding what marketing really brings to consumers. Marin A. Marinov holds a PhD degree in Management and is Professor of International Business at Aalborg University, Denmark. His research interests include internationalization of business, multinational firms and business development in emerging economies, as well as business policy and strategy. He has taught and done extensive research on both sides of the Atlantic and in Asia in countries including Austria, Bulgaria, China, Finland, France, Germany, Portugal, Spain, Sweden, the United Kingdom and the United States among numerous others.

Routledge Frontiers in the Development of International Business, Management and Marketing Series Editors: Marin Marinov and Svetla Marinova

Economic Transition and International Business Managing Through Change and Crises in the Global Economy Edited by Eric Milliot and Sophie Nivoix Value in Marketing Retrospective and Perspective Stance Edited by Marin A. Marinov For more information about this series, please visit: www.routledge.com/ business/series/RFDIBMM

Value in Marketing Retrospective and Perspective Stance

Edited by Marin A. Marinov

First published 2020 by Routledge 52 Vanderbilt Avenue, New York, NY 10017 and by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business © 2020 Taylor & Francis The right of Marin A. Marinov to be identified as the author of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging-in-Publication Data A catalog record for this book has been requested ISBN: 978-0-367-20948-3 (hbk) ISBN: 978-0-429-26433-7 (ebk) Typeset in Sabon by Apex CoVantage, LLC

Contents

List of Tables List of Figures 1

Value in Marketing: What Is It and Why Does It Matter?

vii viii 1

M A R I N A . M ARIN OV AN D SVE TL A MARIN OVA

2

The Concept of Consumer Value: Development, Implications, Trajectory

9

M O R R I S B . H O L B RO O K

3

The Intra-Variable Perspective on Value Research: A Personal Documented View

42

R AQU E L SÁ N CH E Z- FE RN ÁN DE Z AN D MA RTINA G. GALLAR Z A

4

The Inter-Variable Perspective on Consumer Value Research: A Personal Documented View

90

M A RTI N A G . GAL L A RZA A N D RAQUE L SÁ N C HEZ -FER NÁNDEZ

5

A Critical Review of the Value Concept in the International Marketing Context

126

SA R DA N A I S L AM KH A N , H O YIN WO N G AN D PARV ES SU LTAN

6

The Value of Networks and Knowledge in the Internationalization Process of Firms: Challenges and Future Perspectives

145

K E N T E R I K S SO N A N D AN GE L IKA L IN DSTRAND

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Value Co-Creation in Social Media Networks SV E TL A M A R IN OVA, JO N AS E DUA RDSE N AN D M A R I N A . M ARIN OV

163

vi

Contents

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Value Creation in Context: A Value Chain Locus Perspective

180

SV E TL A M A R IN OVA, SUSAN FRE E MA N A N D M A R I N A . M ARIN OV

List of Contributors Index

211 216

Tables

2.1 2.2 2.3 2.4 2.5 3.1 4.1 4.2 6.1 6.2 6.3 6.4 6.5 6.6 8.1 8.2

Distinctions Between (1) Verbal/Visual Modalities and (2) Inputs/Outputs 2 × 2 × 2 or Eight-Fold Typology of Customer Value With Value Types Shown in CAPITAL LETTERS Refined and Clarified Version of Table 2.2 The Four Major Types of Value A Typology of Consumer Value With Renamed Categories Intra-Value Research: A Review and Classification of Value Conceptual Proposals From 1984 to 2017 Diachronic Relevance of Value Across Marketing Paradigms Further Insights Into the Quality-Value-SatisfactionLoyalty Chain: Extra Constructs and Contexts Performance in International Business Network Research (N = 109) International Business Network Research (N = 799) Methods Used in International Business Network Research Performance and International Business Knowledge Development (N = 92) International Business Knowledge Development (N = 599) Methods Used in International Business Knowledge Development Firm Characteristics Interviewee Roles

16 18 18 24 25 54 93 104 150 151 151 154 156 157 188 189

Figures

3.1 3.2 3.3 3.4 4.1 4.2 4.3

5.1 7.1 8.1 8.2

Depicting Intra- and Inter-Variable Research on Consumer Value Disciplinary Sources and Marketing Applications of the Value Concept: Illustrative Quotations Consumer Value: Nature and Defining Characteristics Research Streams on Consumer Value: A Diachronic Perspective Depicting Intra- and Inter-Variable Research on Consumer Value Conceptual Delimitations Between Value and Related Concepts The Measurement of Linkages in the Quality-ValueSatisfaction-Loyalty Chain: A Review From 1985 to 2018 A Comprehensive Value Framework for International Marketing Value Co-Creation in Social Media—An Overview A Typology: Context, Positions and Implications for Value Creation Perspectives and Participants in Value Creation

44 46 66 69 91 100

103 138 175 202 204

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Value in Marketing What Is It and Why Does It Matter? Marin A. Marinov and Svetla Marinova

We have been researching the meanings and interpretations of value to find out that it is often perceived as too obscure in its meaning and many people would merely shrug their shoulders in bewilderment. Not to mention that when trying to find the literal translation for value in other languages, one might struggle to find equivalent words that express what it really means. Instead, descriptive words—such as benefit, use or utility come to mind more easily and are more understandable. Then you hear: “Oh, yeah, I see what you mean.” Moreover, when we mention value to some friends and colleagues, many would simultaneously equate it with profit. Indeed, value is a concept that can mean many things to different people or may be not meaningful to some. This makes us wonder how we can communicate better what value is, who creates it and why it is important in business-to-consumer (B2C) and business-to-business (B2B) marketing. Consequently, this volume presents a collection of personal perspectives, reflections and overviews on the meanings, interpretations and perspectives associated with value in marketing. The concept of value is as old as the exchange processes and dates back to the dawn of the existence of mankind, evidence of which can be traced in the Bible. Aristotle in his work The Nicomachean Ethics indicated that justice in exchange calls for proportioned reciprocity as there is a need to identify how value should be measured for the evaluation of proportioned reciprocity. The Roman law called not for the inherent value of a good but for a market price, which had to be determined at the time of the sale. Mazzucato’s recent award-winning book The Value of Everything (2018) also argues that value is often explicitly equated with what can procure a price in the market; as a result, price determines value, albeit she explores value further from this initial premise. According to Zeithaml (1988) and Holbrook (1999), a diversity in the meanings and interpretations of value exist because value is perceived as highly subjective and dependent on the individual’s perception. The initial understanding of value as utility originates with Adam Smith (2003 [1776]) and the economic marginal utility theory that emerged from the foundations of Smith’s earlier work (Kauder, 1965). Value in business activities

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has developed on this basis with the interpretation of the worth created in business transactions for the parties participating in the exchange of goods. As a result, the perceived value to any party is the ratio between calculable and presentable benefits received and sacrifices made being measured in a single measure of value, such as money (Anderson and Wynstra, 2010). It is widely accepted, though, that value has multiple measurements and is not exclusively related to economic benefits, but it relates to relationship benefits and functional benefits (Ritter and Walter, 2012). This interpretation is echoed by Marinova, Larimo and Nummela (2017), who also highlight that value is subjective, relative, differing among users, and context specific. This is aligned with Ravald and Grönroos (1996), who describe value as related to consumers’ own actions, position and experience in the buying process. Of course, consumers cannot create value alone and in this regard, Amit and Zott (2001) argue that value can only be created and hence, refers to the total value created among all participants in a transaction. This is reflected in the original definition of marketing adopted in the U.S. in 1935 by the AMA, which stated that: “(Marketing is) the performance of business activities that direct the flow of goods and services from producers to consumers” (Wilkie and Moore, 2007: 269). For a number of decades value in exchange was debatably one of the major concepts in marketing (see, e.g., Alderson, 1957; Bagozzi, 1975; Houston and Gassenheimer, 1987). Marketing literature has been exploring value creation by firms for their customers as exchange value and value-in-use for the customer, based on customer wants, needs and preferences. Subsequently, the notion of value creation in the firm gave place to value co-created in the relationship between the firm and the consumer (Prahalad and Ramaswamy, 2004). Research by Vargo and Lusch (2004, 2006, 2007, 2008, 2011), Vargo, Maglio and Akaka (2008) and Akaka, Vargo and Lusch (2013) has developed the Service Dominant Logic (SDL) and the service-ecosystem perspective that have placed centrality to service exchange, integration of resources, value co-creation, value-in-use and value-in-context (Akaka, Vargo and Lusch, 2013). Thus, co-creation and multiple value outcomes have been recognized as fundamental to service provision. In line with this, the AMA’s definition of marketing was adjusted in 2013 to reflect the understanding that a product is no longer the object of exchange between a firm and its customer, but it is an offering, a bundle that creates value for the customer, for various parties contributing to the bundle offered to the customer, and for the society at large. “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large” (AMA, 2013). At present, numerous understandings of value are centered on the essential conventions of various theoretical approaches applied in social

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sciences, mostly economics, psychology, sociology and anthropology. The late developments concerning Consumer Culture Theory (CCT), Service Dominant Logic (SDL) and branding research have advocated the necessity for a clarification and a theoretical synthesis of the different conceptions of value (e.g., Arvidsson, 2006; Domegan et al., 2013; Grönroos, 2012; Gummerus, 2013; Holbrook, 1999), types of value and mechanisms for value creation and co-creation. The philosophical reflections of Plato in The Republic (in 360 BC) regard value as intrinsic and extrinsic (Plato, 2007). The intrinsic value in Plato’s thinking relates to the internal worth or ‘goodness’ of a person, something deeply internally embedded that shapes one’s moral values and beliefs. The extrinsic value is associated with things and therefore, it exposes the importance of the ‘thing’, which could be an object, a product, an activity or anything that is external to a person and brings some instrumental value for that person. This arguably leads to the assumption that value can be both intrinsic and extrinsic and that these two concepts do not exclude, rather, they complement one another. In addition, the worth itself is a matter of perception, the perception of the person who gets the worth of the ‘thing’ and thus has a subjective evaluation and interpretation, which may or may not be shared by other persons. In line with this, Holbrook (1999) categorizes three dimensions of value, namely: (1) intrinsic-extrinsic, (2) self-oriented versus other-oriented and (3) active-reactive. The intrinsic-extrinsic dimension is applied when a product is valued because of its qualities as an end product or as a means that helps someone gain something else. A self-oriented versus other-oriented dimension relates to the value of the product to the end-user or because of its worth to someone due to the reactions of others. The active-reactive dimension is about the involvement of a person in the value of the product. Others have suggested that value in marketing should be seen as a multidimensional construct including functionality and features (with identity, safety, usability and performance), customer experience (with convenience, visual appeal, reliability and compatibility), brand image (with accomplishment, sensory appeal, productivity and values) and social status (with comfort, engagement, efficiency and refinement). Some have developed the Marketing Value Wheel Framework with business value, consumer value and cultural value with their constituents (Carr, 2019), while others suggest that value should be analyzed considering various levels and types (Boztepe, 2007; den Ouden, 2012; Marinova, Freeman and Marinov, 2018). In doing so, the notion of marketing has been further unpacked and its complexity has created new challenges to marketing scholars and practitioners alike. This book comprises various chapters presenting a broad retrospective analysis on the term ‘value in marketing’ taken from the perspectives of the concept of consumer value, intra- and inter- variable perspectives on value research. It investigates and analyzes the dispersed knowledge in

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the marketing literature to categorize various schools of thought related to the concept of value in the field of marketing. It has also indicated that firms possessing well-established social networks generally grow fast internationally providing value well beyond national borders and consumer groups in a single country, as they link users and sellers of goods and services globally. Chapter 2 is written by a guru in marketing, Emeritus Professor Morris B. Holbrook, and represents a personal retrospective journey suggesting an idiosyncratic subjective contemplative treatise, a generalized true-tolife SPI appraisal, mapping out the progression of the author’s identifiable actual Concept of Consumer Value (CCV); setting CCV as a lean-to of earlier work on the Consumption Experience; bringing up numerous aspects of CCV that are debated time and again, often taken the wrong way, or disregarded; and referring briefly to those on the international scene who have addressed theoretical fine-tuning and measurementrelated empirical issues in ways that, in spite of the author’s own participation, the author believes are still embryonic and in need of further improvement. Chapters 3 and 4, authored by Associate Professors Raquel SánchezFernández and Martina G. Gallarza, represent intra- and inter- variable perspectives on value research. Chapter 3 refers to the deep, extensive and scattered research on value, and identifies the emergence of two main areas of discussion, namely, conceptualization and dimensionality, representing intra-variable approach, and interrelationships with other constructs, inter-variable approach. Chapter 3 sets to contribute to the value literature by providing a systematic review under an intra-variable perspective, including: (1) an explanation of the importance of researching the notion of intra-variable perspective; (2) a review of the etymological foundations of the value concept on the basis of numerous disciplinary sources; (3) an exploration of the polysemy and terminological richness associated to the analyses concept; (4) a comparison and classification of the value definitions, where the wide spectrum of approaches is evidenced; (5) a diachronic review of what has been studied regarding the nature, typology and dimensionality of value, uni- and multi-dimensional approaches). Chapter 3 concludes with a discussion of the major inadequacies, deficiencies, challenges referring to the analyzed notion, and identifies future research streams in the investigation of value. Chapter 4 offers a review on inter-variable approach, showing that the inter-variable perspective on value is a crowded and rich steam of research that has never lost the interest of marketing and consumer behavior researchers. This chapter is organized in sections, along with an introduction and conclusion. First, it brings the relevance of value research; then the chapter addresses the conceptual inter-variable perspective, i.e., delimitations between value and related variables, both diachronically and synchronically. Afterwards, it deals with the methodological

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inter-variable perspective, showing a ‘chain of effects’ between (service) quality-consumer value-customer satisfaction-loyalty. Finally, the chapter proposes an overview of the future perspectives on value measurement, essentially as connections between inter- and intra- perspectives. Overall, this chapter takes retrospective and perspective points of view, concerning the inter-variable perspective on value. Chapter 5, written by Dr. Sardana Islam Khan, Dr. Ho Yin Wong and Dr. Parves Sultan, investigates and analyzes the dispersed knowledge found in the literature to categorize various schools of thought related to the concept of value in the field of international marketing. The extant literature has addressed different products, contexts or relationships from the perspective of perceived value investigating various factors and aiming at different outcomes. It is really challenging to connect the dots between the dispersed knowledge existing in the contemporary international marketing literature on value. This chapter endeavors to fill in certain gaps in the literature on international marketing. These schools of thought, referred to in the chapter, take account of the cost leadership school of thought, superior product school of thought, relationship school of thought and culture school of thought. Based on the analysis of these schools of thought, an integrative value framework has been developed and proposed for international markers and future researchers, including a comprehensive list of factors and activities creating value for consumers and firms in the international marketing context. Chapter 6, written by Professor Kent Eriksson and Dr. Angelika Lindstrand, addresses the process of internationalization of firms and the importance of networks. Firms with well-established social networks generally grow fast internationally providing value because they link users to each other, and also to sellers of goods and services. The technology of social networks make it possible to connect actors internationally, however there is a need to consider cultural, cognitive and regulative factors that actors need to overcome so that international business operations can take place. Overcoming such obstacles of the international context is associated with knowledge development. This chapter is a review of the current accomplishments in the international business research on value in the process of knowledge development and network creation. The review is conducted to identify future directions of research on value in international business. The authors adopt an all-encompassing definition of value arguing that the reason for it is based on the premise that sustained international business is only viable if networks and knowledge developed create value for the firm. As value can be defined narrowly, the authors analyze value in terms of firm performance. Chapter 7, by Professor Svetla Marinova, Dr. Jonas Eduardsen and Professor Marin A. Marinov, explores the impact of social media for organizations in terms of value co-creation and identifies how firms can use social media as a platform for facilitating value co-creation.

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Value co-creation in social media platforms is a complex process of actor engagement where firms and heterogeneous customers and/or customer communities interact on technologically enabled platforms to co-create value in co-design, co-conception, co-production and co-promotion. Thus customers do not only consume value created by companies, but they proactively engage in a timely, transparent, self-managed approach for mutual learning and resource sharing to enhance product and service provision, assuming various roles in the co-creation process and gain intrinsic (hedonic), extrinsic (pragmatic and economic) and internalized extrinsic benefits (cognitive, social and personal) benefits. Companies also participate in this co-creation process in order to design, initiate, launch and augment product/service offerings and thus enhance their organizational explorative and exploitive innovation capabilities, promotion appeal and consumer reach. Internet platforms serve as enablers and a meeting ground for customers and companies to co-create, but they also bring in new organizational capabilities of creating communities of common interest, providing information, speed and transparency in the co-creation process. In order to develop such capabilities, social media offer various platforms to respond to customer heterogeneity, as well as to diverse company needs, develop new functionalities and capabilities, empower customers, while customers have become proactive participants who have embraced these new responsibilities and opportunities of cocreator empowerment. Thus, while social media can provide a rich source of external knowledge that can be used to co-create value, organizations must acquire new skills and competencies to adequately benefit from social media. The authors develop a holistic framework for social media– driven value co-creation and contribute to the literature on social media marketing and value creation by addressing an important theoretical and managerial research gap. Chapter 8, written by Professors Svetla Marinova, Susan Freeman and Marin A. Marinov, explores how value is created and co-created within a specific context of relationships and how this value is shaped by the social context. It explores the perceptions of the value created by small and medium-sized enterprises (SMEs) operating in different levels of an international value chain. The chapter offers a holistic understanding of multi-firm participants and network attachments throughout the supply chain rather than a single point of a supply chain, hence recognizing different outcomes and values. Implied cultural differences of value shaping multiple perspectives on meanings and interpretations of value are captured. Introducing systems perspective into marketing and supply chain position research, the chapter posits that creating value includes the ecosystem that thrives when multiple actors align in a supply chain to create a supportive environment for value creation. The authors demonstrate different perceptions and value propositions at different levels and suggest a value chain positioning typology that affects the value created by

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the participant firms in the value chain, and a typology of types of value concerning different levels of value users.

References Akaka, M. A., Vargo, S. L. and Lusch, R. (2013). The complexity of context: A service ecosystems approach for international marketing. Journal of International Marketing, 21(4): 1–20. Alderson, W. (1957). Marketing Behavior and Executive Action: A Functionalist Approach to Marketing, Homewood, IL: Richard D. Irwin. American Marketing Association. (2013). Definition of Marketing, www.ama. org/AboutAMA/Pages/Definition-of-Marketing.aspx, Accessed on 25 February, 2016. Amit, R. and Zott, C. (2001). Value creation in e-business. Strategic Management Journal, 22: 493–520. Anderson, J. C. and Wynstra, F. (2010). Purchasing higher-value, higher-price offerings in business markets. Journal of Business-to-Business Marketing, 17(1): 29–61. Arvidsson, A. (2006). Brands: Meaning and Value in Media Culture, London and New York: Routledge. Bagozzi, R. P. (1975). Marketing as exchange. Journal of Marketing, 39(October): 32–39. Boztepe, S. (2007). User value: Competing theories and models. International Journal of Design, 1(2): 55–63. Carr, D. (2019). What Value Do You Create? Marketing’s 3 Types of Value, January 16, https://hackernoon.com/what-value-do-you-create-marketings-3-typesof-value-7b5f40cad756, Accessed on 03 August, 2019. den Ouden, E. (2012). Innovation Design: Creating Value for People, Organizations and Society, London: Springer Verlag. Domegan, C. T., Collins, K., Stead, M., McHugh, P. and Hughes, T. (2013). Value co-creation in social marketing: Functional or fanciful? Journal of Social Marketing, 3(3): 239–256. Grönroos, C. (2012). Conceptualising value co-creation: A journey to the 1970s and back to the future. Journal of Marketing Management, 28(13–14): 1520–1534. Gummerus, J. (2013). Value creation processes and value outcomes in marketing theory: Strangers or siblings? Marketing Theory, 13(1): 19–46. Holbrook, M. B. (1999). Consumer Value: A Framework for Analysis and Research, New York: Routledge. Houston, F. S. and Gassenheimer, J. (1987). Marketing and exchange. Journal of Marketing, 51(4): 3–18. Kauder, E. (1965). History of Marginal Utility Theory, Princeton, NJ: Princeton University Press. Marinova, S., Freeman, S. and Marinov, M. (2018). Context and position in value co-creation: A multi-firm perspective. Paper presented at the 2018 EIBA conference, University of Economics and Business, Poznan, 13–15 December. Marinova, S., Larimo, J. and Nummela, N. (2017). Value Creation in International Business: An SME Pespective, Volume 2, London: Palgrave Macmillan Springer.

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Mazzucato, M. (2018). The Value of Everything: Making and Taking in the Global Economy, New York, NY: Allen Lein. Plato (2007). The Republic, Penguin Classics, London: Penguin Books. Prahalad, C. K. and Ramaswamy, V. (2004). Co-creation experiences: The next practice in value creation. Journal of Interactive Marketing, 18(3): 5–14. Ravald, A. and Grönroos, C. (1996). The value concept and relationship marketing. European Journal of Marketing, 30(2): 19–30. Ritter, T. and Walter, A. (2012). More is not always better: The impact of relationship functions on customer-perceived relationship value. Industrial Marketing Management, 41(1): 136–144. Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations, London: W. Strahan and T. Cadell. 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. (2006). Service-dominant logic: What it is, what it is not, what it might be. In Vargo, S. L. and Lusch, R. F. (Eds.), The Service Dominant Logic of Marketing: Dialog, Debate, and Directions, New York: M. E. Sharpe, Inc.: 43–55. Vargo, S. L. and Lusch, R. F. (2007). Service-dominant logic: Continuing the evolution. Academy of Marketing Science, 36(1): 1–10. Vargo, S. L. and Lusch, R. F. (2008). From goods to service(s): Divergences and convergences of logics. Industrial Marketing Management, 37(3): 254–259. Vargo, S. L. and Lusch, R. F. (2011). It’s all B2B . . . and beyond: Toward a systems perspective of the market. Industrial Marketing Management, 40(2): 181–187. Vargo, S. L., Maglio, P. O. and Akaka, M. A. (2008). On value and value cocreation: A service system and service logic perspective. European Management Journal, 26(3): 145–152. Wilkie, W. L. and Moore, E. S. (2007) What does the definition of marketing tell us about ourselves? Journal of Public Policy & Marketing, 26(2): 269–276. Zeithaml, V. A. (1988). Consumer perception of price, quality, and value: A means-end model and synthesis of evidence. Journal of Marketing, 52(3): 2–22.

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The Concept of Consumer Value Development, Implications, Trajectory Morris B. Holbrook

In this subjective personal introspective chapter, I shall pursue an impressionistic autobiographical SPI approach to trace the development of my own particular Concept of Consumer Value (CCV); to position CCV as an extension of the earlier work on the Consumption Experience; to mention various aspects of CCV that are often debated, misunderstood, or ignored; and to refer briefly to those on the international scene who have addressed conceptual refinements and measurement-related empirical issues in ways that, despite my own participation, I believe are still embryonic and in need of further development. So let us begin at what was, for me, the beginning. When I arrived on the scene as an MBA candidate at Columbia University’s Graduate School of Business in 1965, I enjoyed the privilege of joining the intellectual ferment that surrounded the proliferation of new attempts to construct theories of buyer behavior that embraced the sorts of boxes-and-arrows models introduced by the Nobel Prize–winner Herbert Simon and his colleagues. Writers like John Howard (1963), Franco Nicosia (1966), Engel, Kollat and Blackwell (1968), and later Jim Bettman (1979) were beginning to formulate models of the buyer as a rational information-processing brand-choosing decision maker. And such emerging approaches reached their full flower right under my nose as a student in John Howard’s buyerbehavior class at Columbia. Together with Jagdish Sheth, John’s former PhD student at the University of Pittsburgh, Howard was immersed in the creative throes of building the conceptual structure that ultimately blossomed as their monumentally influential Theory of Buyer Behavior (Howard and Sheth 1969). In class, John invited us students to extend, question, debate, and even attack his ideas. And I found this process of discovery thrilling. In short, I became addicted to the then-nascent study of buyer behavior, started on research to seek empirical support for the Howard-Sheth Theory, wrote my dissertation on aspects of advertising illustrative of the Howard-Sheth approach, and embarked upon a career as a consumer researcher with a strong orientation toward the sorts of rational information-processing decision-oriented views espoused by Howard-and-Sheth and by the other buyer-behavior gurus of the time. (For reviews, please see Holbrook 1995, 2001.)

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In writings too numerous and no doubt too tedious to bear repeating here, I have documented the undeniable fact that these and other models of buyer behavior all tended to follow the same sort of logical progression—traceable all the way back to Plato—in which Information (from brand features, advertising, word of mouth, and so forth) builds Cognitions (beliefs about the relevant brands) that combine to create Affect (preferences in the form of liking or disliking the available offerings) that encourage Behavior (an actual purchase decision that produces a brand choice) that leads to Satisfaction (a favorable or unfavorable postpurchase evaluation that does or doesn’t reinforce learning to buy the brand repeatedly). This I-C-A-B-S model held sway in the voluminous amount of empirical work produced by Howard and his colleagues at Columbia (Farley, Howard, and Ring 1974; Farley and Ring 1970) (for a review, please see Holbrook 1974) and, for example, by those working on Fishbein- or Rosenberg-type multiattribute-attitude models (Fishbein and Ajzen 1975; Rosenberg 1956) (for reviews and extensions, please see Holbrook 1977, 1981; Ryan and Holbrook 1982). These theoretical approaches did a rather nice job of explaining brand choices in the area of mostly functional utilitarian products such as, say, toothpaste or laundry detergent or lawn mowers or insurance policies. But the I-C-A-B-S formulations failed to plumb the depths of consumer responses to more hedonic emotionally connected offerings such as, say, perfume or jewelry or luxury cruises or rock concerts. I had felt a creeping awareness of this problem as an MBA student when I had questioned Professor Howard himself about why automobile advertisements showed beautiful scantily clad women draped across the hoods of luxury cars and so forth. But he had convinced me that the important criteria hinged on such economically rational performance specifications as horsepower, miles-per-gallon, and speed of accelerating from zero to 60 miles per hour. So—though I was a willing convert—it took the catalytic force of Beth Hirschman to wake me from my theoretical slumbers. Thus, when I first met Beth at an ACR Conference in 1979, I found her embarked on a program of research that, under an umbrella that could be broadly characterized as Hedonic Consumption, openly embraced emotions, irrationality, aesthetic responses, and many other phenomena not comfortably accommodated by the traditional I-C-A-B-S formulations. To this task, Beth brought an explosive onslaught of intellectual energy and penetrating insight that I have not seen equaled, before or since. Being a nearby neighbor on Riverside Drive in New York City, I was able to work closely with Beth to unleash some relevant conceptual analyses that took the form of one article on Hedonic Consumption first-authored by Beth (Hirschman and Holbrook 1982) and another on the Consumption Experience first-authored by yours truly (Holbrook and Hirschman 1982). Together, these two publications signaled our awareness of the need to expand beyond the confines of the traditional decision-oriented

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I-C-A-B-S formulation to include additional experiential aspects of each component that embraced (I) aesthetic offerings such as music, movies, television programs, and visual arts; (C) unconscious thoughts, dreams, and daydreams; (A) emotional responses that went well beyond brand preferences to include love, hate, joy, sorrow, fear, anger, lust, disgust, and so forth; (B) pre- and post-purchase activities that extended into areas of play and leisure pursuits; and (S) satisfaction as a rich pattern of desirefulfilling enjoyment (Holbrook and Hirschman 1982). In this (sometimes in ways that we did not fully recognize at the time but have since taken pains to acknowledge wherever possible), we built upon the earlier work of marketing researchers (Alderson 1957; Boyd and Levy 1963; Kotler and Levy 1969; Levy 1959; Woods 1981); economists (Abbott 1955; Marshall 1920); and consumer advocates (Norris 1941). Indeed, Stanley Lebergott (1993) has traced the importance of the consumption experience backwards through John Maynard Keynes (1936) to Alfred Marshall (1920) and all the way to Adam Smith (1776). (For a review, please see Holbrook 1994b.) For short, we referred to the central C-A-B portion of our elaborations as Fantasies, Feelings, and Fun (the Three F’s). This focus on an expanded concept of the Consumption Experience spilled over into all aspects of my own work dealing with entertainment and the arts; emotional responses to products and advertisements; leisure pursuits and consumer esthetics—producing a stream of research too voluminous to cite here but covered at some length in a recent autobiographical essay (Holbrook 2017). These new directions of inquiry into the Three F’s expanded my consciousness in many ways, but this expanded consciousness did not yet include a fully elaborated view of the last element in the I-C-A-B-S chain—namely, (S) Satisfaction. Howardand-Sheth and others had tended to view Satisfaction as an outcome of post-purchase evaluation that, if positive, reinforced repeat-purchase tendencies in ways that elevated the strength of brand loyalty. Writers like Rich Oliver (1980, 1997; Mano and Oliver 1993) had made a career out of studying Satisfaction and explaining how it reflected the degrees to which Performances (Ps) exceeded Expectations (Es) on a number of relevant evaluative criteria (somewhat confusingly referred to as “disconfirmation,” which sounds bad but, if Ps > Es, is actually good). This fruitful and widely accepted view did much to orient marketing strategists in a direction useful to building repeat-purchase behavior by raising Ps to insure that Ps > Es on a variety of key evaluative criteria. (Or—conversely, I’ve always thought—lowering Es without improving Ps to keep Ps > Es according to the logic that if your expectations are low, you won’t be disappointed.) But I gradually came to realize that this traditional view of Ps > Es as the key to post-purchase Satisfaction did not fully capture the complex nature of the value that results from a consumption experience. This realization dawned on me with some force as the result of a couple of

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coincidentally related events in (roughly) 1983. First, for Xmas, my Aunt Kitty and Uncle Harry gave me a copy of Robert Pirsig’s Zen and the Art of Motorcycle Maintenance: An Inquiry into Values (Pirsig 1974). I fell in love with this book, pondered its deeply philosophical implications, and—pursuing one of its main themes—came away with an interest in the whole problem of defining “Quality.” Second, down at New York University (Columbia’s sister school to the south), Jack Jacoby and Jerry Olson (then at Penn State) organized a conference on “Quality” and invited me to submit a paper and to make a presentation on that theme. Toward that end, I elicited the participation of Kim Corfman, a Columbia PhD student at the time and now a professor at NYU in her own right. My work on this project happened to coincide with the first sabbatical that I enjoyed after receiving tenure. So I had a bit of extra time to reflect, ponder, and extrapolate conceptual conclusions. Kim took charge of the data-gathering phase and produced some nice empirical results that I’ll mention again later (but that lie outside my main focus at the moment), while I buried myself in my office and agonized over the meaning of “Quality” in ways reminiscent of the self-absorbed reflections reported by Pirsig (1974) in connection with an alter-ego whom (harking back to Plato) he calls Phaedrus—hence, the subtitle of the ultimate chapter by Holbrook and Corfman (1985): “Phaedrus Rides Again.” To further this rather abstruse or even esoteric inquiry into the meaning of “Quality,” I turned to literature from the branch of philosophy known as “Axiology.” Not to be misdirected by good-natured jokes from Hal Kassarjian concerning the undersides of automobiles, Axiology involves the philosophical study of value in general or, in my case, the Concept of Consumer Value (CCV) in particular. Toward the end of gaining insights into CCV, I visited the stacks at Columbia University’s Butler Library for probably the only time that I have penetrated those walls during my fifty-plus years at the school and found myself confronted by a long shelf of books on this recondite topic. Many of these volumes came from the personal collection of that grand old Columbia professor John Dewey. In those days, library books had small pouches in the back with cards indicating relevant information about the dates when people had borrowed them from the library. But this evidence indicated that—with the likely exception of Professor Dewey himself—these books had never been checked out or read by anybody whomsoever. In short, I realized that I was exploring virgin territory—albeit territory that, over the years, had suffered from immense buildups of mold and mildew and other evilsmelling substances that afflict books if you let them sit on a humid shelf for half a century. I selected a huge armful of volumes with likely sounding titles and carried them back to my office. But—because I suffer from rampant allergies and occasional attacks of asthma—I could not think of reading these tomes until I had donned a surgical mask and, sometimes gasping for air, Xeroxed every page of every book—a large labor of love,

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to put it mildly. I then returned the fetid axiology books to Butler Library (where they undoubtedly languish to this day, growing more putrid by the minute) and began the task of reading my odorless Xerox copies of the collective wisdom on the philosophy of value. In my reading, I found much to contemplate among many helpful contributions from bygone philosophers with names like Mortimer Adler (1981), Monroe Beardsley (1967), E.  J. Bond (1983), William Frankena (1973), Risieri Frondizi (1971), Everett Hall (1961), Robert Hartman (1967), A. L. Hilliard (1950), Johan Huizinga (1938), W. D. Lamont (1955), C. I. Lewis (1946), L. M. Loring (1966), George Herbert Mead (1938), Charles Morris (1956), Radhakamal Mukerjee (1964), Harold Osborne (1933), Dewitt Parker (1957), Stephen Pepper (1958), Ralph Barton Perry (1954), Eli Siegel (1981), Paul Taylor (1961), and Georg Henrik Von Wright (1963). The collective wisdom of these brave axiologists gradually coalesced into my emerging views on the Concept of Consumer Value (CCV)—that is, the nature and types of value derived by consumers from consumption experiences. This investigation of CCV suggested the following conclusions concerning (1) the nature and (2) the types of consumer value. First, regarding the Nature of Consumer Value, I defined value as an interactive relativistic preference experience. Consumer Value is interactive insofar as it depends on a relationship between a Subject (the consumer) and an Object (the relevant product or event). Value cannot exist without a value-producing Object of some kind (meaning, for example, that beauty is not only in the eye of the beholder). Nor can it exist without a Subject to appreciate it (meaning, for example, that a work of art cannot have value apart from those who admire it . . . or pay for it). Rather, Consumer Value entails a SubjectObject interaction in which the consumption experience resulting from a product or event appeals to one or another individual. This aspect of consumer value has inspired disciples of the Service-Dominant Logic (SDL, Vargo and Lusch 2004) or the managerial gurus who espouse Experiential Marketing (Prahalad and Ramaswamy 2004) to celebrate the co-creation of value (Arnould 2007; Cova, Dalli, and Zwick 2011; Sorensen, Andrews, and Drennan 2017), thereby overlapping with the Concept of Consumer Value (CCV) in ways that I shall mention later and that exhibit a considerable degree of refined analysis but that do confuse the picture somewhat in their tendency to use the term “interaction” to refer to interpersonal relations between customers and service providers (“direct interaction”) as opposed to a broader relation (“indirect interaction”) between a product or event (Object) and a consumer (Subject) (Grönroos 2011, 2012; Grönroos and Ravald 2001; Grönroos and Voima 2013; Sorensen, Andrews, and Drennan 2017). In other words, those with a service-marketing orientation tend to use the term “interaction” to refer to interpersonal communications or joint activities between customers and service personnel, whereas my concept of the subject-object

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interaction encompasses a much broader inclusion of inter-relationships between products or events (objects) and consumers (subjects). Hence, joint co-creation activities as envisioned by theorists such as Grönroos (2011, 2012) are only part—indeed, an important but a small part—of the story as I see it. Consumer Value is relativisitic in at least three senses. Specifically, it is comparative, personal, and situational. Value is comparative insofar as we can state the value of one object only in reference to that of one or more other objects as evaluated by the same individual. Thus, legitimate value judgments involve relative preferences among objects for a given person rather than illegitimate utility comparisons among people. Put differently, there is no valid absolute measure of consumer value that can be applied across individuals—that is, no valid measure of what the economists call “Cardinal Utility.” This means that—common measurement practices notwithstanding—I cannot validly claim that I like vanilla ice cream at a level of 9 on a 10-point scale of absolute value. Rather, I can validly claim only that I like vanilla ice cream better than I like, say, chocolate ice cream (perhaps with some sort of calibration to assess how much better). For this reason, as economists have long insisted, interpersonal utility comparisons of the form “I like vanilla ice cream better than my wife Sally likes vanilla ice cream” are illegitimate. Rather, I can legitimately claim only that “I like vanilla ice cream better than chocolate, whereas Sally likes chocolate better than vanilla,” which involves only comparisons made at the intrapersonal level. Notice that this issue concerning the invalidity of interpersonal utility comparisons bedeviled the early research on multiattribute attitude models. Researchers were in the habit of collecting belief and affect scores across a sample of respondents for one or another object (say, a political candidate or a make of automobile); forming sums of beliefs multiplied times desirability weights for each respondent; and then using these summative scores to predict overall affect toward the brand across respondents. Unfortunately, such procedures involved interpersonal utility comparisons that negated their validity (Bass and Wilkie 1973). The word began to circulate informally that—realizing this—Frank Bass, then Editor of the Journal of Marketing Research, would no longer accept attitude-measurement papers that transgressed by correlating the components of attitude models across people. This inspired many of us to conduct research according to what Jaccard and Wood (1986) called an “idiothetic” approach in which comparisons were made and correlations run across a number of objects within each respondent at the intrapersonal level (e.g., Holbrook 1977, 1981). This within-individuals across-objects approach avoids the fallacy of interpersonal utility comparisons and carries implications for the future of value-related research to be discussed later. Consumer Value is personal insofar as it differs among people. To repeat, I like vanilla better than chocolate; Sally likes chocolate better

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than vanilla; and never the twain shall meet. The realization that different people have different preference functions relating features (vanilla/ chocolate) to beliefs (delicious/disgusting) to evaluations (more/less favorable) is, of course, the basis for market segmentation and, therefore, the foundation for much or even most marketing strategy. Any self-respecting axiologist could have figured out the essence of marketing long before that field of study was invented. Consumer Value is situational in that it varies from one context to the next. For example, suppose that, when eating a strawberry sundae, I prefer vanilla to chocolate ice cream but that, when eating a hot fudge sundae, I prefer chocolate to vanilla. Here appears a shining example of the well-known and highly publicized fact that a (comparative personal) value judgment (preferring vanilla/chocolate ice cream) depends on the context in which the evaluation is made (strawberry/hot fudge sundae). This realization implies the need to include the relevant situation(s) in any market-segmentation scheme. Russ Belk (1975) investigated this theme thoroughly in the case of such offerings as beverages, snack foods, or leisure activities; and I later extended this perspective to the case of situation-specific ideal points in preference functions for radio stations when listening at home, at work, or in the car (Holbrook 1984). For example, at home, I might prefer a station that plays soothing classical music; whereas, in the car, I might seek out a 24-hour news station. Analogous context-dependent applications are ubiquitous throughout the world of marketing research. Clearly and as implied in everything said thus far, Consumer Value pertains to a preference among alterative experience-producing objects or events—vanilla versus chocolate, strawberry, salty caramel, mint chip, rum raisin, pistachio, peppermint, cookie dough, rocky road, moose tracks, bear claw, and so forth. Here, it is important to distinguish between “Value” (singular) and “Values” (plural). The latter, of great interest to sociologists such as Rokeach (1968, 1973), concern the criteria used to determine an evaluation—as when, for example, my values suggest that I prefer a politician who is honest; smart; competent; in favor of free speech, racial equality, and women’s rights; peace-loving; concerned about climate change, global warming, and protecting the environment; not corrupted by personal business interests; not compromised by ties to unfriendly foreign powers such as Russia; not inclined to appoint family members to high government positions; and not likely to spend way too much time on the golf course. Based on the criteria determined by these values (plural), I can evaluate any number of candidates to reach summary judgments of value (singular) for each and can then (comparatively, personally, and situationally) conclude that I prefer Candidate HRC to Candidate DJT. Finally, most important and consistent with the work that Beth and I had done on the aforementioned experiential view of consumer behavior,

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Consumer Value can result only from a consumption experience. By itself, an object (product or event) has no value. As implied by the need for an object-subject interaction, value results only when that object performs the service of providing an experience that comparativelypersonally-and-situationally produces a preference in the form of a favorable evaluation. From this, it follows that the distinction between goods and services is more or less meaningless in the sense that, essentially, any offering (whether labelled a “good” or a “service”) performs the service of providing a value-producing consumption experience. Thus, a lollipop (traditionally regarded as a “good”) performs a hunger-reducing and taste-satisfying service just as much as a bank teller (traditionally regarded as a “service”) performs a check-cashing and money-handling service. So, conceptually, the distinction between the two becomes rather pointless (all the more if the teller hands out free lollipops). What matters is the nature of the experience provided by the service-performing object (product, event, or whatever)—often enhanced, by the way, via some degree of self -service on the part of the customer (Grönroos 2011). All of that falls under the heading of the Nature of Consumer Value viewed as an interactive relativistic (comparative, personal, situational) preference experience. But, second, the next key question concerns an identification of the various Types of Consumer Value. All during my years of post-graduate education and after, I have been a big fan of building typologies based on a series of two or more dichotomous distinctions. For example, in one of my proudest moments, this approach—based on distinctions between (1) Verbal/Visual Modalities and (2) Inputs/ Outputs—led me to discover the existence of a fourth monkey to accompany Hear-No-Evil, See-No-Evil, and Speak-No-Evil, as follows: Table 2.1 Distinctions Between (1) Verbal/Visual Modalities and (2) Inputs/ Outputs  

Verbal Modality

Visual Modality

Inputs Outputs

Hear-No-Evil Speak-No-Evil

See-No-Evil ?????

We find the fourth monkey (?????) lurking around the playground during recess, wearing a trench coat, and terrifying the children who stray too far from the jungle gym. His name is “Show-No-Evil.” Obviously, with the availability of a method like that for isolating key types of one or another phenomenon, I could not resist applying the 2×2×2 approach to an identification of the different Types of Consumer Value. (Please note that, here and in what follows, I shall treat the three key distinctions of interest as dichotomies even though they could more defensibly be viewed as continua ranging from one extreme to the other.

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The reader should keep in mind that the typology I propose could be represented more accurately by a multidimensional space in which continuous dimensions replace the simplified dichotomies that I shall discuss here.) The first distinction commands almost universal recognition among the various axiologists and concerns the difference between Extrinsic and Intrinsic Value. Extrinsic Value refers to the case in which a product or event serves as the means to some end, as when my bat hits a ball over the fence in left field for a home run, wherein the extrinsic value of my bat-wielding experience lies in its goal-achieving run-producing efficacy. By contrast, Intrinsic Value refers to the case in which the experience of a product or event is prized as an end in itself, as when I appreciate hearing the sonorous tonalities and majestic themes in a performance of Bruckner’s Seventh Symphony as a listening experience valued for its own sake. It happened that, at the time of developing the value typology, I resonated to the Extrinsic/Intrinsic distinction with special force because I was simultaneously involved in working with Bob Zirlin—a real PhD in Philosophy from Johns Hopkins—to write a review of the aesthetic aspects of consumer behavior, where the aesthetic aspects of art and entertainment are characterized by the intrinsic nature of the value they provide (Holbrook and Zirlin 1985). Finding the same Extrinsic/ Intrinsic distinction rampant in the writings of age-old axiologists gave me confidence that this is indeed a key dichotomy or dimension on which to focus. Second, I found widespread support for another key distinction based on the difference between Self-Oriented and Other-Oriented Value. SelfOriented Value depends on how I respond to some consumption experience or on how it affects me. By contrast, Other-Oriented Value depends on how some consumption experience affects others or on how they respond to it. Here, I intend “Other” to encompass a broad spectrum that ranges from the Deity to the Cosmos, to Mother Nature, to the Planet, to the Country, to one’s Town or Community, to one’s circle of Friends and Acquaintances, to one’s Family and Loved Ones, and even to potentially difficult-to-access Subcomponents of One’s Own Personality. Clearly, at one level, this distinction refers to the conventional contrast between self-oriented individual interests compared with the otheroriented social aspects of value creation. And, just as clearly, sometimes the lines tend to get a bit blurred. One example of such blurring occurs in various Eastern religions that posit a sort of internal “other” with which the “self” needs to get in touch in order to experience some kind of epiphany. Something similar might be said for the kind of internal quest that occurs in various forms of psychoanalysis. In what follows, I shall include these kinds of internal explorations under the heading of “other-oriented” even though the “other” in question lies within the “self” as conventionally conceived.

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Third, hints appear to support a contrast between Active and Reactive Value. Active Value refers to a manipulation of some product- or eventproduced experience in order to reap the relevant type of reward by virtue of the effect I have on it. By contrast, Reactive Value stems from my responding to some product- or event-produced experience to appreciate its value by virtue of the effect it has on me. Pounding a nail with a hammer clearly exhibits active value. Conversely, my enjoyment of a massage in which the masseuse pounds my back with her fists exhibits reactive value. Putting these distinctions together, Holbrook and Corfman (1985) produced the following 2×2×2 or eight-fold Typology of Customer Value with value types shown in CAPITAL LETTERS (and major examples shown parenthetically). In subsequent writings, much of this terminology has been refined and, I believe, improved in clarity. Specifically, as already indicated, what we then called “Passive Value” I now call “Reactive Value” (Holbrook 1999b). “Politics” is now identified as “Status (Success, Impression Management).” “Esteem” now includes “(Reputation, Materialism, Possessions).” “Morality (Virtue)” has been replaced by “Ethics (Virtue, Justice, Morality).” And “Religion (Faith)” has become “Spirituality (Faith, Ecstasy, Sacredness, Magic)” (Holbrook 1999b). However—because they are based on the same Table 2.2 2 × 2 × 2 or Eight-Fold Typology of Customer Value With Value Types Shown in CAPITAL LETTERS  

 

Extrinsic

Intrinsic

Self-Oriented

Active

EFFICIENCY (Convenience) EXCELLENCE (Quality) POLITICS (Success) ESTEEM (Reputation)

PLAY (Fun) ESTHETICS (Beauty) MORALITY (Virtue) RELIGION (Faith)

Passive Other-Oriented

Active Passive

Table 2.3 Refined and Clarified Version of Table 2.2  

 

Extrinsic

Intrinsic

SelfOriented

Active

EFFICIENCY (O/I or O-I, Convenience) EXCELLENCE (Quality)

PLAY (Fun) AESTHETICS (Beauty) ETHICS (Virtue, Justice, Morality)

Reactive OtherOriented

Active Reactive

STATUS (Success, Impression Management) ESTEEM (Reputation, Materialism, Possessions)

SPIRITUALITY (Faith, Ecstasy, Sacredness, Magic)

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three underlying dimensions, distinctions, or dichotomies—the types themselves have remained virtually unchanged over the years (Holbrook 1999b). Efficiency refers to the active manipulation of some experience produced by a product or event as a means to some self-oriented end—as when I push on the gas pedal to increase the speed of the car or strike a match to produce the flame for lighting a candle. Very often, Efficiency is measured as the ratio or difference between an Output (O) and an Input (I)—as when I assess my car’s performance in terms of miles-per-gallon (O/I) or evaluate the benefits-less-costs of a mutual fund according to its returns-minus-fees (O-I). In the case of Convenience, one special kind of Efficiency, the Input (I) of interest is time—as when I measure my car’s performance by clocking miles-per-hour or judge the value of a doctor’s visit according to how long I am kept waiting. Thus, the whole value of a “convenience” store such as, say, Seven-Eleven lies not in the quality of its merchandise or the attentiveness of its staff or the breadth of its selection but, rather, in the timeliness of its availability when you are driving down the highway late at night looking for a place to stock up on corn puffs. As I’ll mention later, a great deal of the value-related literature—such as the work on SERVQUAL (Parasuraman, Zeithaml, and Berry 1988; Zeithaml 1988)—focuses on this O/I or O-I logic to construct get-versus-give- or benefits-versus-sacrifices-based measures of value-for-the-money or other indices that essentially capture what I am calling Efficiency (sometimes at the expense of neglecting other major types of value). Excellence represents the reactive side of Efficiency wherein I appreciate some product or event for its capacity to serve as the means to a self-oriented end but without actually needing to use it for that purpose. Ascendant among the various aspects of Excellence, we find the notion of Quality. This refers to my admiration for the degree to which some product or event can accomplish some task to satisfy a self-oriented goal without my necessarily putting that ability into practice. For example, my knife made from Damascus steel (an ancient gift from my grandfather) may be sharp enough to cut in half your dropped silk scarf from Hermès; but I can admire this excellent quality without actually needing to destroy your hideously expensive garment. Or, as another example, the excellence of my Ferrari might allow it to roar down the highway at 120 mph; but I can appreciate this unexcelled quality without actually taking my chances on getting a speeding ticket. This definition of Quality as an extrinsic self-oriented reactive type of consumer value proceeds directly from our attempt to address the questions posed by Jack Jacoby’s and Jerry Olson’s “Perceived Quality” conference at NYU and reflects the view that I absorbed from the axiological literature that any given type of value (in this case Quality) can be understood only by virtue of interpreting its relationships with other types of value. In this case, Quality is a sub-species of Excellence as distinct from the other seven types of value identified by the eight-fold typology.

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Status refers to the case in which I actively manipulate some consumption experience as a means to the end of producing a desired response in others. Examples would include various aspects of Impression Management—as when I don an elegant long-sleeved striped shirt from Ralph Lauren, a snappy tie from Brooks Brothers, and a preppy jacket from J. Press in order to Dress for Success. Notice that status entails the conscious management of my own consumption with an eye to how others respond to it. By contrast, Esteem involves my reactive appreciation of the way(s) in which others might potentially respond to my own consumption as a means of producing an effect on them. For example, I could contemplate how one or another of my Possessions might potentially enhance my Reputation with admiring friends and neighbors without actually showing them the relevant object(s) or overtly seeking their approval. As a personality characteristic, Materialism has a bit of this esteem-oriented flavor. Yielding to my own occasionally materialistic impulses, I have a closet full of over-priced neckties—mostly gifts from extravagant friends and family members—that I would probably never wear in public but that I keep just for the satisfaction of knowing that they would be there if I needed them. Turning to the intrinsic side of the typology, Play refers to consumption experiences actively pursued for the self-oriented satisfaction of the effect they have on me when enjoyed for their own sake as ends in themselves. The nature of leisure activities—indeed, the essence of Fun—is that the relevant consumption experiences serve as their own reward and provide me with pleasure that achieves no other purpose. The moment that such an event is treated as the means to some self-oriented end—say, the accomplishment of a money-earning task—it stops being leisure and starts being work. Rather, purely purposeless playful activities enjoyed for their own sake are the province of children and some liberated adults— especially those with an inclination toward creativity. My friends from a jazz-ensemble class (how to play nicely with others) do not understand why I do not want to pursue gigs that would involve getting paid (a very small amount) to perform in public. The answer lies in the difference between Play and Efficiency (plus the fact that such jobs do not pay well enough to inspire me to sacrifice my lofty principles). The reactive side of play is Aesthetics or Esthetics. Either spelling is correct, and I cannot make up my mind which I prefer—Greek or British. So I have used both. (A)esthetics refers to the intrinsic self-oriented value attained through my response to a consumption experience appreciated as an end in itself. Indeed, this aspect of enjoying an experience for its own sake is the hallmark of philosophical definitions of Aesthetics (Holbrook and Zirlin 1985) and the essence of evaluations that fall under the heading of “Beauty” and that bolster the part of the cliché that can be considered valid when claiming that “beauty is in the eye of the beholder.”

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(As previously mentioned, Beauty also requires the existence of some sort of object, a product or event, to behold as part of the subject-object interaction.) Beauty implies the appreciation of an experience valued intrinsically for its own sake. So the minute I stop admiring my sculpture by Hans Arp for its graceful lines, delicate balance, and gleaming finish and start appreciating its ability to serve as a doorstop, the relevant type of value shifts from Beauty to Quality. (It’s a really excellent doorstop, but that has nothing to do with its aesthetic appeal.) Ethics concerns the active manipulation of a consumption experience intrinsically appreciated for its own sake by virtue of the way it affects others or how others respond to it. For example, I might donate money to a charity so as to experience the feeling of helping other people. Or I might endeavor to be honest and tell the truth for the sake of avoiding the harm that would otherwise befall others. Sub-species of Ethics such as Virtue, Justice, and Morality have received little attention from consumer researchers and—in my view, from the macromarketing side of things—deserve far more energetic investigation by the members of our discipline (Cooper-Martin and Holbrook 1993; Holbrook 1994c; Murphy and Laczniak 2012; Smith and Quelch 1992). Finally, Sprituality refers to the sort of experience in which I feel that my Self has achieved some sort of communion with an Other in a way that I value intrinsically for its own sake as an end in itself. Thus, axiologists see Ecstasy as involving an intrinsically rewarding disappearance of the Self/Other dichotomy—as when, in a state of rapture, I feel myself merging with some sort of greater power. As mentioned earlier, the Other in question could be the Deity, the Cosmos, Mother Nature, my Community, my Friends and Family, or even some hitherto unapproachable part of Myself with which I have found a way to communicate. Thus, this type of value involves aspects of Faith, Sacredness, or Magic and inspires one or another sort of religious or quasi-religious experience. As part of our NYU offering, Kim and I presented the Concept of Customer Value (CCV) as just described and then reported the results of a small experimental study in which—by manipulating various aspects of a musical consumption experience—we showed that Overall Preference depended on perceptions of Beauty, Quality, and Fun. However, the conference organizers—Jack Jacoby and Jerry Olson—felt that our paper was much too long to be included in the conference-based book on Perceived Quality; so, in the end, we cut back greatly on the philosophical material related to CCV and focused instead on the more collaborative empirical section (Holbrook and Corfman 1985). I suspect that Jack and Jerry were somewhat disappointed by this strategy for shortening the paper; but, in the co-authored chapter, I wanted to emphasize the part of the work in which Kim had played the greatest role and to save the more esoteric stuff for pursuing on my own at a later date.

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This “later date” turned out to be a bit slow in coming. Specifically, after much additional labor, I managed to crank out a lengthy philosophically oriented paper addressing the Concept of Customer Value. But I could not bear to submit this work on CCV to the journal that should have served as its logical target publication—namely, the Journal of Consumer Research. Having endured JCR’s review process countless times, I knew that—even if I received an invitation to revise-and-resubmit—by the time the editors and reviewers had finished with my CCV paper it would retain little resemblance to what I truly wanted to say. And, caring as I did about the value-related topic, I could not stand to let this happen. (For an illustration of the way[s] in which my CCV lends itself to misunderstanding, misinterpretation, and misrepresentation, please see Woodruff [1997], p. 141.) I did manage to insert intimations of CCV into various projects devoted to broader issues. For example in a chapter entitled “Expanding the Ontology and Methodology of Research on the Consumption Experience” for a book edited by Dave Brinberg and Rich Lutz, Beth and I built upon our earlier treatment of Fantasies-Feelings-and-Fun to extend the I-C-A-B-S formulation in ways that included expanded aspects of the Situation, Inputs, Thoughts, Emotions, Activities, and Value or S-EA-V (Hirschman and Holbrook 1986). A bit later, in an article entitled “Actions and Reactions in the Consumption Experience: The Complementary Roles of Reasons and Emotions in Consumer Behavior,” John O’Shaughnessy, Stephen Bell, and I tried to achieve an integrated view of consumer behavior that sought a rapprochement of the decision-oriented approach with the experiential or hedonic perspective and that took Value (as opposed to Satisfaction) as its main output variable of interest. We tried very hard to publish this paper in JCR, but a rather persistently resistant reviewer convinced the editors to reject our work on the rather absurd grounds that reasons and emotions are, in principle, “incommensurable.” With generous help from Beth Hirschman as Editor, we managed to publish the piece in Research in Consumer Behavior (Holbrook, O’Shaughnessy, and Bell 1990). But I have often suspected that, if the article had it appeared in JCR, it would have attracted a wider audience, would have saved the world quite a bit of needless bickering about the relative importance of Thoughts and Emotions, and would have established Consumer Value as the key output of primary importance. Meanwhile, I waited. And waited. And, during the time that I waited, I took my Concept of Customer Value on the road and presented it at a large number of schools, conferences, and other venues—including (by the time I was finished) the University of Utah, the University of Michigan, Ohio State University, the University of Quebec in Montreal, Dartmouth’s Tuck School, the University of Illinois, McGill University in Montreal, the University of Pennsylvania’s Wharton School (twice), the University of California in Los Angeles, the University of British

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Columbia, Rutgers University in New Brunswick, the University of Arizona, Iowa State University, the City University of New York’s Baruch College, Edith Cowan University in Perth (Australia), the University of Texas in Austin, Diamond Inc. in Tokyo, Hakuhodo Inc. in Tokyo, the Japanese Marketing Association in Tokyo, the University of Miami (AMA Doctoral Consortium), the Society for Marketing Advances (St. Pete Beach, FL), and—of course, my home turf—Columbia University itself (at least a couple of times). So it seems fair to say that, while I withheld my major work on CCV from submission to a journal, I took it around the world and exposed it, via formal presentations, to virtually every marketing scholar residing in the USA, Canada, Australia, and Japan. (True, Europe did not appear on my road-show itinerary—which seems ironic given that this is where my work on consumer value has ultimately had its greatest impact.) Finally, I got a chance to publish my treatise on the Concept of Customer Value in the form that I intended. Specifically, in the book they edited on Service Quality, Roland Rust and Rich Oliver were so kind as to include my lengthy CCV paper under the title “The Nature of Customer Value: An Axiology of Services in the Consumption Experience” (Holbrook 1994d). About the same time, in a volume edited by Marilyn Revell DeLong and Ann Marie Fiore on Aesthetics of Textiles and Clothing, a popularized version of my thoughts about CCV appeared as “Axiology, Aesthetics, and Apparel: Some Reflections on the Old School Tie” (Holbrook 1994a). Then—in 1996, at the conference of the Association for Consumer Research—I organized a Special Session on CCV that featured a brief introduction by me and mini-presentations by eight experts on the eight main types of Consumer Value (Holbrook 1996). According to the conference chairpeople, Kim Corfman and John Lynch, this was the best-attended session at an ACR conference up to that moment in time. Encouraged by this populous response, I persuaded all but one of the session participants to collaborate with me on a book for Routledge on the theme of Consumer Value: A Framework for Analysis and Research (Holbrook 1999a). In this volume, after an Introduction by yours truly (Holbrook 1999b), eight chapters covered the eight major types of Consumer Value, as follows: Efficiency (France Leclerc and Bernd Schmitt); Excellence (Rich Oliver); Status (Mike Solomon); Esteem (Marsha Richins); Play (Kent Grayson); Aesthetics (Janet Wagner); Ethics (Craig Smith); and Spirituality (Stephen Brown). The collective wisdom of these authors persuaded me to change the title of the book from Customer Value to Consumer Value. This distinction deserves a few words of commentary before proceeding farther. Specifically, I should pause to clarify the terminological distinction between “Customer” Value and “Consumer” Value. When I first began worrying about the nature of value in general and quality in particular, as part of our contribution to the Jacoby-and-Olson conference at NYU, I adopted a perspective oriented toward the concerns of marketing

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managers wishing to provide value to the buyer in ways that would contribute to satisfaction and thereby encourage brand loyalty so as to achieve high rates of repeat-purchasing behavior. In short, this focus dwelled on market-embedded buying decisions and the benefits derived therefrom in pursuit of outcomes favorable to the firm’s bottom line. The target of such efforts was the customer—hence, the term “Customer Value” (Holbrook 1994a, 1994d; Holbrook and Corfman 1985). Over time, however, I had adopted a vantage point that focused more broadly on all aspects of the consumption experience—including, of course, those aspects that manifested themselves in market-related behavior but also embracing aspects of the human condition that did not necessarily involve profit-oriented cash-based market transactions and that would more appropriately be termed “Consumer Value.” Increasingly, I viewed consumer research as concerning itself with all forms of consumption experiences without restrictions as to whether these experiences stemmed from purchase decisions or from some other sort of offering or event. In this, I regarded Customer Value as the province of marketing research and Consumer Value as the proper focus of consumer research. Hence, the friends and colleagues who participated in the aforementioned collection of value-related essays easily convinced me to title the book in ways that reflected my own expanded interests in the consumption experience considered broadly—Consumer Value: A Framework for Analysis and Research (Holbrook 1999a). In line with this distinction between Customer Value and Consumer Value and my own gravitation toward the latter direction of inquiry, in the present chapter I use the latter term in most situations where the need for such terminology appears. Meanwhile, I have continued to write the occasional essay on the subject of Consumer Value. Two of these appeared as articles for the Journal of Business Research—namely, “Customer Value and Autoethnography: Subjective Personal Introspection and the Meanings of a Photograph Collection” (Holbrook 2005) and “Consumption Experience, Customer Value, and Subjective Personal Introspection: An Illustrative Photographic Essay” (Holbrook 2006a). Both studies make use of a collection of photos inherited from my grandfather to illustrate the different types of Consumer Value. In this sense, the articles are quite similar so that I find it quite interesting if confusing to speculate on how they managed to appear in the same journal only a few months apart. In the second study for JBR, I collapsed the distinction between active and reactive value to focus on just four major types, as follows: Table 2.4 The Four Major Types of Value  

Extrinsic

Intrinsic

Self-Oriented Other-Oriented

Economic Social

Hedonic Altruistic

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This reduction of the eight types of value to just four major types— Economic, Social, Hedonic, and Altruistic—allows for more expedient discussion and has also proven useful in the classroom (where I have found that time-pressed, career-oriented, sometimes anti-intellectual MBAs really do not care about enriching their understanding of Consumer Value to include eight as opposed to four major types). While in this simplification-oriented mood, I also tried to persuade advocates of the Service-Dominant Logic (SDL) that their rather complex list of relevant considerations could be easily encapsulated under the rubric of the Concept of Consumer Value (CCV). Bob Lusch and Steve Vargo were so kind as to include my reflections in this direction as part of their book on the SDL theme, and I believe that when it benefits from careful scrutiny, my title says it all: “ROSEPEKICECIVECI versus CCV— The Resource-Operant, Skills-Exchanging, Performance-Experiencing, Knowledge-Informed, Competence-Enacting, Coproducer-Involved, Value-Emerging, Customer-Interactive View of Marketing Versus the Concept of Customer Value: ‘I Can Get It For You Wholesale’” (Holbrook 2006b). A final simplification for the sake of difficult-to-elicit popularization appeared in two more recent book chapters. The first, for a book on Marketing Management edited by Lisa Peñaloza, Nil Toulouse, and Luca Massimiliano Visconti, discussed (not optimistically) the kinds of customer value contributed by academic institutions under the heading “Catering to Consumers or Consuming the Caterers: A Bridge Too Far .  .  ., Way Too Far” (Holbrook 2012). The second, on a happier theme for The Routledge Companion to Arts Marketing edited by Daragh O’Reilly, Ruth Rentschker, and Theresa A. Kirchner, reviewed the value-related aspects of artistic offerings in general and provided a detailed illustration based on performances by the great vibraphonist Gary Burton in a chapter entitled “Consumption Criteria in Arts Marketing” (Holbrook 2014). In both cases, I offered a Typology of Consumer Value with categories renamed so that, for ease of memorization, they all begin with the letter “E”: Table 2.5 A Typology of Consumer Value With Renamed Categories  

 

Extrinsic

Intrinsic

Self-Oriented

Active

EFFICIENCY (O/I, O-I) EXCELLENCE (Quality) EXHIBITIONISM (Status, Impression Management) ELITISM (Esteem, Materialism)

ENTERTAINMENT (Play, Fun) ESTHETICS (Beauty) ETHICS (Justice, Virtue, Morality) ECSTASY (Spirituality, Rapture)

Reactive Other-Oriented

Active Reactive

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As the reader may have gathered from my enthusiasm about the Three F’s, I like typologies with category names that all begin with the same letter. Hence, I am happy with my Eight E’s scheme and consider this to be a strong argument in favor of spelling “Esthetics” with an “E” instead of an “AE.” The Gary Burton example just mentioned leads us toward a short discussion of special problems and issues raised by the Concept of Consumer Value. Almost as soon as I finish explaining everything that I have said so far about CCV, someone invariably raises a hand and asks, “But isn’t it possible for some consumption experience to offer more than one type of value?” The answer is, of course, “Absolutely, Yes!” Indeed, the axiologists amused themselves by coining a term for this—namely, “Compresence.” According to this notion of Compresence, any valuecreating experience may partake of one, two, three, more, or even all of the various types of value at any one time (though, most often, a smaller number are more prominent than others). Over the years, I have repeatedly illustrated this point with examples based on my Columbia Business School necktie (Holbrook 1994a), my grandfather’s enjoyment of trips to the Brule River in Northern Wisconsin (Holbrook 2005, 2006a), the satisfactions provided by a vibraphone (Holbrook 2006b), the educational experience at an academic institution (Holbrook 2012), and—as just mentioned—performances by the great vibraphonist Gary Burton (Holbrook 2014). (Yes, I have vibraphones on my mind, and they are indeed a copious source of different types of value in my life as a consumer.) I hope the reader will agree that it makes perfect sense for multiple types of value to appear simultaneously and that the word “Compresence” describes this situation perfectly. Another sometimes troubling issue relates to the reason why, in the aforementioned article (Holbrook 2006a), I collapsed the Active/Reactive distinction, thereby condensing the typology to just four major types of value (Economic, Social, Hedonic, and Altruistic). Specifically, over the years, I have found that people seem to have some trouble identifying the difference between active and reactive value. As mentioned earlier, this distinction hinges on whether I actively manipulate some object so as to create an effect on it that results in a value-laden experience or, rather, reactively appreciate and respond to an object because of the effect it has on me by virtue of its capacity to perform in some way. Thus, in the case of Ethics, I act for the benefit of one or more Other(s). By contrast, in the case of Spirituality or Ecstasy, my Self responds to some Other(s), often in a way that involves a disappearance of the Self/Other dichotomy. I feel as if I have become one with the Deity or the Cosmos or Mother Nature or some hitherto inaccessible part of my Own Being. To me, this Active/Reactive distinction seems fairly straightforward; yet many people do not “get” it. Similarly, the contrast between Status or Exhibitionism and Esteem or Elitism hinges on whether I manipulate my consumption

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actively as a means to producing some response in others (as in the case of Impression Management) or reactively appreciate the capacity of one or another product or event (such as my Possessions) potentially to produce a favorable response from others (as in the case of Materialism). Again, this contrast strikes me as fairly clear; yet Marsha Richins complained about its obscurity in her chapter on Esteem for the aforementioned book on Consumer Value (Holbrook 1999a). Hence, especially when teaching, I have sometimes dropped the third active-reactive distinction and relied on the four-fold typology mentioned earlier: Economic, Social, Hedonic, and Altruistic (Holbrook 2006a). By the way, the day after I wrote the last paragraph, I passed a Beauty Parlor called the “Concept Salon” on 2nd Avenue at 58th Street in New York City with a sign in the window that said, “Style is not a display of wealth, But an expression of imagination.” Though worded a bit clumsily, this slogan seems to compare Status or Exhibitionism (dressing or coiffing in a way that impresses others with its expensiveness) with Esteem or Elitism (imaginatively contemplating an awareness of one’s own good taste in clothes and beauty-related products). Patrons of the Concept Salon apparently understand the difference, implicitly if not explicitly. Also, one might wonder whether there might exist some additional distinction(s) not covered in the present CCV but leading to eight or more additional types of Consumer Value with which to grapple. In reading the axiologists, I tried to make sure that I included what I deemed to be the most important and oft-mentioned distinctions (Extrinsic/Intrinsic, Self-Oriented/Other-Oriented, Active/Reactive). But I cannot guarantee that someone might not eventually come up with one or more additional contrasts that might multiply the relevant number of value types by two or more. Not so secretly, I hope that this will not happen because I do not think I could gracefully cope with sixteen or more value types. Eight seems like more than enough to keep us busy. Another issue concerns the somewhat careless use in our discipline of the term “Customer Value” or “Consumer Value” itself. When I originally began the series of investigations reported in this chapter, I envisioned Customer Value as the key output from any analysis of consumer behavior. According to my interpretation, Customer Value emerges from the relevant Fantasies, Feelings, and Fun or from the chain of effects moving from the Situation to Thoughts to Emotions to Activities to Value— which, in turn, serves as the major determinant of Brand Loyalty (every marketing manager’s profit-maximizing dream). And—quite obviously, but just to be clear—by CCV I meant the Value OF the Firm’s Offering TO the Customer. But the time came in 2006 when two of my more brilliant colleagues—Sunil Gupta and Don Lehmann (2006), exploring the sources of a firm’s profitability attributable to buyer loyalty in the form of repeat-purchase behavior—came up with the term “Customer Lifetime Value (CLV),” by which they meant the Value OF the Customer TO the

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Firm. Sunil-and-Don’s article was part of an entire issue of the Journal of Relationship Marketing devoted to CLV. Due to the eminence and prestige of these and other colleagues who have latched onto the CLV terminology, I fear that—as implied by Woodruff (1997)—the rather oppositional meanings embodied by CCV and CLV have caused confusion among readers and researchers alike. Not so secretly, given that my CCV came first and had been well publicized over the years, I wish that my colleagues would drop CLV and adopt another term such as, say, “LongTerm Customer Profitability (LTCP).” But, considering the well-respected importance of their contributions, I fear that CLV will continue to coexist with CCV, causing confusion and perhaps even frustration among students, teachers, and people who write essays about marketing-related topics such as value. On the whole, along similar lines and despite my self-promoting efforts reported in the present chapter, I feel that the Concept of Consumer Value has received something less than the attention it deserves from members of our discipline in general and from the advocates of Consumer Culture Theory (CCT) in particular. Apparently, I am regarded as one of the original progenitors of CCT (Arnould and Thompson 2005; Askegaard and Scott 2013)—sometimes with good-natured descriptions of my work as “wild,” “wacky,” or “weird” (Bode and Østergaard 2013). Yet after listing me (plus many others) in that capacity, those whose promote the “CCT Brand” (Arnould and Thompson 2007) typically go on to imply, by the omission of references to my more recent work, that I stopped creating anything worthwhile after a couple of frequently cited articles from the early 1980s. As an example, consider the chapter by Eric Arnould (2007) in celebration of CCT in which he argues that many of the insights provided by the Service-Dominant Logic (SDL) overlap and cohere with perspectives friendly to the CCT viewpoint. Because I am regarded as a CCT-friendly author and because Eric explicitly refers to the SDL-oriented volume that contains my aforementioned chapter suggesting that CCV encompasses most or even all of the issues raised by SDL (Holbrook 2006b), I might have hoped for a bit of recognition that CCV has already contributed to many of the insights claimed by Eric for CCT as a supplement or replacement for SDL. But—even though my chapter is sitting there and staring him in the face, with me sometimes seen as an early proponent of CCT—Eric makes no mention of Morris. In proposing a CCT-based lexicon, Eric does emphasize the “experience”and “value”-related aspects of interest, but without acknowledging the sources for these concepts (p.  68). Thus, as topics worthy of further research, he asks, “Where does ‘value’ come from and what makes that ‘value’ worth coproducing?” (p.  71) without noticing that some of us have been wrestling with those issues for decades. In a more recent article (Arnould 2013), Eric continues in a similar vein. Here, he does acknowledge my work on consumer value (Holbrook 1999b), but he describes

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my approach as “limited” to “the kind of exchange that predominates in capitalist market economies” (p. 131) and complains that I “fetishize the quest for the unified sense of being capitalism sunders” (p. 132). Not thinking of myself as limited to fetishizing capitalism and being unacquainted with the more advanced aspects of the CCT jargon, I have no idea what Eric means by these characterizations of CCV, but I gather that his appraisals somehow reflect an energetic advocacy for the CCT Brand (Arnould and Thompson 2007). All this tends to make me feel a bit frustrated and causes me to worry that the Concept of Consumer Value receives more than its fair share of neglect or misrepresentation from the gurus who move and shake our consumer-research community. Further neglect is ubiquitous in writings by the numerous business experts who have created managerial self-help books on what is sometimes called “Experiential Marketing” or the “Brand Experience.” I have not read all such works, but in multiple book reviews (Holbrook 2000, 2006c, 2007a, 2007b, 2007c), I have covered experientially oriented publications by a number of authors such as Arussy (2002; Carbone (2004); LaSalle and Britton (2002); Milligan and Smith (2002); Pine and Gilmore (1998, 1999); Samuel (2003); Schmitt (1999, 2003, 2007, 2012); Schmitt, Rogers and Vrotsos (2003); Schmitt and Simonson (1997); Shaw and Ivens (2002); and Smith and Wheeler (2002). Most of these writers, intent on popularization, show little concern for or awareness of the research on the Consumption Experience that has been contributed by those with a somewhat more scholarly bent, and virtually nobody among the experiential gurus pursues the role of consumption experiences in the direction of examining their relevance to the creation of Consumer Value. If they mention my work at all, they cite one of the early articles with Beth on hedonic consumption (Hirschman and Holbrook 1982) or the experiential view (Holbrook and Hirschman 1982) and let it go at that, never mentioning the rather voluminous amount of subsequent follow-up work on Fantasies-Feelings-and-Fun or Thoughts-Emotions-Activitiesand-Value that stemmed therefrom and never noticing the emergence of a more important and fundamental focus on Consumer Value. The one exception I have found to this mostly anti-intellectual approach to the proliferation of managerial self-help books on experiential marketing and the brand experience appears in an excellent volume by LaSalle and Britton (2002)—two authors who do recognize the role of consumption experiences in providing the bases for consumer value. To anyone interested in pursuing the conventional wisdom on the marketing of valuecreating experiences, I recommend LaSalle-and-Britton’s helpful guide. As mentioned earlier, I carried my value-centric message to all parts of the USA, to Canada, to Australia, and to Japan and was a bit surprised but greatly reassured to discover that the Concept of Consumer Value seems to resonate with ideas and beliefs found in different cultures worldwide. For example, members of my Japanese audiences graciously

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approached me and told me that they had found my ideas about the nature and types of consumer value useful in structuring market analyses for their local companies. Indeed, they gave me various handsomely produced corporate documents that featured representations of my Typology of Consumer Value. Unfortunately for me, I do not read Japanese and was not able to plumb the depths of their discoveries, but I felt reassured to know that some of the ideas reported herein have found their way to acceptance and application at the global level. As mentioned earlier, major places that I did not visit to preach my value-oriented ideas about consumers were Western Europe and the United Kingdom. Yet, somewhat paradoxically, Europe in general and Spain in particular turn out to be the locales where my work seems to have attracted its most enthusiastic following. Besides the USA, contributions referenced in the present chapter have come from (alphabetically) Australia, Belgium, Canada, China, Denmark, Finland, France, Italy, Spain, and the UK. Early in the present millennium, I began email correspondences with two Spanish professors—Raquel Sánchez-Fernández and Martina González-Gallarza Granizo—who did not know each other but who, by coincidence and without any mutual awareness, had begun to work on issues related to consumer value in the tourist- and hospitality-services industries. So their research covered closely related themes. And both had long Spanish names with several components that, to an ignorant American, seemed somewhat indistinguishable. So—for a while, being in the foolish habit of carelessly clicking on “Reply to Sender” when responding to emails (without paying proper attention to the full name of the person to whom I am replying)— I actually thought that they were the same person. Eventually, emerging from my dim-witted slumbers, I figured out their separate identities. And, in time, both traveled to New York as visiting scholars at Columbia so that I could have the pleasure of working with them. Operating separately from each other but sometimes with me and other coauthors, Martina and Raquel have contributed definitive reviews of the literature on the Concept of Consumer Value (Gallarza, Gil-Saura, and Holbrook 2011; Gallarza, Gil-Saura, and Holbrook 2012; Sánchez-Fernández and Iniesta-Bonillo 2006; Sánchez-Fernández, Iniesta-Bonillo, and Holbrook 2009). Their work has helped to arouse and reinforce the value-related interests of other European colleagues. So, if I wanted to receive a warm reception of my value-related ideas, I could probably skip Chicago or Boston or Palo Alto and head directly to Spain and surrounding countries where, I feel pretty sure, there exists an emerging community of scholars with a strong interest in CCV (not to mention an inviting climate, friendly people, beautiful scenery, and a vibrant cultural reverence for the arts). A problem area closely related to that of conceptualization concerns the whole issue of measurement and empirical testing. In that connection, we observe a long line of data-driven studies with relevance to the various types of consumer value discussed herein. Some have focused on

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just one major type of value, as in the tradeoff-oriented, get-versus-give, benefits-versus-sacrifices, or quality-versus-price formulations championed by Dodds and Monroe (1985; Dodds, Monroe, and Grewal 1991) or by Zeithaml (1988) and related to the aspects of Quality assessed via the SERVQUAL index developed by Parasuraman, Zeithaml, and Berry (1988) to represent what I have called “Excellence” in service industries. Others have addressed just two major types of value, as in the work by Batra and Ahtola (1991), by Mano and Oliver (1993), and by Babin, Darden, and Griffin (1994) on developing measures for the Utilitarian versus Hedonic aspects of Consumer Value. Still others have pursued broader approaches to multiple types of value, as in studies such as that on the PERVAL Scale by Sweeney and Soutar (2001) and by Wang, Lo, Chi, and Yang (2004), who have attempted with mixed success to operationalize the list of categories of value proposed by Sheth, Newman, and Gross (1991)—namely, Functional Value, Social Value, Emotional Value, Epistemic Value, and Conditional Value. And some brave souls—again, with mixed success—have sought support for subsets of my own eightfold value types using either qualitative interpretive analyses (Bevan and Murphy 2001; Kim 2002) or quantitative empirical approaches (Bourdeau, Chebat, and Counturier 2002; Leroi-Werelds, Streukens, Brady, and Swinnen 2014; Mathwick, Malhotra, and Rigdon 2001, 2002). In my own work, I have used the eight-fold typology of value as an interpretive lens through which to understand the different types of value lurking in photographs taken by my grandfather (Holbrook 2005, 2006a) and present in situations involving clothes (Holbrook 1994a), musical instruments (Holbrook 2006b), academic institutions (Holbrook 2012), or musicians (Holbrook 2014). I cannot come close to claiming an in-depth familiarity with all of the innumerable relevant empirical applications. However, excellent accounts of the empirical work appear in the reviews by Raquel (Sánchez-Fernández and Iniesta-Bonillo 2007) and by Martina (Gallarza and Gil-Saura 2008). And both these researchers have worked with various coauthors (including yours truly) to begin the process of developing reliable and valid measures for the types of consumer value distinguished by my eight-fold typology, often with a focus on tourism (Gallarza and Gil-Saura 2008) or hospitality services (Gallarza, Arteaga, Del Chiappa, Gil-Saura, and Holbrook 2017; Sánchez-Fernández, IniestaBonillo, and Holbrook 2009) and with expanded implications concerning the relationship of value types to links in the chain of effects involving overall value, satisfaction, and loyalty (Gallarza and Gil-Saura 2006; Gallarza, Gil-Saura, and Arteaga Moreno 2013). As an indication of the international scope of such research, in the case of Gallarza et al. (2017), I am the fifth coauthor of a paper with colleagues whose affiliations reach from Spain to Italy and even to South Africa. That said, I must confess that the empirical applications I have seen thus far—including those in which I myself have participated—tend to

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fall short of certain measurement-related ideals that I alluded to earlier when describing the relativistic aspects of consumer value. Specifically, at the risk of excessive generalization, it seems to me that most if not all of the empirical value-oriented research has worded questions in ways that pertain to just one consumption experience (such as dining in a restaurant or staying in a hotel), rather than seeking a more universal set of indices that can be applied across a wide range of consumption situations; has ignored the economist’s persuasive strictures against interpersonal utility comparisons; has compiled measurement scales that encourage various methods artifacts; and has too often demonstrated statistical reliability without showing validity in the form of predicting a key outcome variable such as Brand Loyalty. In these connections, I worry especially about the ways in which the relevant scales are typically constructed and the ways in which they are usually tested across people (inter-individually) rather than across experiences (intra-individually). Too often, the multiple items generated to form an index of each value type are all worded in the same positive direction. This encourages yay- or nay-saying biases in which assessments of index reliability merely reflect the fact that different people tend to mark different ends of the relevant scales. In my opinion, future research should work toward wording a random half of the various scales in the reverse directions so as to minimize these yay- and nay-saying biases. Further, scales are often grouped into sub-sections of a questionnaire in such a way that all the items pertaining to a particular type of value appear together. This encourages another type of methods artifact in which respondents fall into a pattern of answering and stick with it until they encounter a new sub-section, thereby enhancing apparent index reliability for reasons that are largely spurious. Clearly, it would be far preferable to present the various scale items in a random order to discourage such response-set biases. The threats to reliability and validity introduced by these two habits of questionnaire construction seem bad enough, but their damaging impact is greatly intensified by the common (I believe, virtually universal) practice of designing the various measures for applicability to just one sort of consumption experience evaluated by a large sample of respondents with the relevant tests run across people, thereby committing the sin of making interpersonal utility comparisons. It would be far more sound methodologically to ask each respondent to evaluate a sizeable set of consumption experiences on generally applicable value scales; to standardize or normalize these value scores within individuals; and then to run the relevant correlations and other analyses across experiences (within individuals) rather than across people (for one experience at a time). Yes, I realize that such an approach places a much greater burden on the time and effort of respondents. We shall need, say, 8 × 10 = 80 vignettes describing different consumption experiences; 4 × 8 = 32 value scales (16 reverse-worded and all 32 scrambled randomly); and a set of patient respondents to provide the various ratings of each

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experience on each value scale (80 × 32 = 2,560 ratings in all). The bad news is that the task will take a long time to complete and that these respondents will have to be rewarded generously for their demanding participation. The good news is that we can regard these respondents as content-analytic judges and can probably get by with as few as ten or twelve of these judges. I have never tried this approach with value-related scales for vignettes describing consumption experiences. But, as noted earlier, I pursued a comparable approach in much of my work on multiattribute models (e.g., among many examples, Holbrook 1977, 1981); also, Bill Havlena did something similar for his dissertation on “The Varieties of Consumption Experience” (e.g., Havlena and Holbrook 1986); and Rajeev Batra, T. J. Olney, and I used essentially the same approach in obtaining measures of emotional responses to TV commercials (e.g., Batra and Holbrook 1990; Holbrook and Batra 1987; Olney, Holbrook, and Batra 1991). (Please note that sometimes the relevant scores are standardized within individuals across objects; aggregated across individuals for each object; and then analyzed across objects. This preserves the essence of a within-individual across-objects approach and allows for testing the homogeneity of value judgments via assessments of interjudge reliability.) Based on these earlier studies, I have every confidence that—using items worded to apply across a broad range of consumption experiences—a within-individual across-objects approach will lend itself to the development of reliable general-purpose indices for measuring the eight types of consumer value in ways that validly predict an outcome variable such as brand loyalty. And when the day arrives on which we successfully develop General Purpose Indices of Consumer Value, it will indeed be a happy day. O, Happy Day—with a clear blue sky, the sun shining, birds singing, the leaves rustling to make a soothing sound, and the sweet smell of magnolias or maybe Valencia oranges wafting in the breeze. On this happy day, our more refined ways of measuring consumer value will contribute to the fulfillment of all eight relevant value types—Efficiency (pursuing a timely and low-cost path to new knowledge); Excellence (enjoying our contemplation of a high-quality set of value measures); Status or Exhibitionism (impressing the world with our new discoveries in ways that might earn some young professor a well-deserved promotion); Esteem or Elitism (appreciating the refinement that, if paraded in public, would win widespread respect for our methods); Play or Entertainment (thrilling to the fun of making new discoveries that satisfy our curiosity); Aesthetics or Esthetics (admiring the beauty of our conceptual scheme and its operationalization in the form of reliable and valid measures); Ethics (planning to use our approach to help marketers better serve their customers and society); and Spirituality or Ecstasy (feeling a sense of rapture over epiphanies that we seem to share with the rest of Humanity and maybe even with the larger forces of the Cosmos). The nice thing about working

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on the Concept of Consumer Value is that it enables us to conjure up such enticing dreams. As I said, “O, Happy Day! O, Happy, Happy Day!!!”

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Holbrook, M. B. (1994d), “The Nature of Customer Value: An Axiology of Services in the Consumption Experience,” in Service Quality: New Directions in Theory and Practice, R. T. Rust and R. L. Oliver (Eds.), Thousand Oaks, CA: Sage Publications, 21–71. Holbrook, M. B. (1995), Consumer Research: Introspective Essays on the Study of Consumption, Thousand Oaks, CA: Sage Publications. Holbrook, M. B. (1996), “Special Session Summary: Customer Value: A Framework for Analysis and Research,” in Advances in Consumer Research, Vol. 23, K. P. Corfman and J. G. Lynch, Jr. (Eds.), Provo, UT: Association for Consumer Research, 138–142. Holbrook, M. B. (Ed.) (1999a), Consumer Value: A Framework for Analysis and Research, London, UK: Routledge. Holbrook, M. B. (1999b), “Introduction to Consumer Value” and “Conclusions,” in Consumer Value: A Framework for Analysis and Research, M. B. Holbrook (Ed.), London, UK: Routledge, 1–28 and 183–197. Holbrook, M. B. (2000), “The Millennial Consumer in the Texts of Our Times: Experience and Entertainment,” Journal of Macromarketing, 20 (2), 178–192. Holbrook, M. B. (2001), “Remembrance: John A. Howard (1915–1999),” Journal of Consumer Research, 28 (2), 337–338. Holbrook, M. B. (2005), “Customer Value and Autoethnography: Subjective Personal Introspection and the Meanings of a Photograph Collection,” Journal of Business Research, 58 (1), 45–61. Holbrook, M. B. (2006a), “Consumption Experience, Customer Value, and Subjective Personal Introspection: An Illustrative Photographic Essay,” Journal of Business Research, 59 (6, June), 714–725. Holbrook, M. B. (2006b), “Rosepekiceciveci versus CCV: The Resource-Operant, Skills-Exchanging,Performance-Experiencing,Knowledge-Informed,CompetenceEnacting, Coproducer-Involved, Value-Emerging, Customer-Interactive View of Marketing Versus the Concept of Customer Value: ‘I Can Get It For You Wholesale’,” in The Service-Dominant Logic of Marketing: Dialog, Debate, and Directions, R. F. Lusch and S. L. Vargo (Eds.), Armonk, NY: M. E. Sharpe, 208–223. Holbrook, M. B. (2006c), “The Consumption Experience: Something New, Something Old, Something Borrowed, Something Sold: Part 1,” Journal of Macromarketing, 26 (2), 259–266. Holbrook, M. B. (2007a), “The Consumption Experience: Something New, Something Old, Something Borrowed, Something Sold: Part 2,” Journal of Macromarketing, 27 (1), 86–96. Holbrook, M. B. (2007b), “The Consumption Experience: Something New, Something Old, Something Borrowed, Something Sold: Part 3,” Journal of Macromarketing, 27 (2), 173–201. Holbrook, M. B. (2007c), “The Consumption Experience: Something New, Something Old, Something Borrowed, Something Sold: Part 4,” Journal of Macromarketing, 27 (3), 303–329. Holbrook, M. B. (2012), “Catering to Consumers or Consuming the Caterers: A Bridge Too Far . . . , Way Too Far,” in Marketing Management: A Cultural Perspective, L. Peñaloza, N. Toulouse, and L. M. Visconti (Eds.), New York, NY: Routledge, 489–504.

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Loring, L. M. (1966), Two Kinds of Values, New York, NY: The Humanities Press. Mano, H. and R. L. Oliver (1993), “Assessing the Dimensionality and Structure of the Consumption Experience: Evaluation, Feeling, and Satisfaction,” Journal of Consumer Research, 20 (3), 451–466. Marshall, A. (1920, edition 1961), Principles of Economics, Eighth Edition, New York, NY: The Macmillan Company. Mathwick, C., N. K. Malhotra, and E. Rigdon (2001), “Experiential Value: Conceptualization, Measurement and Application in the Catalog and Internet Shopping Environment,” Journal of Retailing, 77 (1), 39–56. Mathwick, C., N. K. Malhotra, and E. Rigdon (2002), “The Effect of Dynamic Retail Experiences on Experiential Perceptions of Value: An Internet and Catalog Comparison,” Journal of Retailing, 78 (1), 51–60. Mead, G. H. (1938), The Philosophy of the Act, Edited by C. W. Morris, J. M. Brewster, A. M. Dunham and D. Miller, Chicago, IL: University of Chicago Press. Milligan, A. and S. Smith (Eds.) (2002), Uncommon Practice: People Who Deliver a Great Brand Experience, London, UK: Pearson Education. Morris, C. (1956), Varieties of Human Value, Chicago, IL: The University of Chicago Press. Mukerjee, R. (1964), The Dimensions of Values, London, UK: George Allen and Unwin. Murphy, P. E. and G. R. Laczniak (2012), Ethics in Marketing: International Cases and Perspectives, London, UK: Routledge. Nicosia, F. M. (1966), Consumer Decision Processes, Englewood Cliffs, NJ: Prentice-Hall. Norris, R. T. (1941), The Theory of Consumer’s Demand, New Haven, CT: Yale University Press. Oliver, R. L. (1980), “A Cognitive Model of the Antecedents and Consequences of Satisfaction Decisions,” Journal of Marketing Research, 17 (4), 460–469. Oliver, R. L. (1997), Satisfaction: A Behavioral Perspective on the Consumer, New York, NY: McGraw Hill. Olney, T. J., M. B. Holbrook, and R. Batra (1991), “Consumer Responses to Advertising: The Effects of Ad Content, Emotions, and Attitude toward the Ad on Viewing Time,” Journal of Consumer Research, 17 (4), 440–453. Osborne, H. (1933), Foundations of the Philosophy of Value, Cambridge, UK: Cambridge University Press. Parasuraman, A., V. A. Zeithaml, and L. L. Berry (1988), “SERVQUAL: A Multiple-Item Scale for Measuring Consumer Perceptions of Service Quality,” Journal of Retailing, 64 (1), 12–40. Parker, D. H. (1957), The Philosophy of Value, Ann Arbor, MI: The University of Michigan Press. Pepper, S. C. (1958), The Sources of Value, Berkeley, CA: University of California Press. Perry, R. B. (1954), Realms of Value, Cambridge, MA: Harvard University Press. Pine, B. J., II, and J. H. Gilmore (1998), “Welcome to the Experience Economy,” Harvard Business Review, 76 (July–August), 97–105. Pine, B. J., II, and J. H. Gilmore (1999), The Experience Economy: Work is Theatre and Every Business a Stage, Boston, MA: Harvard Business School Press. Pirsig, R. M. (1974), Zen and the Art of Motorcycle Maintenance: An Inquiry into Values, New York, NY: Bantam Books.

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Taylor, P. W. (1961), Normative Discourse, Englewood Cliffs, NJ: Prentice-Hall. Vargo, S. L. and R. F. Lusch (2004), “Evolving to a New Dominant Logic for Marketing,” Journal of Marketing, 68 (1), 1–17. Von Wright, G. H. (1963), The Varieties of Goodness, London, UK: Routledge and Kegan Paul. Wang, Y., H. P. Lo, R. Chi, and Y. Yang (2004), “An Integrated Framework for Customer Value and Customer-Relationship-Management Performance: A Customer-Based Perspective from China,” Managing Service Quality, 14 (2/3), 169–182. Woodruff, R. B. (1997), “Customer Value: The Next Source for Competitive Advantage,” Journal of the Academy of Marketing Science, 25 (2), 139–153. Woods, W. A. (1981), Consumer Behavior, New York, NY: North Holland. Zeithaml, V. A. (1988), “Consumer Perceptions of Price, Quality, and Value: A Means-End Model and Synthesis of Evidence,” Journal of Marketing, 52 (3), 2–22.

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The Intra-Variable Perspective on Value Research A Personal Documented View Raquel Sánchez-Fernández and Martina G. Gallarza

Introduction If there is one notion that encapsulates all the essence of marketing thought, this will probably be ‘value.’ Consumer value (as the preferred wording chosen in this chapter among the many nomenclatures, as explained later) is a hallmark of marketing research and marketing practice. As a quick look to the marketing literature shows (a search on Google Scholar of the terms ‘value and marketing’ revealed 3 470 000 results on January 2018), which indicates that value has been extensively researched. The concept has constantly been revisited, and it has been one of the few to bring together both managerial relevance and academic rigour. However, despite its centrality and relevance, many authors have long agreed on the lack of consistency concerning the nature of value and its conceptualization (see, e.g., in chronological order, Zeithaml, 1988; Dodds et al., 1991; Holbrook, 1999; Day and Crask, 2000; Sweeney and Soutar, 2001; Lin et al., 2005; Woodruff and Flint, 2006; SánchezFernández et al., 2009; Boksberger and Melsen, 2011; Gallarza et al., 2011; Chang and Dibb, 2012; Helkkula et al., 2012; Leroi-Werelds et al., 2014; de Medeiros et al., 2016; Mencarelli and Lombart, 2017). As a result, there are difficulties associated with value research, which according to Gallarza et al. (2011) are conceptual, methodological and related to its measurement, provoking a vicious circle when researching value. Therefore, studying value is not an easy task: as stated by Khalifa (2004, p. 646), “. . . the concept of value, however, is one of the most overused and misused concepts in social sciences in general and in management literature in particular.” It is a truly multidisciplinary topic, difficult to apprehend conceptually and crucial to be applied managerially. Indeed, “value is perhaps a chimera in the managerial and social sciences, but it has proved to be a compelling one” (Arnould, 2014, p. 129). This chapter (alongside Chapter 4) would like to contribute to this ‘compelling chimera’ by providing a systematic review to help the systematization of knowledge, where value lovers, both new and old ones, could feel comfortable. For the former—to recognize the achievements in this long

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and winding road of value research, and for the latter—to find their own work and salient contributions in this landscape. More than ten years ago, one of the co-authors of this chapter placed the already existing extensive and not always clear research on consumer value into two main approaches (Gallarza and Gil-Saura, 2006, p. 438): a) An intra-variable approach that emphasizes the multidimensional nature of value and classifies dimensions of value into varied nature; and b) An inter-variable approach interested in conceptual and methodological connections between value and other related concepts. This dichotomy (i.e., multi-dimensionality—intra-variable approach— and interrelationships with other constructs—inter-variable approach) is the one we will use in both this chapter and Chapter 4, as it allows to categorize all research on value in either one or the other approach, or eventually, in a combination of both. Figure 3.1 and Figure 4.1 depict this duality and offer a review of our work on the intra- or inter-variable approaches, alongside other scholarly work. The intra-variable approach on value (highlighted in grey in Figure 3.1) contains several classical and seminal theoretical approaches (e.g., Zeithaml, 1988; Sheth et al., 1991; Holbrook, 1999) as well as subsequent developments of conceptualizations and taxonomies of value (e.g., Schmitt, 1999, 2003; Sweeney and Soutar, 2001; Arnould, 2014) followed by more recent proposals, incorporating the earlier literature, but also moving towards more flexible and dynamic understandings of the complexity of the value concept and its dimensions (e.g., Lin et al., 2005; Gallarza et al., 2011; Gummerus, 2013; Leroi-Werelds et al., 2014).  This chapter, focused on the intra-value approach, is structured as follows. First, the etymological foundations of the value concept are described on the basis of different disciplinary sources that explain the origin and evolution of value. Furthermore, the influence of this multidisciplinary underpinning on the conceptualization and use of term ‘value’ in the marketing field is analyzed and, in particular, in the two main marketing branches where value has been studied, that is, consumer behaviour and marketing management. Second, the polysemy and terminological richness associated to the value concept are explored, illustrating the main reasons for the extensive and scattered variety of terms in value research. Third, we discuss the existing heterogeneity, inconsistency and diversity in the definition and conceptualization of value in the marketing literature, providing a classification of the multiple proposals. Thus, we identify the convergence and divergence that explain the lack of a clear consensus among scholars and practitioners. As a result of this analysis, the main characteristics of the value concept are identified. Fourth, a

Value Dimension 2

Value Dimension 1

Intra-variable Perspective

Value Dimension j: e.g. Quality

Value Dimension k

Source: The authors.

Satisfaction

Main illustrative works on the INTER-VARIABLE APPROACH:

Perceived Value

Others

Inter-variable Perspective

Loyalty

Bolton & Drew (1991) Cronin, Brady & Hult (2000) Hutchinson et al. (2009) Doods, Monroe & Grewal (1991) Day & Crask (2000) Sánchez-Fernández & Iniesta-Bonillo (2009) Rust & Oliver (1994) McDougall & Levesque (2000) Boksberger & Melsen (2011) Ostrom & Iacobucci (1995) Babin & Kim (2001) Forgas-Coll et al. (2014) Woodruff & Gardial (1996) Baker et al. (2002) Gallarza et al. (2015) Heskett, Sasser & Schlesinger (1997) Brady et al. (2005) Cronin (2016) Parasuraman (1997) Gallarza & Gil-Saura (2006) Gallarza et al. (2016a, 2016b) Oliver (1999) Sánchez et al. (2006) Gallarza et al. (2017b, 2017c) Sweeney, Soutar & Johnson (1999) Chen & Tsai (2007) Mencarelli & Lombart (2017)

Causal Effects

Figure 3.1 Depicting Intra- and Inter-Variable Research on Consumer Value

Gallarza & Gil-Saura (2006) Zeithaml (1988) Sánchez-Fernández & IniestaMonroe (1990) Bonillo (2006, 2007) Doods et al. (1991) Martín-Ruiz et al. (2008) Mattsson (1991) Sánchez-Fernández et al. (2009) Sheth et al. (1991) Heinonen et al. (2010, 2013) Babin et al. (1994) Gallarza et al. (2011) Gale (1994) Grönroos (2011) Holbrook (1994) Chang & Dibb (2012) Woodruff (1997) Helkkula et al. (2012) Grewal et al. (1998) Gummerus (2013) Holbrook (1999) Arnould (2014) Schmitt (1999, 2003) Leroi-Werelds et al. (2014) Mathwick et al. (2001) Eid & El-Gohary (2015) Sweeney & Soutar (2001) Cronin (2016) Sirdeshmukh et al. (2002) Gallarza et al. (2017a) Vargo & Lusch (2004) Varshneya et al. (2017) Lin et al. (2005)

Main illustrative works on the INTRA-VARIABLE APPROACH:

CHAPTER X

····· ·····

Intra-Variable Perspective on Value Research

45

systematic review of the wide spectrum of approaches to the nature of value is conducted through a diachronic outline of the proposed dimensions and taxonomies. Finally, the chapter concludes with a discussion of the main shortcomings, deficiencies, lacunae, challenges, new trends and future research streams that can be identified in the value research under an intra-variable perspective.

Origin and Etymology of Value For a comprehensive understanding of the origin of the notion ‘value,’ it is crucial to examine the term’s etymological roots in several disciplines: philosophy, economy, psychology and management. Figure 3.2 depicts these origins, as well as the two main branches of the notion of value in marketing (i.e., consumer behaviour and marketing management) with illustrative quotations for each discipline. The source of ‘value’ is attributed to a branch of philosophy known as axiology or the theory of value (e.g., Lewis, 1946; Perry, 1954; Hartman, 1967; Frondizi, 1971). Axiology, in its broadest sense, encompasses areas of philosophy (Lockwood, 1999) that deal with some ‘evaluative’ aspects, such as aesthetics and moral, or social and political philosophy. In particular, axiology depends crucially on the idea of worth, and it analyzes, under an ethical perspective, the concepts of ‘right’ and ‘good’ in conducts, no matter if personal or social. Axiology’s interest in people’s internal value systems and in their impact upon perceptions, judgements and behaviours subsequently influenced economics and the development of the theory of economic value. Thus, in classical theory and Marxism, it is argued that the economic value of a good or service is determined by the number of labour hours required to produce it, which is in the origin of the concept of ‘added value.’ Furthermore, based on the notions of utility or desirability, economists argue that consumers are rational beings that analyze the exchange value or price of goods and services in terms of utility maximization. Another discipline that contributes to the conceptualization of value is psychology and its equity theory (Adams, 1963), which is applied to consumption situations on the basis of inputs/outcomes comparisons (Huppertz et al., 1978). This idea of balance or equilibrium determines the notion of trade-off in consumption. Equity, as the ratio of contributions (or costs) and benefits (or rewards), has played a pivotal role in business management in such areas as market competitiveness, worker motivation and performance. Specifically, the term ‘value’ has been widely used in management to explain many key concepts, for example, the value chain (Porter, 1985) or shareholder value (Rappaport, 1986; Payne et al., 2000)).  Concerning the management discipline, the concept of ‘value’ emerged as the defining business issue of the 1990s, and it has continued to receive extensive research interest in present times. A great number of studies

“The concept of ‘value’ is an ancient one which has been developed extensively over many centuries, largely by philosophers and economists” (Brennan and Henneberg, 2008, p. 563)

“A need to consider this concept within the broader context of the general theory of value or axiology” (Holbrook and Corfman, 1985, p. 40)

“Psychologists have examined individuals' value orientations toward the environment, and attempted to develop scales to measure the degree people believe in an intrinsic value in nature ” (Lockwood, 1999, p. 383)

PSYCHOLOGY Equity Theory

MARKETING MANAGEMENT Segmentation Differentiation Positioning Customer Relationship Management

“Customer value is considered central to competitive advantage and long -term success of business organizations” (Khalifa, 2004, p. 645)

MANAGEMENT Value Chain

“As marketers, we should be committed to the proposition that the creation of customer value must be the reason for the firm’s existence and certainly for its success” (Slater, 1997, p. 166)

Figure 3.2 Disciplinary Sources and Marketing Applications of the Value Concept: Illustrative Quotations

“Improving the perceived value of products and services increases the total standard of living” (Nilson, 1992, p. 176) “Companies that measure value … will make a superior contribution to society” (Gale, 1994, p. xv) “Marketing activities ... are socially justified because…everyone is better off after the exchange than before” (Holbrook, 1994, p. 22)

ETHICAL UNDERPINNINGS

“Both marketing practitioners and scientists have come to recognize the major influence that perceived value has on consumer behavior. This identification has evolved to the point where control over the provision of value to customer has become a strategic imperative for the 1990s ” (Sweeney et al., 1999, p. 78)

CONSUMER BEHAVIOUR Attraction Choice and purchase Repetition and loyalty

THE CONCEPT OF VALUE IN MARKETING

MICROECONOMICS Utility and Price

PHILOSOPHY Axiology or the Theory of Value

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have highlighted its relevance as a strategic weapon in driving organizational changes (Goodstein and Butz, 1998), sustaining a competitive advantage (Gale, 1994; Parasuraman, 1997; Woodruff, 1997; Slater and Narver, 2000; Rintamäki et al., 2007), and ensuring companies’ longterm success (Khalifa, 2004). Following Slater (1997), “the creation of customer value must be the reason for the firm’s existence and certainly for its success” (p.  166). Moreover, on the top of being a key concept in management science, the notion of value is also essential in marketing, as it is associated with satisfaction and behavioural intentions (Oh, 2000; Hu et al., 2009; Hutchinson et al., 2009; Forgas-Coll et al., 2014; Prebensen et al., 2016; Wu et al., 2016), while eventually creating loyalty manifested in enhanced profitability (Gale, 1994; Woodruff, 1997; Rintamäki et al., 2007). Indeed, value as a notion has been considered a key construct for the understanding of both the epistemology and practice of marketing (Holbrook, 1999; Sweeney and Soutar, 2001; Leroi-Werelds et al., 2014). As Gallarza et al. (2011) point out, what first attracts the attention of any marketing researcher interested in the concept of value is “its increasingly unanimous recognition as an imperative focus for both practitioners and researchers” (p. 179). Value is inextricably rooted in fundamental marketing principles. Following Holbrook (1999, p.  2), the Kotlerian conception of marketing indicates that “implications concerning consumer value are central to our understanding of marketing and, indeed, the Concept of Consumer Value constitutes the foundation, defining basis, or underlying rationale for the Marketing Concept in the sense that each party to a transaction gives up one thing in return for something else of greater value.” Accordingly, multiple authors have long agreed on the epistemological implications of value for marketing as a discipline. For example, Mizik and Jacobson (2003, p. 63) asserted that “value creation is a cornerstone of marketing.” Holbrook (1999, p.  9) indicated that “prescriptively as well as descriptively, Consumer Value shapes the design of marketing strategy,” and also, Grönroos (2011a, p.  243) stated that “value and value creation has been found to be a foundational aspect in marketing and business.” As a result, the latest definitions of Marketing from the American Marketing Association (2004, 2007 and 2013) integrate the word ‘value.’ Value has been considered fundamental, not only to the epistemological development of marketing, but also to the understanding of consumer behaviour and marketing management. In the area of consumer behaviour, its significance has evolved the development of two pivotal dimensions (Gallarza and Gil-Saura, 2006; Gallarza et al., 2011): the economic dimension, where value is linked to a perceived price through what is known as ‘transaction value’ (Grewal et al., 1998; Monroe, 1990); and the psychological dimension, where value is related to the cognitive and affective influences on product purchase decisions through

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the concepts of ‘perceived value’ or ‘consumer value’ (Holbrook, 1999; Sweeney and Soutar, 2001). From a managerial point of view, organizations continuously search for ways to achieve and retain competitive advantages through superior value delivery (Gale, 1994; Woodruff and Gardial, 1996; Woodruff, 1997; Ngo and O’Cass, 2009). Thus, value has been often linked to use situations and related consequences by means of the term ‘customer value’ (Slater, 1997; Woodruff, 1997). In this sense, value has been recognized as an essential foundation of several key strategic marketing principles such as market segmentation (DeSarbo et al., 2001), product differentiation (Ulaga and Chacour, 2001), brand positioning (Gale, 1994; Stabell and Fjeldstad, 1998), and customer relationship management (Wang et al., 2004). Last but not least, the value notion has also ethical underpinnings for both consumer behaviour and marketing management derived from the ontological roots on marketing, as it is the interchanges of value(s) which makes us better off after an exchange. This is an idea where both aforementioned literatures (consumer behaviour and marketing strategy) are coincident. For example, Grönroos (2008, p. 303) defines value for customers in the following way: “Value for customers means that after they have been assisted by a self-service process (cooking a meal or withdrawing cash from an ATM) or a full-service process (eating out at a restaurant or withdrawing cash over the counter in a bank) they are or feel better off than before.” The ethical justification that links marketing strategies and the value concept is even more evident in the following quotations (included also in Figure 3.2): “Marketing activities .  .  . are socially justified because (if we neglect economic externalities involving third parties) everyone is better off after the exchange than before” (Holbrook, 1994, p. 22); and “companies that measure value . . . will make a superior contribution to society” (Gale, 1994, p. xv) because “improving the perceived value of products and services increases the total standard of living” (Nilson, 1992, p. 176).

Polysemy and Terminology in the Value Research Despite the profound and abiding interest in the concept of value in the marketing literature, there is a lack of a clear consensus on its theoretical and conceptual foundations. Accordingly, the debate is still open about the definition, nature and measurement of value. It is obvious that the attempt of understanding the many constructions that some concepts may have in the consumer’s mind is not always easy; but when it comes to dealing with the word ‘value,’ the task becomes even harder. Actually, there is a gap between what the formal or langue definition of the term ‘value’ is, and the many pragmatic usages that the word may have among individuals. Moreover, several authors have emphasized the overuse of the term and the considerable inconsistency in its terminology (Murphy

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et al., 2000; Woodall, 2003; Khalifa, 2004; Lindgreen and Wynstra, 2005; Sánchez-Fernández and Iniesta-Bonillo, 2006; Boksberger and Melsen, 2011; Gallarza et al., 2011; Chang and Dibb, 2012). This situation results from the complex nature of this concept, as the qualifying terms used to depict it are numerous: value is ‘subjective’ (Zeithaml, 1988), ‘multifaceted’ (Babin et al., 1994; Rivière and Mencarelli, 2012), ‘polysemic’ (Zeithaml, 1988; Kashyap and Bojanic, 2000; Gallarza and Gil-Saura, 2006), ‘dynamic’ (Woodruff and Gardial, 1996; Parasuraman and Grewal, 2000), ‘difficult to quantify’ (Petrick, 2002), ‘rather hazy’ (Desmet and Zollinger, 1997), ‘elusive’ (Zeithaml, 1988), and an ‘amorphous concept’ (Zeithaml and Bitner, 1996), with a nature qualified as ‘nebulous’ (Sánchez-Fernández and Iniesta-Bonillo, 2007) and ‘abstract’ (Gallarza and Gil-Saura, 2006). Another sign of the complexity that is inherent in the value construct can be found in its different meanings for consumers (Zeithaml, 1988; Day, 2002), researchers (Lai, 1995; Gallarza et al., 2011) and practitioners (Gale, 1994; Woodruff and Gardial, 1996). In addition to, and following de Chernatony et al. (2000), the difficulties existing in defining value derive from its variability between customers, cultures, situations, stages in the purchase process and the offers’ degree of tangibility. Consequently, the significant body of knowledge of this seminal topic in marketing is rather fragmented, somewhat dispersed and still-inconclusive. Accordingly, contributors to this field have often stressed that the research on value needs further refinement and development (Ulaga, 2001; Liu et al., 2005; Gallarza et al., 2011; Helkkula et al., 2012; de Medeiros et al., 2016). The complicated nature of value and the difficulties arising in its analysis have resulted in the use of an extensive, scattered and assorted terminology. Without claiming to be exhaustive, many examples in marketing literature show this inconsistency: ‘perceived value’ (Zeithaml, 1988; Dodds et al., 1991; Agarwal and Teas, 2001); ‘consumer value’ (Holbrook, 1999; Park, 2004); ‘customer value’ (Gale, 1994; Holbrook, 1994; Woodruff, 1997); ‘customer perceived value’ (Grönroos, 1997); ‘value for the customer’ (Woodall, 2003); ‘perceived customer value’ (Lai, 1995); ‘shopping value’ (Babin et al., 1994); ‘consumption value’ (Sheth et al., 1991); ‘experiential value’ (Mathwick et al., 2001, 2002; Varshneya et al., 2017); ‘relationship value’ (Ravald and Grönroos, 1996); ‘product value’ (Bowman and Ambrosini, 2000); ‘service value’ (Bolton and Drew, 1991; Jayanti and Ghosh, 1996; Cronin et al., 2000); ‘added value’ (de Chernatony et al., 2000); ‘judgment value’ (Flint et al., 1997); ‘desired value’ (Flint et al., 2002); ‘expected value’ (Van der Haar et al., 2001); ‘net value’ (Lovelock, 1991); or ‘received value’ (Flint and Woodruff, 2001). According to Sánchez-Fernández and Iniesta-Bonillo (2006), this terminological variety raises a fundamental question: “whether all these terms refer to the same concept or whether, on the contrary, we are dealing with different notions” (p.  41). As these authors suggest, these

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terms generally explain the individuals’ perception or evaluative judgement in the different stages of the consumer purchase decision process. However, this variety arises for many reasons. Identification of the following potential sources of delimitation may help in explaining the origin of this terminological richness: a) The value-producing object. Value exists because it is present in ‘something’ that is evaluated by the consumer (Holbrook, 1994, 1999). This object can be physical or mental. In this sense, such terms as ‘product value,’ ‘service value,’ ‘store value’ or ‘relationship value’ have been used in the literature depending on what is evaluated. In this line, Lindgreen and Wynstra (2005) highlight that it is important to distinguish between two major research streams: the value of goods and services, and the value of buyer–seller relationships. b) The dynamic nature of value (Parasuraman, 1997; Woodruff, 1997; Holbrook, 1999; Lapierre, 2000). Consumers’ perception varies in different stages of the purchase decision process. As stated by Gallarza et al. (2011, p.  181), “the value construct helps to explain different facets of consumer behaviour that occur both before and after the purchase itself.” Under this consideration, some authors distinguish between pre-purchase and post-purchase consumer value (Oliver, 1999; Day and Crask, 2000). One should note the use of terms like ‘desired value,’ ‘expected value,’ ‘exchange value,’ ‘consumption value,’ ‘received value,’ ‘in-use value’ or ‘redemption value.’ In particular, Woodall (2003) proposes four temporal categorizations in defining value: ex-ante, transaction, ex-post and disposal. Also, Rivière and Mencarelli (2012) link the terms ‘customer value,’ ‘shopping value’ and ‘consumer value’ to the moment of actual value formation in a, respectively, pre-purchase, purchase and post-purchase situation. In a subsequent study, Mencarelli and Rivière (2015) re-name those terms as, respectively, ‘purchase value,’ ‘shopping value’ and ‘consumption value.’ Other researchers emphasize the existence of ‘experiential value’ in shopping behaviour (e.g., Holbrook, 1999; Schmitt, 1999; Mathwick et al., 2001, 2002; Helkkula et al., 2012; Prebensen et al., 2016; Gallarza et al., 2017a). Recent trends in marketing research have proposed such new concepts as ‘value self-creation’ (Zainuddin and Gordon, 2014) or ‘value-in-behavior’ (Gordon et al., 2018), related also to the experience and behaviour. c) The comparative nature of the notion. Value judgements involve relative preferences among objects (Holbrook, 1999). Such comparisons are shown in terms like ‘comparative value’ and ‘relative value.’ Value has also been defined as a trade-off between benefits and sacrifices (Zeithaml, 1988). This balance or ratio determines such concepts as ‘net value,’ ‘value for money,’ ‘value for price’ or ‘overall value.’

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d) Its consideration as preferential judgement (Zeithaml, 1988; Ostrom and Iacobucci, 1995; Oliver, 1999; McDougall and Levesque, 2000). Preference entails some sort of ‘judgment value.’ e) The perceptual nature of value. In the words of Day (2002), “value as perceptual is undeniable” (p.  27). Therefore, value varies across individuals (Holbrook, 1999; Day and Crask, 2000). As a result, the terms ‘perceived value,’ ‘perceived consumer value’ or ‘perceived customer value’ have been used in the literature. f) Value depends on consumption goals (Woodruff and Gardial, 1996). The ultimate purpose or goal that consumers are attempting to achieve determines the distinction between ‘value in use,’ that is related to the functional outcome of the product consumption, and ‘possession value,’ linked to symbolic, self-expressive and aesthetic qualities associated with consumption behaviour. New advances in value research have distinguished between the notions of ‘value in exchange,’ rooted on the Good-Dominant Logic (GDL) and that views value as something that is added to products in the production process and at point of exchange, and ‘value in use,’ created, according to the ServiceDominant Logic (SDL), when customers use goods and services (Lusch and Vargo, 2006). g) The dual approach to the value concept in marketing. As stated previously, both consumer behaviour and marketing management literature have deeply examined this notion. In the consumer area, value is related to consumers’ purchase decisions through the terms ‘consumer value’ and ‘perceived value.’ For marketing strategy, value focuses on desired consequences in specific use situations, and it is commonly named ‘customer value.’ Some authors have tried to explain the distinction between ‘customer value’ and ‘consumer value’ (Lai, 1995; Jensen, 1996; Sánchez-Fernández and Iniesta-Bonillo, 2006), without reaching similar conclusions. Instead, other scholars have used interchangeably both terms ‘customer value’ and ‘consumer value’ (Chen and Dubinsky, 2003) or ‘customer value’ and ‘perceived value’ (Sinha and DeSarbo, 1998; Ralston, 2003). There are two areas where these fuzzy delimitations and high polysemy towards the value notion are particularly important. Thus, the persistent degree of confusion concerning the scope and meaning of value has been particularly analyzed in: a) the distinction between the terms ‘value’ (singular) and ‘values’ (plural); and b) between the notions ‘customer value’ and ‘consumer value.’ First, some studies have examined the difference between consumption value and personal values (Holbrook, 1999; Oliver, 1999; de Chernatony

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et al., 2000; Sánchez-Fernández and Iniesta-Bonillo, 2006; Boksberger and Melsen, 2011; Chang and Dibb, 2012). Literature shows that values are referred to the psychological structure that influences and guides individuals’ attitudes, evaluative judgements and behaviour. Rokeach (1973, p. 5) defines values as “an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence,” and Schwartz (1994, p.  88) as “desirable goals, varying in importance that serve as guiding principles in people’s views.” Therefore, values (in plural) are of crucial importance in forming individuals’ beliefs, motivations and action systems (Chang and Dibb, 2012). Consequently, values are abstract ideals relatively stable over time and influenced by internal and external factors such as personality, education and culture. In contrast to personal values, value (in singular) in consumption is a dynamic construct related to evaluation and judging behaviour. Value encompasses individuals’ perceptual judgements associated with consumer behaviour at any stage of the buying decision process. Holbrook (1999) summarizes brilliantly this differentiation by explaining that the preferential nature of this concept shows that value (singular) is “the outcome of an evaluative judgment,” whereas values (plural) refers to the “standards .  .  . , rules .  .  . , criteria . . . , norms . . . , goals . . . , or ideals . . . on the basis on which evaluative judgments get made” (Holbrook, 1999, p.  8). Therefore, value is the summary valuation and values are the underlying evaluation criteria. Accordingly, many authors state that consumer value and personal values are different constructs (Oliver, 1996; Woodruff, 1997; Day and Crask, 2000; Sánchez-Fernández and Iniesta-Bonillo, 2006), whereas others suggest that consumption value and personal values are linked (Oliver, 1999), pointing out that individuals’ judgements about specific products and services reflect their values (Prentice, 1987). In this sense, other scholars argue that individual’s personal values influence perceived value (Huber et al., 2001; Ledden et al., 2007). Ultimately, personal values and perceived value are distinct constructs with a clear differentiation in their nature and scope. However, the doctrine has often used these terms interchangeably, which has resulted in confusion and misunderstandings. Second, another source of controversy and ambiguity has been the use of the terms ‘customer value’ and ‘consumer value.’ There is not a universally accepted definition of these among scholars. In general, both are respectively linked to two marketing branches: marketing management and consumer behaviour. In the managerial literature, the concept of customer value is inherent to experience and it is linked to use situations and related consequences (Woodruff and Gardial, 1996; Slater, 1997; Woodruff, 1997). Thus, customer value embodies the customer’s perceived preference for and evaluation of supplier’s products and services in their usage. In consumer behaviour research, value is linked with the concept of perceived value in the purchase decision process (Sánchez-Fernández and

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Iniesta-Bonillo, 2006). Few works have explored the distinction between both terms, but it is interesting to note that some authors base their differentiation on the dynamic nature of value. For example, Lai (1995) asserts that customer value focuses on “the buyers’ evaluation of product purchase at the time of buying,” whereas consumer value stresses “people’s valuation on the consumption or possession of products” (p. 381). In the same temporal line, Jensen (1996) indicates that customer value is the overall assessment in the pre-purchase stage of decision-making, and consumer value is the post-purchase assessment of the consumption experience. Rivière and Mencarelli (2012) also propose a classification criterion based on the moment of actual value formation during the purchase and consumption process. They define ‘customer value’ as the estimated value prior to the acquisition. For them, this is a cognitive and rational construct rooted in the economic concept of exchange value, and based on the classical Zeithaml’s proposal (1988) of a trade-off between benefits and sacrifices. On the contrary, it is suggested that ‘shopping value’ is the inherent value when consumers are visiting the store. They link this notion with the concept of experiential value in retailing on the basis of two different seminal approaches: works from Babin et al. (1994) and Mathwick et al. (2001, 2002). Finally, these authors argue that ‘consumer value’ refers to the post-purchase behaviour, and it is defined as “the value perceived during/after the consumption or use of the product” (Rivière and Mencarelli, 2012, p. 105). In this case, they root their proposal in the theoretical framework of Holbrook (Holbrook and Corfman, 1985; Holbrook, 1994, 1999).

Definition and Nature of Value The unanimous recognition of the importance of the value concept in marketing has generated a substantial volume of studies about this notion. Four decades of research have provided innumerable definitions and, as in the case of the terminology, a lack of consensus about what is value, how we can define it and what are the main ‘facets’—in words from Holbrook (1999)—or defining characteristics of this construct. Table 3.1 supports this conclusion by means of a chronological selection of value definitions from 1984 to 2017. Several classification criteria (i.e., approach, type of analysis and setting, context and terms used) provide meaningful insights about the evolution and scope of the value definitions. First, what Table 3.1 shows is that, in spite of the many proposals— we have compiled almost 60 in an attempt of showing only the main illustrative contributions to the value definition—the concept remains unclear. This idea is consistent with recent studies, where it is emphasized that “absence of a unified theoretical framework” (Rivière and Mencarelli, 2012, p.  97), the “theoretical confusion about perceived value” (Mencarelli and Rivière, 2015, p.  201), the “multiple overlapping and

Dodds et al. (1991, p. 308)

Lichtenstein et al. (1990, p. 54) Monroe (1990, p. 51)

Morrison (1989) quoted in Murphy et al. (2000, p. 46)

Zeithaml (1988, p. 14)

Trade-off

Trade-off

Trade-off

Trade-off

Trade-off

Trade-off

Trade-off

“Value is the amount buyers are willing to pay for what a firm provides them” “Consumer value depends on the utility derived from an item and the investment needed to acquire it” “Perceived value is the consumer’s overall assessment of the utility of a product based on perceptions of what is received and what is given” “The mental estimate that consumers make of the travel product, where perceptions of value are drawn from a personal cost/ benefit assessment” “We can define value as the ratio of quality to price” “Buyers’ perceptions of value represent a balance between the quality or perceived benefits of the product compared to the perceived sacrifice by the payment of the price” “The cognitive tradeoff between perceptions of quality and sacrifice results in perceptions of value”

Corfman (1987, p. 29)

Experiential

“All factors, both qualitative and quantitative, subjective and objective, that make up the complete shopping experience”

Schechter (1984) quoted in Zeithaml (1988, p. 13) Porter (1985)

Approach

Conceptual proposal

Author(s)

Empirical (calculators and stereo headset players)

Empirical (coupons) Theoretical

Theoretical

Empirical (beverages)

Theoretical

Theoretical

Empirical (supermarkets)

Type of analysis (setting)

B2C

B2C

B2C

B2C

B2C

B2C

B2C

B2C

Context

Table 3.1 Intra-Value Research: A Review and Classification of Value Conceptual Proposals From 1984 to 2017

Perceived value

Value

Value

Value

Perceived value

Consumer value

Value

Value

Term used

Holbrook (1994, p. 27, 1999, p. 5) Rust and Oliver (1994, p. 7)

Chang and Wildt (1994, quoted in Murphy et al., 2000) Feurer and Chaharbaghi (1994, p. 50) Gale (1994, p. xiv)

Spreng et al. (1993, p. 51)

Liljander and Strandvik (1993, p. 14) Mazumdar (1993, p. 28)

Stevens (1992, p. 44)

Mattsson (1991, p. 42)

“The degree to which a potential adopter perceives that the benefits of a new product exceed the sacrifices associated with its adoption and consumption” “A consumer’s anticipation about the outcome of purchasing a product or service based on future benefits and sacrifices” “Value can be seen as a combination of a product’s (destination’s) perceived quality and associated price which a visitor will summarise as the value received” “Customer value can therefore be considered as the benefit perceived by the customer in relation to the demanded price” “Customer value is market-perceived quality adjusted for the relative price of your product” Value is “an interactive relativistic preference experience” “Value is some combination of what is received and what is sacrificed”

“Product value patterns are the effects of an ongoing evaluative act by a consumer on being exposed to a product” “The notion of value for money refers primarily to the relationship between price, quality and quantity” “Perceived value equals perceived benefits/ perceived price”

Theoretical

Trade-off

Theoretical

Trade-off

Theoretical

Theoretical

Trade-off

Experiential

Empirical

Theoretical

Theoretical

Empirical (restaurant)

Empirical (tourism products)

Theoretical

Trade-off

Trade-off

Trade-off

Trade-off

Trade-off

Benefits

B2C

B2C

B2C

B2C

B2C

B2C

B2C

B2C

B2C

B2C

(Continued)

Value

Consumer value

Customer value

Customer value

Value

Perceived value

Perceived value

Perceived value

Value for money

Product value

Anderson and Narus (1998, p. 54)

Patterson and Spreng (1997, p. 416) Woodruff (1997, p. 142)

Fornell et al. (1996, p. 9) Laitamäki and Kordupleski (1997, p. 158)

“Customer value is a customer’s perceived preference for and evaluation of those product attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes in use situations” “Value in business markets is the worth in monetary terms of the technical, economic, service, and social benefits a customer company receives in exchange for the price it pays for a market offering”

“Value refers to the sum total of all benefits that consumers perceive they will receive if they accept the market offering” Customer value is “the emotional bond established between a customer and a producer after the customer has used a salient product or service produced by that supplier and found the product to provide an added value” Perceived value is “the perceived level of product quality relative to the price paid” “Customer value is the relationship between the degree of customer satisfaction with the products and services received and the satisfaction with the price paid” “Defining value in terms of performance (quality) and price (a sacrifice)”

Hunt and Morgan (1995, p. 6)

Butz and Goodstein (1996, p. 63)

Conceptual proposal

Author(s)

Table 3.1 (Continued)

Trade-off

Benefits

Theoretical

Empirical (consultancy firms) Theoretical

Theoretical

Trade-off

Trade-off

Empirical (multiple)

Theoretical

Experiential

Trade-off

Theoretical

Type of analysis (setting)

Benefits

Approach

B2B

B2C

B2B

B2C

B2C

B2C

B2C

Context

Value

Customer value

Perceived value

Customer value

Perceived value

Customer value

Value

Term used

Oliva (2000, p. 56)

McDougall and Levesque (2000, p. 394)

Lapierre (2000, p. 123)

Walters and Lancaster (1999, p. 646)

Sinha and DeSarbo (1998, 236) Sirohi et al. (1998, p. 228) Oliver (1999, p. 45)

“Value is quality that the consumers can afford” “We define value as ‘what you get for what you pay’” “Value is a positive function of what is received and a negative function of what is sacrificed” “Value is determined by the utility combination of benefits delivered to the customer less the total costs of acquiring the delivered benefits. Value then is a preferred combination of benefits (value drivers) compared with acquisition costs” “Customer-perceived value can, therefore, be defined as the difference between the benefits and the sacrifices (e.g., the total costs, both monetary and non-monetary) perceived by customers, in terms of their expectations, i.e., needs and wants” “Broadly defined, perceived value is the results or benefits customers receive in relation to total costs (which include the price paid plus other costs associated with the purchase). In simple terms, value is the difference between perceived benefits and costs” “Customer value is the hypothetical price for a supplier’s offering at which a particular customer would be at overall economic break-even, relative to the best alternative available to the customer for performing the same set of functions” Empirical (supermarkets) Theoretical Theoretical

Empirical (companies of multiple sectors)

Empirical (dentist, auto service, restaurant, haircut) Theoretical

Trade-off

Trade-off

Trade-off

Trade-off

Trade-off

Trade-off

Empirical (cars)

Trade-off

B2B

B2C

B2B

B2C

B2C

B2C

B2C

(Continued)

Customer value

Perceived value

Customerperceived value

Value

Value

Value

Value

“Customer value is created when the benefits to the customer associated with a product or a service exceed the offering’s life-cycle costs to the customer” “Perceived value is the consumer’s objective assessment of the utility of a brand based on perceptions of what is given up for what is received” Perceived customer value represents “the difference between customer’s perceived benefits and customer’s perceived costs” “Value is the relationship of a firm’s market offering and price weighed by the consumer against its competitor’s market offering and price” “We define customer-perceived value in industrial markets as the trade-off between the multiple benefits and sacrifices of a supplier’s offering, as perceived by key decision makers in the customer’s organization, and taking into consideration the available alternative suppliers’ offerings in a specific-use situation” “The customer value concept assesses the value a product offers to a customer, taking all its tangible and intangible features into account” “We understand value as the perceived tradeoff between multiple benefits and sacrifices gained through a customer relationship by key decision makers in the supplier’s organization”

Slater and Narver (2000, p. 120)

Walter et al. (2001, p. 366)

Van der Haar et al. (2001, p. 628)

Ulaga and Chacour (2001, p. 530)

Kothandaraman and Wilson (2001, p. 380)

Huber et al. (2001, p. 41)

Rust et al. (2000, p. 445)

Conceptual proposal

Author(s)

Table 3.1 (Continued)

Empirical (printing and copying services) Empirical (managers of multiple companies)

Trade-off

Empirical (hydrocolloid food ingredients)

Trade-off

Benefits

Theoretical

Theoretical

Empirical (managers of multibusiness corporations) Theoretical

Type of analysis (setting)

Trade-off

Trade-off

Trade-off

Trade-off

Approach

B2B

B2B

B2B

B2C

B2C

B2C

B2C

Context

Value

Customer value

Customerperceived value

Value

Perceived customer value

Perceived value

Customer value

Term used

Kotler and Keller (2006, p. 133)

Yang and Peterson (2004, p. 803)

Snoj et al. (2004, p. 157)

Woodall (2003, p. 21)

Chen and Dubinsky (2003, p. 326)

Afuah (2002, p. 172)

“The value that a customer attaches to the characteristics is a function of the extent to which they contribute to the customer’s utility or pleasure” Perceived customer value is “a consumer’s perception of the net benefits gained in exchange for the costs incurred in obtaining the desired benefits” “Value for the customer (VC) is any demandside, personal perception of advantage arising out of a customer’s association with an organisation’s offering, and can occur as reduction in sacrifice; presence of benefit (perceived as either attributes or outcomes); the resultant of any weighed combination of sacrifice and benefit (determined and expressed either rationally or intuitively); or an aggregation, over time, of any or all of these” “The value is conceptualized as a customer’s perceived net trade-off received from all relevant benefits and costs or sacrifices delivered by a product or service or supplier and its use” “Customer-perceived value results from an evaluation of the relative rewards and sacrifices associated with the offering” “The difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives” Trade-off

Trade-off

Theoretical

Empirical (online banks)

Empirical (mobile phones)

Theoretical

Trade-off

Trade-off

Empirical (e-commerce)

Empirical (cholesterol drugs)

Trade-off

Benefits

B2C

B2C

B2C

B2C

B2C

B2C

(Continued)

Customer value

Customerperceived value

Value

Value for the customer

Perceived customer value

Value

Wang and Wang (2010, p. 599)

Kuo et al. (2009, p. 888)

Grönroos (2008, p. 303)

Smith and Colgate (2007, p. 8)

“What customers get (benefits, quality, worth, utility) from the purchase and use of a product versus what they pay (price, costs, sacrifices), resulting in attitude toward, or an emotional bond with the product” “Value for customers means that they, after have been assisted by a self-service process, . . . or a full-service process . . . they are or feel better off than before” “In this study, perceived value is the evaluation of the benefits of a product or a service by customers based on their advance sacrifices and expost perceived performance when they use mobile valueadded services” “We understand that value is defined over perceived gain or loss relative to a reference point”

“Consumer value is a cognitive-affective evaluation of an exchange relationship carried out by a person at any exchange of the process of purchase decision, characterized by a string of tangible and/ or intangible elements which determine, and are also capable of, a comparative, personal, and preferencial judgment conditioned by the time, place, and circumstances of the evaluation” “Perceived value is a dynamic variable that is also experienced after consumption”

Sánchez-Fernández and IniestaBonillo (2006, p. 53)

Moliner et al. (2007, p. 199)

Conceptual proposal

Author(s)

Table 3.1 (Continued)

Theoretical

Empirical (mobile services)

Empirical (mobile hotel reservation services)

Co-creation

Trade-off

Trade-off

Trade-off

Empirical (trips and ceramic products) Theoretical

Theoretical

Experiential

Experiential

Type of analysis (setting)

Approach

B2C

B2C

B2C

B2C

B2C

B2C

Context

Perceived value

Perceived value

Value for customers

Customer value

Perceived value

Consumer value

Term used

Lilien et al. (2017, p. 68)

Jiang et al. (2016, p. 305)

Wang (2012, p. 471)

Prebensen et al. (2012, p. 254)

Helkkula et al. (2012, p. 59)

Choo et al. (2012, p. 83)

Chang and Dibb (2012, p. 256)

“Customer-perceived value is the customer’s overall assessment of what is received and what is given (sacrifice) by a particular supplier compared with other competitors” “Customer preference for and belief in the attributes and attribute performance of the brand” “Individual service customers’ lived experiences of value that extend beyond the current context of service use to also include past and future experiences and service customers’ broader lifeworld contexts” “The process by which a tourist receives, selects, organizes, and interprets information based on the various experiences at the destination, to create a meaningful picture of the value of destination experience” “The overall value perception of a potential customer, which is based on a comparison of the benefits and sacrifices that the customer associates with medical tourism products and services” “Customer-perceived value results from an overall evaluation of the rewards and sacrifices associated with the service” “We define customer value as what a customer exchanges for an offering to satisfy a particular need” Theoretical

Empirical (tourist experiences)

Co-creation

Experiential

Trade-off

Trade-off

Theoretical

Empirical (e-commerce)

Empirical (medical tourism)

Empirical (luxury fashion brands)

Benefits

Trade-off

Theoretical

Trade-off

B2C

B2C

B2C

B2C

B2C

B2C

B2C

Customer value

Customerperceived value

Value perception

Value perceptions

Value in experience

Customer value

Customerperceived value

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Raquel Sánchez-Fernández, Martina G. Gallarza

somewhat contradictory perspectives” in its study (Heinonen et al., 2013, p. 107), the “considerable divergence of opinion” (Leroi-Werelds et al., 2014, p.  430), and the “little consensus in regards to the definition of the concept of perceived value” (Boksberger and Melsen, 2011, p. 229), stressing that value as a concept lacks clarity (Gummerus, 2013; de Medeiros et al., 2016). Some authors identify two different stages in the value research (Boksberger and Melsen, 2011; Gallarza et al., 2011): an early stage (until approximately 2000), which focusses on the definition and conceptualization of value, and a subsequent stage (starting approximately in the year 2000) immersed in the methodological development and measurement of this notion. In line with this proposal, Table 3.1 shows a major concentration of definitions in the first stage. Moreover, a large majority of conceptual proposals have been developed under a business-to-consumer (B2C) perspective (see fifth column in Table 3.1). Surprisingly, despite the importance of value creation in business-tobusiness (B2B) contexts (Makkonen and Olkkonen, 2017; Mencarelli and Rivière, 2015), the existing research literature on value in B2B environments has been comparatively less and, consequently, the number of definitions provided in this context has been scarce (with the relevant exception of Anderson and Narus, 1998; Lapierre, 2000; Oliva, 2000; Ulaga and Chacour, 2001; Walter et al., 2001). On the other hand, value definitions are the result of both theoretical and empirical studies (fourth column in Table 3.1). In B2C environments, services (e.g., tourism, restaurants or service e-commerce) are the most popular, whereas in B2B contexts, a wide range of empirical studies have conducted a multisector study. The heterogeneity in value conceptualizations is reflected in the approach to the concept, which allows to re-group them into four categories: tradeoff, benefits, experiential and co-creation (third column in Table 3.1). First, Zeithaml’s (1988) seminal work defines value as a trade-off between what is received and what is given, illustrating the idea of balance or equilibrium between benefits and sacrifices in a market offer. The rational and purely cognitive view that highlights this conceptualization, rooted in the modern microeconomic theory, has been the basis for a substantial number of definitions (e.g., Liljander and Strandvik, 1993; Chang and Wildt, 1994; McDougall and Levesque, 2000; Rust et al., 2000). The simplicity and clarity of this get-versus-give perspective, coupled with its easy operationalization (value as a ratio or subtraction), probably explains its broad acceptance and extreme influence on the vast value literature. However, in many cases, those definitions have been the origin of empirical approaches based on uni-dimensional and simple structures that explain the nature of value (e.g., Lichtenstein et al., 1990; Dodds et al., 1991; Fornell et al., 1996; Sirohi et al., 1998). Furthermore, there is no agreement among scholars with respect to the number and nature of benefits and sacrifices that define value. Such terms as ‘value,’ ‘value for money’ or ‘value for the customer’ are directly related to this

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type of definitions (see sixth column in Table 3.1), although other terms like ‘perceived value,’ ‘consumer value’ and ‘customer value’ have also been used in these studies. Second, another approach in the value literature accentuates the benefits or attribute performances that consumers receive from the evaluated object. In this case, the number of definitions is not very high, but significant (e.g., Mattsson, 1991; Hunt and Morgan, 1995; Woodruff, 1997; Choo et al., 2012). This conceptualization focuses on the total sum of all benefits as a function of the extent to which tangible and intangible features, attributes, performances, and consequences contribute to the customer’s utility or pleasure. This type of definitions goes beyond a mere consumer’s cognitive evaluation. However, it apparently ignores the costs and sacrifices associated with consumption. Terms as ‘value’ and ‘customer value’ have been mainly used in these definitions. Third, the experiential conceptualization proposed by Holbrook (Holbrook and Corfman, 1985; Holbrook, 1994, 1999) interprets value under a philosophical perspective, emphasizing also the psychological dimension of consumption. Arguably, this holistic and comprehensive conceptualization is the second most cited definition after Zeithaml’s, and it is related to such terms as ‘customer value,’ ‘consumer value’ or ‘perceived value’ (e.g., Sánchez-Fernández and Iniesta-Bonillo, 2006; Moliner et al., 2007; Brodie et al., 2009; Prebensen et al., 2012). Its complex character, its focus on the benefits, and the absence of a methodological and empirical approach to its associated typology of value, probably explain why this conceptualization has not been widely adopted in the literature. Thus, the number of definitions under this approach is clearly lower than the trade-off perspective (see Table 3.1). Finally, the more recent conceptual literature on value has integrated recent advances in services marketing theory and practice about how value is created, and the role of the service provider and the customer, within the SDL (Vargo and Lusch, 2004, 2008) and, recently, to the CustomerDominant Logic (CDL) (Heinonen et al., 2010, 2013). SDL establishes that value is not delivered by the service provider but co-created by firms and customers. Therefore, firms cannot deliver value, but only offer value propositions that are phenomenologically determined by the beneficiary. To summarize our review regarding value definitions, the lack of conceptual unanimity and precision in the value literature—previously explored through the existence of several approaches (i.e., trade-off, benefits, experiential and co-creation)—allows to identify some sources of consensus but also multiple divergences or controversies in value definitions, in line with previous studies (Woodruff, 1997; Day and Crask, 2000; Dumond, 2000; Day, 2002; Sánchez-Fernández and Iniesta-Bonillo, 2006). Thus, the abundant proposals reveal certain points of convergence: a) The perceptual nature of value is probably the most universally accepted characteristic of the concept (Day and Crask, 2000).

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Multiple authors highlight specifically this facet in their definitions— to name just a few in a chronological order: Zeithaml (1988); Monroe (1990); Dodds et al. (1991); Chang and Wildt (1994); Hunt and Morgan (1995); Woodruff (1997); Woodall (2003); Snoj et al. (2004); Kuo et al. (2009); Wang and Wang (2010); Prebensen et al. (2012). b) Value is a subjective concept to the individual, rather than objectively determined by a seller. There is an apparent consensus about the subjectivity of value (Zeithaml, 1988; Bolton and Drew, 1991; Babin et al., 1994; Woodruff and Gardial, 1996; DeSarbo et al., 2001; Sánchez-Fernández and Iniesta-Bonillo, 2006; Rivière and Mencarelli, 2012). This is reflected in several value definitions in a B2C context, for example, when it is mentioned “the consumer’s overall assessment” (Zeithaml, 1988, p. 14), “the mental estimate that consumers make” (Morrison, 1989), the “evaluative act by a consumer” (Mattsson, 1991, p.  308), the “consumer’s anticipation about the outcome” (Spreng et al., 1993, p.  51) or the “customer preference for and belief” (Choo et al., 2012, p. 83). According to Woodruff and Gardial (1996, p. 7), “customer value is not inherent in products or services themselves; rather it is experienced by customers as a consequence of using the supplier’s products and services for their own purposes.” However, regarding the debate about the subjectivist or objectivist side of value, Holbrook (1999) suggests an intermediate position where value depends on the characteristics of the product (goods, services or ideas) but it cannot be created without the appreciation and evaluation of some subject. In B2B contexts, this subjective nature is generally not so evident, but it is also suggested (e.g., Lapierre, 2000; Ulaga and Chacour, 2001; Walter et al., 2001). c) There are multiple sources or factors that generate or explain the perceived value by the consumer. However, it is important to point out that these sources are expressed in different ways—what constitutes in fact a source of discrepancy—in terms of what is received and what is given (Zeithaml, 1988; Rust et al., 2000; Chang and Dibb, 2012), benefits and sacrifices (Monroe, 1990; Mazumdar, 1993; Lapierre, 2000; Ulaga and Chacour, 2001; Woodall, 2003; Kuo et al., 2009), qualitative and quantitative factors (Schechter, 1984), utility and investment (Corfman, 1987), quality and price (Lichtenstein et al., 1990; Stevens, 1992; Chang and Wildt, 1994; Fornell et al., 1996), tangible and intangible elements (Van der Haar et al., 2001; Sánchez-Fernández and Iniesta-Bonillo, 2006), emotional bond and added value (Butz and Goodstein, 1996), attribute and attribute performances (Woodruff, 1997; Choo et al., 2012), consequences (Woodruff, 1997) or information based on experiences (Prebensen et al., 2012). Unsurprisingly, value definitions show several disagreements or discrepancies:

Intra-Variable Perspective on Value Research

65

a) Definitions rely on other terms such as utility, quality, price, emotional bond, worth, attribute performances, consequences, satisfaction, benefits or sacrifices (see Table 3.1). Consequently, the conceptualization and scope of the different proposals can vary significantly. According to Day and Crask (2000, p. 43), “two researchers using the same definition might still be viewing value differently, depending on how these other terms have been defined.”1 b) As noted previously, researchers disagree on the main sources that generate value. Quality is the type of benefit most frequently cited (e.g., Lichtenstein et al., 1990; Gale, 1994), although definitions also refer to attribute performances and consequences, or to technical, economic, service and social benefits (e.g., Woodruff, 1997; Anderson and Narus, 1998). In the case of sacrifices, the price and acquisition costs are some aspects that are mentioned (Monroe, 1990; Stevens, 1992; Walters and Lancaster, 1999). As we will discuss afterwards, the interest on the negative dimensions of value has been scarce (Gallarza et al., 2017b). c) There is no agreement on how value is generated or created. As mentioned previously, recent advances in the value literature show a growing debate about value co-creation, co-production, value propositions and who is engaged in the value creation activities. In the words of Gummerus (2013, p. 21), “these diverging views are likely to exacerbate the already existent incoherence in the value literature.” d) There is no clear pattern about the comparative nature of value. Only some definitions suggest the need for a comparison among different objects for value generation (Holbrook, 1999; Kothandaraman and Wilson, 2001; Kotler and Keller, 2006; Sánchez-Fernández and Iniesta-Bonillo, 2006; Chang and Dibb, 2012). e) Disagreements are also shown in the cognitive and/or affective dimensions of value. Some researchers have suggested that value is strictly a cognitive concept (Zeithaml, 1988; Dodds et al., 1991; Rust and Oliver, 1994; Oliver, 1999), while others defend the dual cognitiveaffective nature of consumer value (Babin et al., 1994; Babin and Kim, 2001; Park, 2004; Sánchez-Fernández and Iniesta-Bonillo, 2006). In this sense, the work of Holbrook and Hirschman (1982; Hirschman and Holbrook, 1982) were fundamental to shift the focus from a functional and economic perspective of consumption to an emotional and hedonic view of this process based on consumer experience. After these seminal proposals, where multisensory, fantasy and emotive aspects of product usage experience are highlighted, both cognitive and affective dimensions have been included in subsequent value definitions (e.g., Butz and Goodstein, 1996; Sánchez-Fernández and Iniesta-Bonillo, 2006; Smith and Colgate, 2007). f) There are different opinions on the dynamic nature of value. Most authors advocate a post-purchase value (e.g., Kuo et al., 2009; Chang and Dibb, 2012); others consider a pre-purchase value (e.g., Spreng

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Raquel Sánchez-Fernández, Martina G. Gallarza et al., 1993); several accentuate the value in the consumption experience (e.g., Holbrook, 1994, 1999; Prebensen et al., 2012); and some of them illustrate how value changes over the purchase decision process (e.g., Moliner et al., 2007; Helkkula et al., 2012). In the words of Payne et al. (2008, p. 86), “customer value creating processes should not be viewed in the traditional ‘engineering’ sense, but as dynamic, interactive, non-linear, and often unconscious processes.”

The existence of substantial disagreements in value conceptualization indicate the need to establish the main defining characteristics or facets that explain the nature of consumer value. On the basis of both previous studies (Holbrook, 1999; Sánchez-Fernández and Iniesta-Bonillo, 2006) and our review of value conceptual proposals (Table 3.1), we explain briefly the defining characteristics of value (see Figure 3.3): a) Value is interactive (Holbrook, 1994, 1999; Payne and Holt, 2001) insofar as it implies an interaction between a subject (e.g., a prospective

Interacve Intra-object Iinter-objects

Relave Experienal

Comparave Personal Situaonal

Consumer Value Higher-level abstracon

Cogniveaffecve

Preferenal

Perceptual

Figure 3.3 Consumer Value: Nature and Defining Characteristics Source: The authors.

Intra-Variable Perspective on Value Research

67

consumer or a customer) and an object (e.g., a product, a service, an event or an idea). As we pointed out previously, Holbrook (1999, p.  6) suggests a “more reasonable” intermediate position between subjectivism and objectivism, advocating for an interactionist perspective where value depends on both the object’s characteristics and the subject’s appreciation of those characteristics. Value can also be the result of an interaction between two subjects (e.g., a customer and a supplier). In fact, several authors have analyzed the named relationship value (Ravald and Grönroos, 1996; Payne et al., 2001; Lindgreen and Wynstra, 2005; Ulaga and Eggert, 2006). b) Value is relativistic by virtue of its comparative, personal and situational nature (Holbrook, 1994, 1999). First, value is comparative (Brady and Robertson, 1999; Eggert and Ulaga, 2002; Rivière and Mencarelli, 2012) in the sense that it involves preferences among objects, that is, an inter-objects comparison (Holbrook, 1994, 1999; McDougall and Levesque, 2000). Consequently, consumer value is a fundamental basis for product differentiation and positioning (Butz and Goodstein, 1996; Ulaga and Chacour, 2001; Chen and Dubinsky, 2003). Value is also comparative because it implies an intra-object comparison or trade-off between benefits and sacrifices (Zeithaml, 1988). Second, value is personal (Bolton and Drew, 1991; Holbrook, 1994, 1999; Ravald and Grönroos, 1996; Brady and Robertson, 1999; Huber et al., 2001) insofar as it differs from one individual to another. As we discussed previously, it is widely recognized in the literature that value is subjective rather than objectively determined by suppliers (e.g., Zeithaml, 1988; Babin et al., 1994; Woodruff and Gardial, 1996; DeSarbo et al., 2001; Sánchez-Fernández and IniestaBonillo, 2006; Rivière and Mencarelli, 2012). This characteristic constitutes the essential foundation for market segmentation (Sinha and DeSarbo, 1998; Holbrook, 1999; DeSarbo et al., 2001; Ulaga, 2001; Agarwal and Teas, 2002). Finally, value is situational, context dependent and temporally determined (Zeithaml, 1988; Patterson and Spreng, 1997; Woodruff, 1997; Day and Crask, 2000; Chen and Dubinsky, 2003). Following Sabiote-Ortiz et al. (2016, p. 34), “overall perceived value can be considered a subjective construct that will vary between consumers, between cultures, and over time.” In this sense, multiple authors have emphasized the dynamic nature of value (e.g., Parasuraman, 1997; Lapierre, 2000; Woodall, 2003; Moliner et al., 2007; Payne et al., 2008; Rivière and Mencarelli, 2012). c) Value is preferential (Holbrook, 1994, 1999) since it is the outcome of an evaluative judgement (Zeithaml, 1988; Ostrom and Iacobucci, 1995; Oliver, 1999; McDougall and Levesque, 2000). d) Value is perceptual (e.g., Day and Crask, 2000; Day, 2002; SánchezFernández and Iniesta-Bonillo, 2006; Prebensen et al., 2012; Wang, 2012) insofar as individuals select, organize and interpret stimuli through a value judgement. In this sense, the customer defines the

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value of the evaluated object (e.g., product or service) and not the supplier (Woodruff, 1997; Vargo and Lusch, 2004; Heinonen et al., 2010). e) Value is a cognitive-affective construct (Babin et al., 1994; Holbrook, 1999; Park, 2004; Sánchez-Fernández and Iniesta-Bonillo, 2006). Consequently, a significant number of authors have identified both dimensions in the value conceptual framework (e.g., Babin et al., 1994; Park, 2004; Sirakaya-Turk et al., 2015). f) Value is a higher-level abstraction (Zeithaml, 1988; Woodruff and Gardial, 1996). The complexity of this concept explains its conceptualization as a higher-level construct. This idea is rooted in cognitive psychology and, in particular, in the means-end theory (Gutman, 1982). Thus, this theory states that values are desirable end-states of existence that guide choice patterns (Gutman, 1982). Therefore, values are in a higher level of the consumer’s hierarchical evaluative structure (Zeithaml, 1988; Woodruff and Gardial, 1996; DeSarbo et al., 2001). g) Value is experiential in a phenomenological sense (Holbrook and Hirschman, 1982; Holbrook, 1999; Vargo and Lusch, 2008; LeroiWerelds et al., 2014; Gallarza et al., 2015) since it is perceived and determined by the consumer and not the producer. Value does not reside in the evaluated object but in the consumption experiences. This conceptualization is related to the notion of value-in-use, which implies that value is created when customers use goods and services (Grönroos, 2008). Following Grönroos and Ravald (2011, p.  8), “value is not created and delivered by the supplier but emerges during usage in the customer’s process of value creation.”

Dimensionality and Operationalization of Consumer Value The conceptual enrichment of the notion ‘consumer value’ has led to the development of multiple proposals in terms of typology, dimensionality and measurement. Consequently, the literature review reveals the existence of several research approaches to the operationalization of value. Each of these conceptual frameworks will be discussed in more detail following on the basis of the outline depicted in Figure 3.4. This diagram shows a diachronic sequence of both influential works—theoretical and empirical with original scales—and some of the main empirical replications or adaptations of these seminal works. Means–End Theory: Zeithaml’s Influential Work One of the first seminal theoretical works on value was conducted by Gutman (1982), who adapted the means-end theory of cognitive psychology to consumption contexts. This theory asserts that values are

ORIGINAL S CALES Authors (DATE)

REPLICATIONS or ADAPTATIONS Illustrative Empirical Works Authors (DATE)

Zeithaml (1988) THEORETICAL

Monroe & Chapman (1987); Monroe (1990) THEORETICAL

Mattsson (1991) ORIGINAL SCALE

Grewal et al. (1998) ORIGINAL SCALE

Empirical replication

Theoretical influence

Woodruff (1997) THEORETICAL

Source: The authors.

Petrick (2002) S irdeshmukh et al. (2002) Liu et al. (2005) ORIGINAL SCALES

Mathwick et al. (2001, 2002) ORIGINAL SCALE

van der Haar et al. (2001); Overby et al. (2004, 2005); Overby (2012)

Kim et al. (2007); Wu et al. (2016)

Kerin et al. (1992); Chang & Wildt (1994); Kashyap & Bojanic (2000); DeS arbo et al. (2001); Brodie et al. (2009); Beneke & Carter (2015)

Wood and S cheer (1996); S weeney et al. (1999); Oh (2000, 2003); Teas & Agarwal (2000); Chu & Lu (2007)

Kwon & S chumann (2001); Al-S abbahy et al. (2004); Zhuang et al. (2010); Audrain-Pontevia et al. (2013); Lai et al. (2016)

Danaher & Mattsson (1994); de Ruyter et al. (1997); Barnes et al. (2011, 2015)

S ullivan et al. (2012); Leroi-Werelds et al. (2014); Mencarelli & Lombart (2017)

Bourdeau et al. (2002); Gallarza & Gil-S aura (2006, 2008); Sánchez-Fernández & IniestaBonillo (2009); S ánchez-Fernández et al. (2009) ; Gallarza et al. (2015; 2016a; 2017a)

Holbrook (1994, 1999) THEORETICAL

Wang et al. (2004); Callarisa-Fiol et al. (2011); Eid & El-Gohary (2015); Gallarza et al. (2016b); Ranaweera & Karjaluoto (2017)

Babin & Attaway (2000); Carpenter & Moore (2009); Ryu et al. (2010); S irakaya-Turk et al. (2015); Cachero-Martínez & Vazquez-Casielles (2017)

S weeney & S outar (2001) ORIGINAL SCALE

Babin et al. (1994) ORIGINAL SCALE

Figure 3.4 Research Streams on Consumer Value: A Diachronic Perspective

MAIN INS PIRATIONAL (THEORETICAL) Authors (DATE)

Legend

Thaler (1985) THEORETICAL

Dodds & Monroe (1985); Doods et al. (1991) ORIGINAL SCALE

Gutman (1982) THEORETICAL

Monroe (1979); Monroe & Krishhnan (1985) THEORETICAL

Hartman (1967, 1973) THEORETICAL

Hirschman & Hoolbrook (1982); Holbrook & Hirschman (1982); Holbrook & Corfman (1985) THEORETICAL

S heth et al. (1991) THEORETICAL

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“desirable end-states of existence [that] play a dominant role in guiding choice patterns” (Gutman, 1982, p.  60). Therefore, individuals are goal-directed, and they use product or service attributes as a means of inferring values or desired end-states. Drawing on this theory—and also on the proposal by Dodds and Monroe (1985) that we will review later— Zeithaml’s pioneer work (1988) provides the most universally accepted definition of consumer value, based on a trade-off between ‘get’ and ‘give’ elements. This functional and purely cognitive view has generated a growing interest on perceived value as a ratio of benefits or positive utilities versus sacrifices or costs, both conceptually (e.g., Zeithaml and Bitner, 1996) and empirically, in such settings as tourism services (e.g., Chang and Wildt, 1994; Hartline and Jones, 1996; Kashyap and Bojanic, 2000; Wang, 2012), mobile internet (Kim et al., 2007) and retailing (Beneke and Carter, 2015). In this research stream, consumer value is measured with simple scales grounded on the concept of value for money. Particularly interesting are the original scales developed by Sirdesmukh et al. (2002) and Lin et al. (2005) on the basis of Zeithaml’s value definition. Both studies operationalize consumer value as a uni-dimensional construct measured by a list of items related to this get-versus-give perspective. Moreover, Petrick (2002) proposed a multi-dimensional scale of perceived value following the theoretical model conceptualized by Zeithaml (1988), identifying five dimensions: quality, emotional response, monetary price, behavioural price and reputation. According to Sánchez-Fernández et al. (2009), Zeithaml’s traditional definition of value “possesses, the merit of simplicity” (p.  95), and has been described as summarized, narrow and even arcane. As a result, some authors argue that this approach is too simplistic for explaining value in consumption experiences (SánchezFernández and Iniesta-Bonillo, 2007). Customer Value Hierarchy Model: Woodruff’s Approach Another early conceptual proposal was the one developed by Woodruff and his colleagues (Woodruff and Gardial, 1996; Flint et al., 1997, 2002; Woodruff, 1997; Overby et al., 2004, 2005). Woodruff and Gardial (1996) adapted the original means-end model (Gutman, 1982) and proposed the ‘customer value hierarchy,’ in an attempt to provide managers with a conceptual framework to figure out “how to improve the value that an organization delivers to its customers” (p. xv). For this purpose, they suggest a hierarchical representation of how customers view products, identifying three levels: attributes, consequences and desired end-states. Consequently, managers should not define their offers strictly in terms of attributes, rather they have to understand interconnections among levels, the existence of different levels of abstraction that increase at higher levels in the hierarchy and the tendency for stability to increase at higher levels. Subsequently, Woodruff (1997) provided a definition of

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value and emphasized the role of value as a major source for competitive advantage. These seminal works have led to both theoretical studies (Flint et al., 1997; Parasuraman, 1997) and empirical developments (e.g., van der Haar et al., 2001; Flint et al., 2002; Overby et al., 2004), but they haven’t had a great impact on or application in the literature. Price-Based Studies: Monroe’s Research Stream Particularly interesting is the prolific research developed by Monroe and others (chronologically, Monroe, 1979; Dodds and Monroe, 1985; Monroe and Krishnan, 1985; Monroe and Chapman, 1987; Monroe, 1990; Dodds et al., 1991; Li et al., 1994; Xia and Monroe, 2010). Its relevance lies in the so-discussed relationship between the concepts of price and value. The early literature in this line (Monroe, 1979; Dodds and Monroe, 1985; Monroe and Krishnan, 1985; Dodds et al., 1991) defines value as a trade-off between benefits and sacrifices. In fact, as we stated before, Zeithaml’s original work was influenced by this conceptualization (see Dodds and Monroe, 1985). According to this view, product’s external cues—such as price, brand name and store name—influence the perceived quality and value (Dodds et al., 1991; Teas and Agarwal, 2000; Agarwal and Teas, 2001). In particular, price has a negative effect on perceived value, but a positive effect on perceived quality (Dodds, 1991). Other studies delve into this conceptual framework by proposing other value determinants such as liking (Li et al., 1994), perceived risk (Wood and Scheer, 1996; Agarwal and Teas, 2001) or price fairness (Oh, 2003). Regarding value measurement, although in this research stream value is defined on the basis of the quality–price relationship, the empirical operationalization of value considers both quality and price as formative antecedents of this notion. Consequently, value is measured as a unidimensional construct through a scale of several items—especially used in the literature has been the original scale developed by Dodds et al. (1991)—in such settings as retailing (Sweeney et al., 1999; Baker et al., 2002; Chu and Lu, 2007) and sale of physical goods (Dodds et al., 1991; Li et al., 1994; Teas and Agarwal, 2000; Agarwal and Teas, 2001). In 1985, Thaler proposed a model of consumer behaviour replacing the utility function of economics with the prospect theory’s value function (Kahneman and Tversky, 1979). Thaler suggests that value is a function of two kinds of utility: acquisition utility, that represents a comparison between benefit and costs; and transaction utility, that depends on the price the individual pays compared to some reference price. Based on this additive model, Monroe and Chapman (1987)—and subsequently Monroe (1990)—extended the price–perceived quality conceptualization proposed by Monroe and Krishnan (1985) to include both acquisition value and transaction value (Audrain-Pontevia et al., 2013). Additionally, Grewal et al. (1998) provided an original scale for both types of value

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that has been widely used in the literature (e.g., Kwon and Schuman, 2001; Oh and Jeong, 2004; Schmitz, 2009; Lai et al., 2016). Price-based studies are rooted on cognitive psychology and microeconomics. Therefore, they provide a simplistic view of value in consumption experience. Despite this limitation, many studies have empirically applied this conceptual framework due to its easy operationalization. Axiology or the Theory of Value: Hartman’s Value Conceptualization Hartman (1967, 1973) suggested that there are value phenomena that form an orderly pattern, and this pattern can be mirrored in a theoretical structure: axiology or the theory of value. Value is thus explained by three dimensions: extrinsic value, intrinsic value and systemic value. The extrinsic value dimension relates the utilitarian or instrumental use of a particular product or service as a means to a specific end. The intrinsic dimension reflects the emotional evaluation of the product or service. Finally, the systemic value dimension represents the inherent relationship between concepts in their systematic interaction, e.g., the give-versus-get relationship. Subsequently, Mattsson (1991) adapted this conceptual framework to a services marketing context by introducing new labels: emotional (feelings), practical (physical and functional aspects of consumption) and logical (rational and abstract characteristics of the purchase). Under this perspective, emotional value is posited as being greater than practical value in terms of richness of content, and this, in turn, is greater than logical value. Subsequent studies have empirically replicated this conceptualization (Danaher and Mattsson, 1994, 1998; de Ruyter et al., 1997; Lemmink et al., 1998; Huber et al., 2000; Barnes et al., 2011, 2015). However, this value operationalization has not received much attention in the literature. The Typology of Consumer Value: Holbrook’s Pioneer Work Some of the early works developed by Holbrook (Hirschman and Holbrook, 1982; Holbrook and Hirschman, 1982; Holbrook and Corfman, 1985) describe value in consumption as a hedonic and utilitarian experience, offering a broader view of consumer behaviour beyond the traditional cognitive perspective. Based on axiology or the theory of value (e.g., Lewis, 1946; Perry, 1954; Hartman, 1967, 1973; Frondizi, 1971), Holbrook’s interest in value dimensions finally led him to define a formal typology (Holbrook, 1994, 1999) that identifies eight separate categories or dimensions of consumer value: efficiency, excellence (quality), play, aesthetics, esteem, status, ethics and spirituality. This typology was based on a three-dimensional paradigm: extrinsic vs. intrinsic—i.e., cognitive vs. affective; active vs. reactive—i.e., consumer’s active or passive control

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over the object consumed or the service experienced; and self-oriented vs. other-oriented—i.e., individual or social. This value typology has inspired many empirical works in such settings as tourism (Gallarza and Gil-Saura, 2006, 2008; Gallarza et al., 2015, 2016, 2017a), restaurants (Sánchez-Fernández and Iniesta-Bonillo, 2009; Sánchez-Fernández et al., 2009), retailing (Sullivan et al., 2012), online shopping (Bourdeau et al., 2002) or higher education (Jiménez-Castillo et al., 2013). In particular, Holbrook’s seminal work has been synthesized in three original value scales—namely, Babin et al. (1994), Sweeney and Soutar (2001) and Mathwick et al. (2001). First, Babin et al. (1994) focused on the utilitarian vs. hedonic value dichotomy to study shopping experience (Cachero-Martínez and Vázquez-Casielles, 2017). Subsequent studies of Babin and his colleagues (Babin and Attaway, 2000; Babin and Babin, 2001; Babin and Kim, 2001; Allard et al., 2009) and of other authors (e.g., Stoel et al., 2004; Ryu et al., 2008; Lloyd et al., 2014; Lo and Qu, 2015; Sirakaya-Turk et al., 2015) have empirically analyzed this duality, mainly in retailing and tourism. Second, Sheth et al. (1991) proposed an early taxonomy of value dimensions, organized in five: functional, social, emotional, epistemic and conditional. These dimensions have rarely been tested in their totality, but have inspired many other works. In particular, it served as the basis for the important work developed by Sweeney and Soutar (2001), providing the so-called PERVAL scale, that has been widely used in many service settings (e.g., Wang et al., 2004; Sánchez et al., 2006; Turel et al., 2007; Williams and Soutar, 2009; Eid and ElGohary, 2015; Ranaweera and Karjaluoto, 2017) and also in physical goods (Callarisa Fiol et al., 2011; Chi and Kilduff, 2011). Finally, Mathwick et al. (2001, 2002) proposed an original scale based on Holbrook’s work, defining four dimensions of value: aesthetics, playfulness, service excellence and customer ROI. This scale has been replicated and adapted in such settings as retailing (Sullivan et al., 2012) and feel and sense products (Brady et al., 2005; Leroi-Werelds et al., 2014). Holbrook’s typology of value “is worth highlighting for its own value and its subsequent repercussions in the services and consumer behaviour literature” (Gallarza et al., 2015, p.  141), being “the most comprehensive approach to the value construct, since it defines more sources of value than other studies” (Sánchez-Fernández and Iniesta-Bonillo, 2007, p. 441). However, despite this crucial importance, several authors have also highlighted some limitations. For example, Cottet et al. (2006) find it difficult to integrate two of the three dimensions advanced by Holbrook in their analyses (i.e., active vs. reactive and self-oriented vs. otheroriented). Sánchez-Fernández and Iniesta-Bonillo (2007) emphasized that the complexity of the value typology complicates its operationalization in capturing certain types of value—e.g., ethical and spiritual value, which have been relatively neglected in the literature (Brown, 1999; Holbrook, 1999; Wagner, 1999). Smith and Colgate (2007) asserted that this

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typology does not fully capture the domain of the customer-value construct and may not be applied in business-to-business contexts. Moreover, Davis and Hodges (2012) stated that researchers disagree on the indicators or sub-dimensions of each higher-level value category. Finally, other authors have complained about the scarce interest of this typology on the negative dimensions or sacrifices (Oliver, 1996; Mathwick et al., 2001, 2002; Kim, 2002).

Conclusions and Further Directions for Research The purpose of this chapter is to provide a critical review under an intravariable perspective of a fundamental concept in the marketing discipline: the interchangeably named ‘perceived value’ or ‘consumer value.’ The growing interest in understanding perceived value and value creation processes has resulted in a continuous, persistent and extensive body of knowledge in the marketing literature. After analyzing the influential theoretical approaches and the subsequent developments of conceptualizations and taxonomies of value, we conclude that value is a perceptual experience characterized by a cognitive-affective, interactive, comparative, personal, situational and preferential nature, being a higher-level construct that is formed by lower-level component parts. Therefore, the traditional view of perceived value as a cognitive and functional construct (Thaler, 1985; Grewal et al., 1998; Zeithaml, 1988; Monroe, 1990; Dodds et al., 1991) is simple and easy to operationalize, but not enough, because it is necessary to include the affective responses in consumption under a more comprehensive conceptualization of this notion. Hence, a multi-dimensional approach to the concept of value provides “a holistic representation of a complex phenomenon” (Sánchez-Fernández and Iniesta-Bonillo, 2007, p. 431). Arguably, among the different conceptual approaches to the typology and dimensionality of value (Mattsson, 1991; Babin et al., 1994; Holbrook, 1999; Mathwick et al., 2001; Sheth et al., 1991; Sweeney and Soutar, 2001), we advocate for that one proposed by Holbrook (1994, 1999). In our opinion, it is the most exhaustive and complete approach to the value construct, since “it contributes to a more comprehensive understanding of all facets of consumption” (Gallarza et al., 2011, p. 183), as “it defines more sources of value than other studies” (Sánchez-Fernández and Iniesta-Bonillo, 2007, p. 441). However, as we have discussed before, there are several shortcomings in this approach that should analyzed further. For instance, the role of costs or sacrifices (Gallarza et al., 2017c) in this value typology (Oliver, 1996; Sánchez-Fernández et al., 2009), the ambiguous meaning of the active/reactive axis (Holbrook, 1999; Richins, 1999), the fuzzy distinction between some types of value—e.g., status and esteem–(Solomon, 1999) and the complexity in its empirical operationalization (Cottet et al., 2006).

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The wide range of relevant theoretical and empirical works shows inconsistency and lack of precise understanding of the value concept. In the words of Gallarza et al. (2011, p. 182), “difficulties in value research remain unresolved and sometimes appear endemic to the very notion of value itself.” Consequently, there is a persistent degree of confusion and numerous lacunae in terms of definition, terminology, conceptualization, methodology and measurement of value. Therefore, there is an increasing need for further research to clarify the remaining deficiencies in the value conceptual framework. Among the different challenges in value research, we highlight several that we consider crucial to overcome the existing conceptual and methodological difficulties. First, regarding the conceptual shortcomings (e.g., polysemy, assorted terminology, lack of consistency in value definitions, insufficient delimitation from related constructs and different facets or defining characteristics of value), further knowledge of the concept is necessary in order to provide a unified theoretical framework and an unambiguous interpretation of its nature. Thus, clear directions for future research are: a) an in-depth etymological and conceptual analysis that leads to a terminological clarification (Sánchez-Fernández and Iniesta-Bonillo, 2006; Gallarza et al., 2011); b) the proposition of a common and unique definition (Zeithaml, 1988; Woodruff, 1997; Parasuraman and Grewal, 2000; Lindgreen and Wynstra, 2005); c) the delimitation of the main facets or characteristics of value (Holbrook, 1999)—in particular, since value is situational and contextdependent (Zeithaml, 1988; Sheth et al., 1991; Parasuraman, 1997; Holbrook, 1999; van der Haar et al., 2001), future empirical analyses are necessary to determine how this notion evolves along the different stages in the buyer decision process; d) there is an increasing need for value studies in a business-to-business context (Mencarelli and Rivière, 2015), since the number of studies in this field is scarce (Anderson and Narus, 1998; Lapierre, 2000; Oliva, 2000; Ulaga and Chacour, 2001; Walter et al., 2001); e) it is also fundamental to analyze and provide an unequivocally differentiation from related constructs—as we will discuss in Chapter 4— such as quality, price, utility, satisfaction and loyalty (Heskett et al., 1997; Sánchez-Fernández and Iniesta-Bonillo, 2006; Gallarza et al., 2011); and f) researchers should improve their knowledge about the value creation process under a relational marketing perspective (Mencarelli and Riviére, 2015). Second, concerning the methodological and measurement problems (e.g., number and composition of value dimensions (Al-Sabbahy et al.,

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2004), differentiation between antecedents and value components or dimensions, negative dimensions of value, a clear specification of the relevant benefits and sacrifices, poor scaling procedures and excessive use of uni-dimensional scales), future research should provide a consistent methodological framework with a comprehensive and widely accepted measurement scale of consumer value. In this sense, subsequent studies should: a) evaluate the richness and generality of Holbrook’s value typology (Sánchez-Fernández et al., 2009); b) analyze the global applicability of Holbrook’s value typology to different settings, and determine prospective differences between B2B and B2C contexts (Mencarelli and Riviére, 2015); c) delve into the multi-dimensional nature of value and identify, if they exist, new potential sources of value (Gallarza et al., 2011, 2015; Mencarelli and Riviére, 2015); d) explore some dimensions that have been traditionally neglected in the value literature, that is, ethics and spirituality (Sánchez-Fernández et al., 2009); e) overcome the scarce analysis of the sacrifice or costs aspects in the value dimensionality (Oliver, 1996; Sánchez-Fernández et al., 2009); f) solve the methodological and measurement difficulties involved in scaling and assessing the value concept (Mathwick et al., 2001; Sweeney and Soutar, 2001; Petrick, 2002; Lin et al., 2005; MartínRuiz et al., 2008); and g) explore the interrelationship between value co-creation and value perceptions (e.g., Vargo and Lusch, 2004; Heinonen et al., 2010; Grönroos, 2011b; Helkkula et al., 2012; Overby, 2012). Accordingly, there is a need to overcome the profound criticism around the concept of value (Boksberger and Melsen, 2011), and establish a convergent view of the conceptualization and measures (Sweeney and Soutar, 2001; Chen and Quester, 2006; Leroi-Werelds et al., 2014; Cronin, 2016). The existence of further adaptations and sophistications of the value dimensionality to different subjects and settings—i.e., first, the one developed by Eid and El-Gohary (2015) about Muslim tourism perceived value; second, recent studies that add dynamicity to value dimensions (Gallarza et al., 2017a); and finally, new proposals concerning the CDL (Heinonen et al., 2010, 2013)—are some examples that illustrate how the intra-variable perspective is increasingly sophisticating and adapting to new research trends and contexts.

Note 1 A comprehensive analysis of the conceptual connections and delimitations between value and other related constructs—that is, an inter-value approach to this concept—will be undertaken in Chapter 4.

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Spreng, R.A., Dixon, A.L. and Olshavsky, R.W. 1993. The impact of perceived value on consumer satisfaction. Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, 6(1), pp. 50–55. Stabell, C.B. and Fjeldstad, Ø.D. 1998. Configuring value for competitive advantage: On chains, shops, and networks. Strategic Management Journal, pp. 413–437. Stevens, B. 1992. Research notes and communications: Price value perceptions of travelers. Journal of Travel Research, 31(2), pp. 44–48. Stoel, L., Wickliffe, V., and Lee, K.H. 2004. Attribute beliefs and spending as antecedents to shopping value. Journal of Business Research, 57(10), pp. 1067–1073. Sullivan, P., Kang, J., and Heitmeyer, J. 2012. Fashion involvement and experiential value: Gen and retail apparel patronage. International Review of Retail, Distribution and Consumer Research, 22(5), pp. 459–483. Sweeney, J.C. and Soutar, G.N. 2001. Consumer perceived value: The development of a multiple item scale. Journal of Retailing, 77(2), pp. 203–220. Sweeney, J.C., Soutar, G.N. and Johnson, L.W. 1999. The role of perceived risk in the quality-value relationship: A study in a retail environment. Journal of Retailing, 75(1), pp. 77–105. Teas, R.K. and Agarwal, S. 2000. The effects of extrinsic product cues on consumers’ perceptions of quality, sacrifice, and value. Journal of the Academy of Marketing Science, 28(2), pp. 278–290. Thaler, R. 1985. Mental accounting and consumer choices. Marketing Science, 4, pp. 199–214. Turel, O., Serenko, A. and Bontis, N. 2007. User acceptance of wireless short messaging services: Deconstructing perceived value. Information and Management, 44(1), pp. 63–73. Ulaga, W. 2001. Customer value in business markets: An agenda for inquiry. Industrial Marketing Management, 30(4), pp. 315–319. Ulaga, W. and Chacour, S. 2001. Measuring customer-perceived value in business markets. Industrial Marketing Management, 30(6), pp. 525–540. Ulaga, W. and Eggert, A. 2006. Relationship value and relationship quality: Broadening the nomological network of business-to-business relationships. European Journal of Marketing, 40(3/4), pp. 311–327. Van der Haar, J.W., Kemp, R.G.M. and Omta, O. 2001. Creating value that cannot be copied. Industrial Marketing Management, 30(8), pp. 627–636. Vargo, S.L. and Lusch, R.F. 2004. Evolving to a new dominant logic for marketing. Journal of Marketing, 68(1), pp. 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), pp. 1–10. Varshneya, G., Das, G. and Khare, A. 2017. Experiential value: A review and future research directions. Marketing Intelligence & Planning, 35(3), pp. 339–357. Wagner, J. 1999. Aesthetic value: Beauty in art and fashion. In: M.B. Holbrook, ed. Consumer value: A framework for analysis and research. London: Routledge. Walter, A., Ritter, T. and Gemünden, H.G. 2001. Value creation in buyer-seller relationships. Industrial Marketing Management, 30(4), pp. 365–377. Walters, D. and Lancaster, G. 1999. Value and information: Concepts and issues for management. Management Decision, 37(8), pp. 643–656. Wang, H.Y. 2012. Value as a medical tourism driver. Managing Service Quality: An International Journal, 22(5), pp. 465–491.

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Wang, H.Y., Lo, H.P., Chi, R. and Yang, Y. 2004. An integrated framework for customer value, and customer-relationship-management performance: A customerbased perspective from China. Managing Service Quality, 14(2/3), pp. 169–182. Wang, H.Y. and Wang, S.H. 2010. Predicting mobile hotel reservation adoption: Insight from a perceived value standpoint. International Journal of Hospitality Management, 29(4), pp. 598–608. Williams, P. and Soutar, G.N. 2009. Value, satisfaction and behavioral intentions in an adventure tourism context. Annals of Tourism Research, 36(3), pp. 413–438. Wood, C.M. and Scheer, L.K. 1996. Incorporating perceived risk into models of consumer deal assessment and purchase intent. In: K.P. Corfman and J.G. Lynch Jr., eds. Advances in consumer research 23. Provo, UT: Association for Consumer Research, pp. 399–404. Woodall, T. 2003. Conceptualising ‘value for the customer’: An attributional, structural and dispositional analysis. Academy of Marketing Science Review, 12, pp. 1–42. Woodruff, R.B. 1997. Customer value: The next source for competitive advantage. Journal of the Academy of Marketing Science, 25(2), pp. 139–153. Woodruff, R.B. and Flint, D.J. 2006. Marketing’s service-dominant logic and customer value. In: R.F. Lusch and S.L. Vargo, eds. The service-dominant logic of marketing: Dialog, debate, and directions. Oxon: Routledge, pp. 183–195. Woodruff, R.B. and Gardial, S.F. 1996. Know your customer: New approaches to understanding customer value and satisfaction. Cambridge: Blackwell Publishers, Inc. Wu, H.C., Li, T. and Li, M.Y. 2016. A study of behavioral intentions, patient satisfaction, perceived value, patient trust and experiential quality for medical tourists. Journal of Quality Assurance in Hospitality and Tourism, 17(2), pp. 114–150. Xia, L. and Monroe, K.B. 2010. Is a good deal always fair? Examining the concepts of transaction value and price fairness. Journal of Economic Psychology, 31(6), pp. 884–894. Yang, Z. and Peterson, R.T. 2004. Customer perceived value, satisfaction, and loyalty: The role of switching costs. Psychology & Marketing, 21(10), pp. 799–822. Zainuddin, N. and Gordon, R. 2014. Social marketing, value, and behaviour: Some important considerations. Paper presented at the International Social Marketing Conference, Frankston, July. Zeithaml, V.A. 1988. Consumer perceptions of price, quality, and value: A meansend model and synthesis of evidence. Journal of Marketing, 52, pp. 2–22. Zeithaml, V.A. and Bitner, M.J. 1996. Services Marketing. New York, NY: McGraw-Hill.

4

The Inter-Variable Perspective on Consumer Value Research A Personal Documented View Martina G. Gallarza and Raquel Sánchez-Fernández

Introduction Addressing relationships between consumer value and related concepts has dominated both consumer behavior and services marketing literatures of the last 30 years. Since Rust and Oliver (1994) called for a consistent line of research into the links between service quality, value and satisfaction, causal models on these variables (adding loyalty as a final outcome) have proliferated with applications to all settings, as several reviews on the value concept have noticed (e.g., Lin et al., 2005; Boksberger and Melsen, 2011; Gallarza et al., 2011). Researching value from this perspective that focuses on its relationships with other constructs is the so-called inter-variable approach, as coined in the terminology proposed more than 10 years ago by one of the co-authors of this chapter (Gallarza and Gil-Saura, 2006, p.  438). With this term, the idea was to label the already existing extensive, but not always clear, research on consumer value, into two main approaches: a) an intra-variable approach that emphasizes the multidimensional nature of value and depicts types of value into their varied nature (see Chapter 3). b) an inter-variable approach, which is the one that seeks to explore the relations between consumer value and other perceptual constructs. This second inter-variable perspective is the one addressed in the present chapter: it deals with conceptual connections and delimitations between value and other related constructs, and also covers assessment issues with means-end models to measure relationships between consumer value and variables such as customer satisfaction and customer loyalty but also other constructs such as, image, commitment or trust. The dichotomy intra vs. inter allows to categorize all research on consumer value in either one or the other approach, or eventually, as this chapter will show, in a combination of both. Figure 3.1 in Chapter 3 and Figure 4.1 in Chapter 4 depict this duality and include references from main illustrative

Gallarza & Gil-Saura (2006) Sánchez-Fernández & IniestaBonillo (2006, 2007) Martín-Ruiz et al. (2008) Sánchez-Fernández et al. (2009) Heinonen et al. (2010, 2013) Gallarza et al. (2011) Grönroos (2011) Chang & Dibb (2012) Helkkula et al. (2012) Gummerus (2013) Arnould (2014) Leroi-Werelds et al. (2014) Eid & El-Gohary (2015) Cronin (2016) Gallarza et al. (2017a) Varshneya et al. (2017) Value Dimension 2

Value Dimension 1

Value Dimension j: e.g. Quality

Value Dimension k

Source: The authors.

Satisfaction

Main illustrative works on the INTER-VARIABLE APPROACH:

Perceived Value

Others

Inter-variable Perspective

CHAPTER Y

Loyalty

Bolton & Drew (1991) Cronin, Brady & Hult (2000) Hutchinson et al. (2009) Doods, Monroe & Grewal (1991) Day & Crask (2000) Sánchez-Fernández & Iniesta-Bonillo (2009) Rust & Oliver (1994) McDougall & Levesque (2000) Boksberger & Melsen (2011) Ostrom & Iacobucci (1995) Babin & Kim (2001) Forgas-Coll et al. (2014) Woodruff & Gardial (1996) Baker et al. (2002) Gallarza et al. (2015) Heskett, Sasser & Schlesinger (1997) Brady et al. (2005) Cronin (2016) Parasuraman (1997) Gallarza & Gil-Saura (2006) Gallarza et al. (2016a, 2016b) Oliver (1999a) Sánchez et al. (2006) Gallarza et al. (2017b, 2017c) Sweeney, Soutar & Johnson (1999) Chen & Tsai (2007) Mencarelli & Lombart (2017)

Causal Effects

Figure 4.1 Depicting Intra- and Inter-Variable Research on Consumer Value

Lin et al. (2005)

Sirdeshmukh et al. (2002) Vargo & Lusch (2004)

Zeithaml (1988) Monroe (1990) Doods et al. (1991) Mattsson (1991) Sheth et al. (1991) Babin et al. (1994) Gale (1994) Holbrook (1994) Woodruff (1997) Grewal et al. (1998) Holbrook (1999) Schmitt (1999, 2003) Mathwick et al. (2001) Sweeney & Soutar (2001)

Main illustrative works on the INTRA-VARIABLE APPROACH:

Intra-variable Perspective

····· ·····

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works on the intra and inter perspectives. Regarding the latter, the chapter reviews works covering initial debates on the value conceptual delimitation (e.g., Zeithaml, 1988; Bolton and Drew, 1991; Holbrook and Hirschman, 1982), methodological approaches to its measurement in models (e.g., Cronin et al., 2000; Day and Crask, 2000) and further discussions on the fuzzy barriers to related concepts (e.g., Boksberger and Melsen, 2011; Gallarza et al., 2011) as well as more contemporary works on the best techniques for value measurement (e.g., Lin et al., 2005; Martín-Ruiz et al., 2008; LeroiWerelds et al., 2014; Gallarza et al., 2017a). The basic underlying idea of the inter-variable research addressed in this chapter corresponds to two aspects: conceptual delimitations and methodological connections between consumer value and related variables. Accordingly, the chapter is organized as follows. After this introduction, there is an opening section that recalls the relevance of value research, as a way of bridging Chapters 3 and 4. This review is split in two headings: diachronic and synchronic analysis. The former revises the origins and evolution of the interest on value in relation to other topics (see Table 4.1); the latter reviews, regardless of time, differences between value and related notions such as utility, quality, satisfaction and loyalty (see Figure 4.3). Then we tackle operationalization and measurement of value as it regards connections with other variables (i.e., methodological inter-variable perspective), showing a ‘chain of effects’ between (service) quality-consumer value-customer satisfaction-loyalty (see Figure 4.3) applied to varied contexts and with eventually extra constructs (see Table 4.2). Finally, the chapter ends with an overview of the future perspectives on value measurement, mainly as connections between the inter and intra perspectives. The result of this outline is that this chapter looks back as much as it looks forward, and invites to further excursions on the inter-variable perspective on value.

Value: The Inexhaustible Topic In Gallarza et al. (2011, pp. 179–182) six reasons are brought forward regarding why researching value is so relevant and still valuable, that is, six reasons why it is an inexhaustible topic. Three of them correspond to the intra-variable perspective and the other three correspond to the inter-variable one. We recall and update them all here, and comment the latest achievements made regarding each of them, as an opening to the chapter. With this, we look for the justification of the inter-variable perspective on value in this book, at the same time we help the reader in bridging chapters 3 and 4, as both perspectives on value are connected and complementary. So, researching value is still valuable because of the following (or differently said, the ‘value of value’ is grounded in): a) Its epistemological implications for marketing as a discipline, based on the Kotlerian perspective (Kotler, 1972) that defines marketing

1995

2000

Satisfaction Service Profit Chain

1990

 Quality vs. Satisfaction Discussion

Relationship Marketing

Quality Trade-off

1985

Price-value Approach

Loyalty Long-term Value

Price Utility Transaction vs. Acquisition Value

Experience Hedonic Value vs. Utilitarian Value

1980

Experiential Marketing

RELATED TOPICS or CONCEPTS

Period

MARKETING STREAM

(Continued)

“From the information processing perspective, . . . objects attain value primarily by virtue of the economic benefits they provide. . . . Abandoning the information processing approach is undesirable, but supplementing and enriching it with an admixture of the experiential perspective could be extremely fruitful” (Holbrook and Hirschman, 1982, p. 138). “Though consumer perceptions of price, quality, and value are considered pivotal determinants of shopping behavior and product choice . . . research on these concepts and their linkages has provided few conclusive findings” (Zeithaml, 1988, p. 2). “Until recently, little formal conceptual effort has been directed toward isolating theoretical reasons for the price perceived quality relationship, or how such a relationship influences buyers’ perceptions of value” (Dodds et al., 1991, p. 307). “The cognitive tradeoff between perceptions of quality and sacrifice results in perceptions of value” (Dodds et al., 1991, p. 308). “A review of the services marketing literature reveals several waves of conceptual research . . . these waves seem to begin with the study of service quality, then carry through to satisfaction research, which has more recently given way to the study of service value” (Cronin et al., 2000, p. 194). “In RM, the customer interface is broader, and the firm has opportunities to provide its customers with added value of various types” (Grönroos, 1994, p. 331).

Representative quotations on the Inter-variable research on value

Table 4.1 Diachronic Relevance of Value Across Marketing Paradigms

3rd AMA Marketing Definition including “value”

Value Facilitators Value Proposition

Value-in-use Value-in- exchange Value-in-context

Service Experience

2007

2010

2013

2015

Co-creation Co-production

2005

2nd AMA Marketing Definition including “value”

Commitment Trust

2004

1st AMA Marketing Definition including “value” Service-Dominant Logic

RELATED TOPICS or CONCEPTS

Period

MARKETING STREAM

Table 4.1 (Continued)

“Digital connectivity, online retailing, and a growing trend towards do-it-yourself (DIY) solutions to consumers’ needs and wants are just three of many changes that the last thirty years have witnessed that likely affect the quality, value, and satisfaction consumers attribute to a specific service experience” (Cronin, 2016, p. 261).

“Value as a concept is central to S-D logic, perhaps ultimately, the most central concept” (Vargo and Lusch, 2012, p. 1). “We have used the term ‘value-in-context’ to capture the notion that value must be understood in the context of the beneficiary's world” (Akaka et al. 2013, p. 9).

“The essential purpose for a customer firm and a supplier firm engaging in a collaborative relationship is to work together in ways that add value or reduce cost” (Anderson, 1995, p. 348). SDL “a dynamic process whereby an interactive co-creation process drives the overall service experience and results in value-in-use for the customer” (Tronvoll, 2007, p. 602). “Value is co-created jointly and reciprocally, in interactions among provider and beneficiary through the integration of resources and the application of competencies” (Vargo et al., 2008, p. 146).

Representative quotations on the Inter-variable research on value

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as a process based on exchanges in which each party gives up something of value in return of something of greater value, and how the three latest definitions of Marketing from the AMA (2004, 2007, 2013) consequently integrate the word ‘value.’ These aspects have been reviewed in Chapter 3, although this centrality of value also corresponds, as this chapter will show, to its joint relevance with topics such as utility, price, service quality, satisfaction and loyalty (Chen and Tsai, 2008). Thus, the epistemological implications of value for the marketing discipline also affect its inter-variable research. b) Its relationship with crucial and relevant marketing-related constructs such as perceived price, service quality or customer satisfaction (Holbrook, 1994), that is, the essence of the inter-variable approach. The inquiry into these relationships have dominated the consumer behavior literature in the 1980s and 1990s, and lately also the one from a service(s) marketing perspective. Indeed, issues related to measurement, mediation and optimization of value are mainstream for service(s) marketing: trends such as “optimizing service networks and value chains” and “measuring and optimizing the value of service” were among the 10 overarching research priorities indicated in the Journal of Service Research by Ostrom et al. (2010, p. 26), announcing “significant opportunities to create new knowledge in that area,” which was proven to be true as “understanding value creation” was again considered among the 12 priorities for services research five years later (Ostrom et al., 2015, p. 128). This chapter covers the relationships both conceptually and methodologically: it evidences the development of this mainstream area of research and presents how new avenues can emerge in the crucial intersection between value and other variables. c) Its ability to explain both consumption evaluations that happen both before and after the purchase itself. Value can be conceptualized and measured as pre-assessment (related then to attitudes or expectations) and as post-assessment (associated to real perceptions). This pre-use and post-use dichotomy is useful in services marketing literature (Lovelock, 1996) and it allows longitudinal studies on differences between expected value and perceived value (e.g., Gallarza et al., 2013). Moreover, taking into account the varied combinations of marketing-related expressions associated with the word ‘value’ (see in Chapter 3 examples as experienced value, delivered value, customer value, consumer value, service value . . .). There is always a chance for researchers to bring more insights into different value(s), as a way of progressing into both inter and intra perspectives of value. d) Its ability for bridging research on consumer behavior and marketing strategy, and also its relevance among both practitioners and scholars. On the one hand, value is a cornerstone for marketing management and is omnipresent in most of professionally oriented

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e)

f)

Martina G. Gallarza, Raquel Sánchez-Fernández literature (e.g., Nilson, 1992; Gale, 1994; Slater, 1997; Day, 1999). As presented in Chapter 3, the value concept is in the foundations of the three major strategic marketing principles—that is, market segmentation, product differentiation and brand positioning (Holbrook, 1995). On the other hand, issues on the inter-variable perspective of value are relevant to scholars and practitioners alike. For the former, given the centrality of value for our body of knowledge, it is consistently interesting to delimitate and relate it to other notions, and therefore to contribute to marketing theory building. For the latter, as main value outcomes are related to customer loyalty and this in turn to return on investment, predicting value outcomes is always a source of competitive advantage. Its ethical justification, derived from its epistemological relevance (see earlier), that is, the interchanges of value(s) which makes us better after an exchange. And this is an idea where both aforementioned literatures (consumer behavior and marketing strategy) are coincident, as it has been explained in Chapter 3. And last but not least, the value concept is relevant both synchronically (it offers the axiomatic roots of marketing as a discipline) and diachronically: nearly each paradigm shift in marketing has embraced the notion of consumer value. First, it was the ‘marketing myopia’ from Levitt (1960), then the experiential approach from the early 1980s (Holbrook and Hirschman, 1982), followed by the relationship marketing approach which places long-term customer value as a priority (Grönroos, 1994), and nowadays the mainstream Service-Dominant Logic (Vargo and Lusch, 2004), which deeply retakes and revisits the term. Aspects dealing with relationships with other topics in this diachronic relevance of the value notion will be reviewed in the following section.

As a result of all these six aspects, value is an inexhaustible topic, or plainly said “Due to this double-sided synchronic/diachronic importance of customer value, the marketing community has maintained an abiding interest in aspects of this concept for more than forty years” (Gallarza et al., 2011, p. 182). The rest of this chapter will review this ‘abiding interest’ in the value concept as it regards the inter-variable perspective, and it will do so both conceptually and methodologically.

Conceptual Inter-Variable Perspective: Dealing With Value Conceptualization Regarding Other Variables Reviewing conceptually the notion of value in the inter-variable perspective means addressing the conceptual relationships between value and related notions, and we will use this “double-sided synchronic/diachronic importance” (Gallarza et al., 2011, p. 182) to sequence the content of this heading.

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The Diachronic Relevance of Value Over Other Topics Across the Marketing Paradigms The notion of value (no matter in which of its many appellations or nomenclatures—customer value, consumer value, perceived value . . .) is a backbone in the evolution of marketing as a body of knowledge: it is therefore diachronically relevant. Indeed, in different moments of the evolution of marketing thought, the notion of value has been at play, either in opposition to other variables, or as a complementary construct. As a way of depicting this relevance, Table 4.1 provides a chronological overview of the last 40 years of research on the relationships between value and other constructs, notions or approaches. In it, five periods are considered (signaling also the dates of the AMA marketing definitions including the word ‘value’), where related terms (third column) or quotations (fourth column) are chosen as illustrative elements of this diachronic view into the conceptual inter-variable perspective on value. The first stream depicted in our diachronic perspective corresponds to the appraisal of the experiential paradigm in the 1980s, and to the duality of utilitarian/hedonic values in consumption. As widely known, the experiential approach was first introduced by Holbrook and Hirschman (1982) and Hirschman and Holbrook (1982), where the conventional information processing approach is left behind in favor of a more phenomenological perspective that enhances the more subjective, emotional and symbolic aspects of consumption. In short, these broader aspects of the experiential approach to consumption are encapsulated in the notion of value (Holbrook, 1999; Schmitt, 1999a), giving place to most of the value conceptualizations revisited in Chapter 3 under the label ‘experiential’ (e.g., Butz and Goodstein, 1996; Sánchez-Fernández and IniestaBonillo, 2006). As a result, experiential value (a beautiful pleonasm to us) is a cornerstone in the study of consumer behavior and is the essence of any human behavior in the marketplace. Surprisingly, at the same time that Holbrook and Hirschman (1982) were enlarging the view of marketing scientists into the provision of more aspects of value than the merely economic one, another stream of research was interested in the utilitarian underpinnings of the value notion, as related to the notion of utility. In this regard, the ‘theory of utility’ provided the conceptual substance of the value construct understood as the balance or trade-off between the ‘utility’ provided by a product and the ‘disutility’ represented by the price paid. Accordingly, as stated by Sánchez-Fernández and Iniesta-Bonillo (2007, p. 429) “several authors have used the term ‘utility’ (in various ways) in their definitions of perceived value.” As a result, regarding our inter-variable approach, we can claim that the second movement towards a conceptual delimitation of value was related to the price-value relationship (see Table 4.1). Indeed, the psycho-economic theories of price-value judgments are at the foundation

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of seminal works on perceived value such as the ones by Monroe (Dodds and Monroe, 1985; Monroe and Krishnan, 1985; Monroe and Chapman, 1987; Monroe, 1990; Dodds et al., 1991) covering the basic dichotomy transaction value vs. acquisition value (Grewal et al., 1998). This dichotomy has been further explored nowadays, once the differences between perceived price and perceived value (Ralston, 2003; Rivière and Mencarelli, 2012) were already clear. The dichotomy is often revisited in the debates on the differences between value-in- use and value-in exchange within the literature in the Service-Dominant Logic. The third period identified in Table 4.1 corresponds to the discussion on the conceptualization and overlapping between service quality and satisfaction (Hu et al., 2009) in service literature, lasting from 1990 to nearly 2000. As remembered in Gallarza et al. (2011, p. 184), this was a period where many authors have claimed that “the three concepts (i.e., quality, value and satisfaction) are not well differentiated and therefore remain ambiguous.” Accordingly, these debates and fruitful discussions in the services literature in the early 1990s on the differences between quality and satisfaction (e.g., Woodruff and Gardial, 1996; Parasuraman, 1997; Woodruff, 1997; McDougall and Levesque, 2000) changed the focus onto the notion of value, which was a progress from the concept of quality and a co-leader with satisfaction, as cornerstones of consumer behavior (see more clearly Bolton and Drew, 1991, p. 383; Cronin and Taylor, 1992, p.  65; Ostrom and Iacobucci, 1995, p.  17). Managerially, during this third period, the search for competitive advantage (Afuah, 2002) beyond quality made marketers to embrace the broader concept of customer value (Gallarza et al., 2011). As a result, as stated by Zeithaml and Bitner (1996, p.  33), “the customer priority of the 1990’s turn[s] out to be value,” an assertion that has been proven to be true, if we look at the many studies on the topic written in those years from a strategic marketing management point of view (e.g, Woodruff and Gardial, 1996; Heskett et al., 1997; Slater, 1997; Woodruff, 1997; Day, 1999). The fourth period signaled in Table 4.1 corresponds to the shift in marketing paradigms to relationship marketing that came in the 2000s after some seminal publications (Grönroos, 1994, 1997). The value notion was again revisited, mainly regarding its conceptual and methodological connections with the notion of loyalty. Indeed, much of the relationship marketing approach focuses on the newly understood concept of value, where value is placed at the core of the contemporary approach to serving customers (Ravald and Grönroos, 1996; Lin and Wang, 2006; Ulaga and Eggert, 2006). Managerially speaking, this relationship marketing approach permits to embrace all relevant marketing concepts that have been presented so far in Table 4.1 (see third column) in a single perspective, adding maybe as a final one, profitability; as Grönroos himself lately stated: “the better the firm services its customers, the more favorably the customers will perceive the quality of the relationship, the more value in

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the customers’ processes will emerge and, in the final analysis, the more successful the firm’s marketing will be” (Grönroos, 2017, p. 220). The fifth and last stream depicted in Table 4.1 is the Service-Dominant Logic (SDL), which emerged over a decade ago, and it will not be wrong if we say that it has prompted the a much-needed development of marketing as a body of knowledge.1 SDL is now confirmed as a paradigmatic lens for rethinking the role of services in marketing, and as a result, it has also confirmed the centric place of the notion of value for marketing both as a discipline and as practice. As Vargo and Lush themselves recognized “value as a concept is central to S-D logic, perhaps ultimately, the most central concept” (Vargo and Lusch, 2012, p. 1). Accordingly, the term and the notion value are present in three of the eight SDL so-called fundamental premises (Vargo and Lusch, 2004, 2008). Consumer value is definitely an essential concept for the SDL both in its origins (Vargo and Lusch, 2004, 2008) and in any further extensions of it, which were mainly related to the concept of value co-creation (Grönroos, 2011; Grönroos and Voima, 2013; Gummerus, 2013). Table 4.1 considers therefore ‘cocreation,’ ‘value-in-use,’ ‘value-in-exchange’ and ‘value-in-context’ as the last related concepts in our diachronic analysis of the relevance of value from an inter-variable perspective. In the end of this diachronic approach, we draw attention to how the last stage depicted in Table 4.1 looks very similar to the first one. The pioneering experiential approach to consumption (Holbrook and Hirschman, 1982) was ‘phenomenological’ placing value in the center of any consumption experience (Helkkula et al., 2012); and Vargo and Lusch (2008), 25 years later describe value as “idiosyncratic, experiential and contextual, experientially determined by the beneficiary as long as the word experiential is meant in a ‘phenomenological sense’” (p. 7). The most contemporary view of value from the SDL perspective, in some sense, revisits the experiential underpinnings of value from the 1980s, although this is not always explicitly mentioned (Gallarza and Arteaga, 2016), as Holbrook himself already ironically denounced (Holbrook, 2006, p.  218). The post-SDL period (from 2015) puts the emphasis therefore on the value in the service experience, where all contemporary changes in our ways of consumption (Internet, do-it-yourself, collaborative economy . . .) will add to the value notion, as Cronin (2016)’s quotation in Table 4.1 illustrates, showing therefore the atemporal and diachronic relevance of the value notion.

The Synchronic Conceptual Relevance of Value Over Other Topics Within the conceptual inter-variable perspective, we will now discuss the conceptual delimitations between value and related concepts, but in a synchronic way, that is, by highlighting the main features of these differences, regardless of a time perspective (see Figure 4.2 for this).

Woodruff & Gardial (1996); Woodruff (1997); Parasuraman (1997); Oliver (1997); Cronin et al. (2000); Riviére & Mencarelli (2012)

LOYALTY

Anderson (1995); Grönroos (1996); Ravald & Grönroos (1996), Oliver (1999a); Bolton et al. (2000); Payne & Holt (2001); Payne, Holt, & Frow, (2000); Chu & Shiu (2009); Boksberger,& Melsen (2011), Mencarelli & Lombart (2017)

Relationship Marketing is based on the role of customer value in loyalty building Both concepts coexist for a mutual goal of building relationships with customers Value is a key antecedent to loyalty (direct and indirect through satisfaction)

Holbrook & Corfman (1985); Zeithaml (1988); Bolton & Drew (1991); Band (1994); Parasuraman & Grewal (2000) Ralston (2003) Riviére & Mendicarelli (2012)

Multiple discussions on the temporal primacy of value on satisfaction or vice-versa Price is a pivotal determinant to distinguish between value and satisfaction Satisfaction is post-consumption while value can be pre or post use Value is an encounter specific input to satisfaction

Source: The authors.

Figure 4.2 Conceptual Delimitations Between Value and Related Concepts

(SERVICE) QUALITY

Quality is an absolute measure though value is more relative Both being multidimensional, quality is single-stimulus and value dual-stimulus Quality is cognitive while value and satisfaction are cognitive and affective Quality is the major “get” component of the value equation

Thaler (1985); Zeithaml (1988); Grewal et al. (1998); Tellis & Gaeth (1990); Monroe (1990); Parasuraman & Grewal (2000); Kwon& Schumann (2001); Afuah (2002)

In economic terms, value has traditionally been equated with utility or desirability The ‘theory of utility’ provides the conceptual underpinning of the value construct The term ‘utility’ is many often in definitions of perceived value Utility is a cognitive construct. Value is a cognitive-affective construct

PRICE/UTILITY

SATISFACTION

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As other reviews have already signaled, ‘value’ has often been poorly differentiated from other related constructs, such us ‘utility,’ ‘price,’ ‘quality’ and ‘satisfaction’ (Sánchez-Fernández and Iniesta-Bonillo, 2006; Chang and Dibb, 2012). Indeed, value, quality and satisfaction—and less prominently price, utility and loyalty—are considered ‘fuzzy concepts’ “in the sense that one is usually conceptualized with reference to the others” (Gallarza et al., 2011, p. 187). Figure 4.1 tries to add clarification of these fuzzy delimitations by referencing works studying each delimitation, and signaling the relevant achievements regarding common and distinct elements from each pair of concepts (value-price with reference also to value-utility; value-quality; value-satisfaction and value-loyalty). It is good to mention how all six terms apply to both tangible and intangible offerings: but the emphasis in all of them (except maybe utility) has most often been placed on service settings. Therefore, as most of the literature included in Figure 4.2 (and subsequent Figure 4.3 and Table 4.2) corresponds to the service marketing realm, we will refer to (service) quality. a) Value, utility and price. Grounded in microeconomics, ‘value’ as a concept has traditionally been equated with utility, as some of its conceptual underpinnings are grounded in the ‘theory of utility’ (Thaler, 1985; Tellis and Gaeth, 1990). This primitive overlapping corresponds to efforts from scholars to understand conceptual relationships between perceptions of price, utility and value, giving place to conceptualizations where value is understood as a trade-off between ‘utility’ and ‘price’ (Sánchez-Fernández and Iniesta-Bonillo, 2007). Although these approaches consider price as not just monetary (e.g., Zeithaml, 1988), in the trade-off perspective. b) Value is solely cognitive (rational) in nature. Further developments (proceeding from other disciplines such as psychology) have added other preferential factors to the value construct, which made it definitely different from both utility and price. Consumer value is therefore seen as a function of both price (monetary and non-monetary) and a broader range of positive utilities. c) (Service) quality and value. As aforementioned, in early 1990s there has been a shift in marketing centrality from quality to value, the latter being ‘richer’ than the former (Bolton and Drew, 1991, p. 383). Prominent authors finally recognized value as “a more comprehensive (and powerful) decision making criterion for consumers than quality” (Cronin, 2016, p.  261). Conceptually, this improved richness of considering value better than quality was underpinned by three aspects (Gallarza et al., 2011): the nature (quality is cognitive, while value is both cognitive and affective), the scope (quality is an absolute measure, whereas value is more relativistic and individualistic, and therefore more flexible to be adapted to changes in consumer behavior) and the valence, as quality is a single-stimulus concept

18. Tam (2000) 19. Kashyap & Bojanic (2000) 20. Murphy et al. (2000) 21. Oh (2000) 22. Cronin et al. (2000) 23. Caruana et al. (2000) 24. McDougall & Levesque (2000) 25. Teas & Agarwal (2000) 26. Babin & Kim (2001) 27. Petrick et al. (2001) 28. Petrick & Backman (2002) 29. Oh (2003) 30. Chiou (2004) 31. Yang & Peterson (2004) 32. Duman & Mattila (2005) 33. Grace & O'Cass (2005) 34. Lin et al. (2005) 35. Lin & Wang (2006)

36. Gallarza & Gil (2006) 37. Um et al. (2006) 38. Chen & Tsai (2007) 39. Lee et al. (2007) 40. Feng & Morrison (2007) 41. Carpenter (2008) 42. Yuan & Wu (2008) 43. Ryu et al. (2008) 44. Chen & Tsai (2008) 45. Hutchinson et al. (2009) 46. He & Song (2009) 47. Chu & Shiu (2009) 48. Gallarza et al. (2009) 49. Hu et al. (2009) 50. Brodie et al. (2009) 51. Chen & Hu (2010) 52. Grappi & Montarani (2011) 53. Ryu et al. (2012)

54. Jin, Lee & Lee (2013) 55. Kim et al. (2013) 56. Hur, Kim & Park (2013) 57. Forgas-Coll et al. (2014) 58. Eid (2015) 59. Bonson Ponte et al. (2015) 60. Pandža-Bajs (2015) 61. Gallarza et al. (2015) 62. Mokhtaran et al. (2015) 63. Gallarza et al. (2016a) 64. Akhoondnejad (2016) 65. Gallarza et al. (2016b) 66. Gallarza et al. (2017b) 67. Mencarelli & Lombart (2017) 68. Jalilvand et al. (2017) 69. Wu & Li (2017) 70. Sun et al. (2018)

Source: The authors.

Figure 4.3 The Measurement of Linkages in the Quality-Value-Satisfaction-Loyalty Chain: A Review From 1985 to 2018

Authors 1. Monroe & Krishnan (1985) 2. Doods & Monroe (1985) 3. Monroe & Chapman (1987) 4. Zeithaml (1988) 5. Dodds et al. (1991) 6. Bolton & Drew (1991) 7. Monroe (1979; 1992) 8. Li et al. (1994) 9. Chang & Wildt (1994) 10. Wakefield & Barnes (1996) 11. Fornell et al. (1996) 12. Sirohi et al. (1998) 13. Grewal, Krishnan et al. (1998) 14. Grewal et al. (1998) 15. Oliver (1999) 16. Sweeny et al. (1999) 17. Oh (1999)

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Context

Varied festival quality dimensions Functional and symbolic value; coffee quality, food and beverage; extra benefits

Brand and company image, employee and company trust Experience quality

Environmental factors; interactions with employees and other consumers Commitment, cooperation

Equity, search for alternatives

Emotional, social, novelty

Sense, feel, think

Emotional response, behavioral price, reputation Restaurant’s image

Festivals (South Korea) Coffee outlets (regressions, not SEM) (Australia)

Longitudinal study on packaged tours (Hong Kong) Passengers of air flight (varied nationalities) Heritage sites (Taiwan)

Luxury hotel restaurants (Taiwan)

Overall quick-casual restaurants (USA) Experiential approach to coffee shops (Taiwan) Adventure tourism (Australia) Golf resorts (USA)

Festivals (USA)

Efficiency, social value, aesthetics, University students’ trips play, time and effort spent (Spanish students) Destination image Destination visitors (Taiwan)

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Gallarza and GilSaura (2006) Chen and Tsai (2007) Lee et al. (2007)

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(Service) Price (or Value Satisfaction Loyalty Other constructs (or quality value for specifications in mentioned money) constructs)

Authors

Table 4.2 Further Insights Into the Quality-Value-Satisfaction-Loyalty Chain: Extra Constructs and Contexts

Bonsoti Ponte et al. (2015) Mokhtaran et al. (2015) Pandža-Bajs, (2015) Gallarza et al. (2015) Akhoondnejad (2016) Gallarza et al. (2016a)

Polo-Peña et al. (2013) Forgas-Coll et al. (2014) Eid (2015)

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Kim et al. (2013)

Chen and Hu (2010) Grappi and Monrarini (2011) Ryu et al. (2012)

Rural tourism (Spain)

Water parks (South Korea) Hybrid cars (USA)

Authentic upscale Chinese restaurant (USA) Restaurants (South Korea)

Festivals (Italy)

Coffee outlets (Australia)

Play, asthetics, ethics, relaxation

Trust, authenticity

(Continued)

Attendees at a local handicrafts festival (Iran) Testing experiential values in hotels (Italy)

Mediterranean cruise passengers Emotional, social, Islamic; Muslim tourism package customer loyalty and customer (varied Muslim countries) retention Trust, privacy, security, Online travel purchase information quality intention (Spain) Employees’ perceived service Hotel (customers and climate employees) (Iran) Reputation, emotional response, Tourists at destination destination appearance (Croatia) Efficiency, play, aesthetics Hotels (Italy)

Social, emotional, trust

Hedonic value, positive and negative emotion, social identification Physical environment, food. Service, image Perceived restaurant food healthiness Experience quality, image Hedonic value, functional value, social value; price consciousness Company reputation

Relational benefits

Source: The authors.

Gallarza et al. × (2017b) Cachero and Vazquez (2017) Jalilvand et al. × (2017) Sun et al. (2017) ×

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Emotional, sensory, intellectual, social and pragmatic Restaurant relational quality, trust, commitment Tourism commercialization, experiential quality

Mental participation, physical participation, mastering Utilitarian and hedonic value, and attitudinal and behavioral loyalty Experiential quality and experiential satisfaction, heritage image Shopping enjoyment, self-esteem

2 satisfactions (cognitive and affective) Trust, commitment

(Service) Price (or Value Satisfaction Loyalty Other constructs (or quality value for specifications in mentioned money) constructs)

Gallarza et al. × (2016b) Jalilvand et al. × (2017) Prebensen and Xie (2017) Mencarelli and Lombart (2017) Wu and Li (2017) ×

Authors

Table 4.2 (Continued)

Historic destination (China)

Restaurants in Teheran (Iran)

Experiential shopping (Spain)

Shopping tourists (Spain)

Heritage Destinations Historic Center (Macau)

Winter adventure tourism (Norway) Retailing in hypermarkets (France)

Multisector shopping behavior (Spain) Traditional restaurants (Iran)

Content

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(all stimuli being positive) whereas value is dual-stimulus, as it can encompass both sacrifices and benefits. Accordingly, in most of the methodological proposals of measuring value after the 1990s, within an intra-variable perspective, (service) quality is viewed as one of the many dimensions of value, and in the inter-variable one, (service) quality is one of the more prominent antecedents of value. As clearly stated by Oliver (1999, p.  53): “Quality is one of the components of value in consumption. Consumers derive value from quality: it enhances their consumption experience and, in economic terms, gives them added utility.” d) Value and satisfaction. When comparing the tandems value-quality and value-satisfaction, the first one has been conceptually and methodologically easier to detach than the second. Many conceptual and methodological discussions have been produced regarding value and satisfaction, with contrasting results (Gallarza et al., 2017c). What makes this effort complex is: a) their joint prominence as “both value and satisfaction provide the conceptual foundation for an expanded process for learning about consumers” (Woodruff and Gardial, 1996, p. xvi), and b) their shared nature as intermediate constructs as “both have common antecedents in consumption events, such as product or service performance, and both have common consequences such as loyalty” (Oliver, 1999, p.  58). The debates suggest that: a) conceptually, price (instead of quality) is the pivotal determinant to distinguish between value and satisfaction: as satisfaction assessment can be made priceless referenced, whereas value determination (often) hinges on the perceived price (Holbrook, 1999; Oliver, 1999; Gallarza et al., 2011); and b) methodologically, discussions, which focused on the temporal primacy of value or satisfaction, are numerous and vivid (e.g., Parasuraman, 1997; Woodruff, 1997; Oliver, 1999), concluding most of the time that “perceived value is a convincing alternative to satisfaction as a predictor of actual loyalty” (Mencarelli and Lombart, 2017, p. 12). e) Loyalty and value. Among the four conceptual tandems from Figure 4.2, loyalty and value present the best delimitation. Here, we cannot talk about fuzzy or nebulous differentiation as happened with satisfaction (competing with value for a primacy as a management goal), with quality (in early times and regarded only as a one-way value concept) and utility or price (as in an earlier microeconomics orientation, and even in a day-to-day conversation). What value and loyalty have in common is that both are key elements of the relationship marketing approach (Ravald and Grönroos, 1996), as “the two coexist for a mutual goal of building a close relationship with customers” (Chu and Shiu, 2009, p. 99). Moreover, considering value as a positive influence on loyalty has become a shared vision for both scholars and managers (Gallarza et al., 2011). Accordingly, the

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Methodological Inter-Variable Perspective: Dealing With Value Measurements Regarding Other Variables We have so far highlighted how relevant conceptual inter-variable research on value is a key body of knowledge in marketing. Accordingly, this relevance has had a methodological echo as it regards joint measurement of value with other related constructs, which is the content of our fourth section. Indeed, it was after Rust and Oliver’s (1994) call for a reliable line of research into the links between quality, value and satisfaction, followed by other relevant research, such as Cronin et al. (1997) and Cronin et al. (2000), that structural equation models on these variables started dominating consumer behavior and services literature. In fact, the methodological inter-variable perspective on value is a topic that has never left our journals and conferences. In comparison with the intra-variable perspective (where no preferred dimensionality of value is clear), the inter-variable approach has gathered more unanimity. The linkages between value and related constructs depict a chain of effects, which start with service quality (and sometimes value for money), adding in between consumer value and customer satisfaction as “intermediary constructs” (Lee et al., 2007, p. 402) and ending with loyalty, as any form of behavioral intentions (attitudinal, behavioral or both). Accordingly, we can refer to a quality-value-satisfactionloyalty chain (shortly Q-V-S-L). As a whole, this Q-V-S-L chain “marks an important consensus in the services marketing and consumer behavior literature which has taken several decades to achieve” (Gallarza and GilSaura, 2008, p. 13). To better discuss all these aspects, and eventually throw light into the controversies, both a figure and a table are included. Figure 4.3 reviews extant empirical studies by re-thinking and updating (with studies dated after 2009) the work made in Gallarza et al. (2011, p. 187). It therefore organizes and depicts the linkages from this Q-V-S-L chain (using a numbered list of studies for each connecting link). As a further step, Table 4.2 provides information not evidenced in Figure 4.2, regarding other relevant variables to be added to this chain (e.g., commitment, trust,

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reputation, image .  .  .) and to show eventually the existence of different constructs representing quality (e.g., experiential quality or relational quality), value (e.g., hedonic vs. utilitarian) or loyalty (e.g., repurchase intentions or positive word-of-mouth), and eventually, but less often, satisfaction (e.g., cognitive of affective). Reflecting a semantic richness (and in detriment sometimes of linguistic accuracy), names attributed to the constructs in previous publications are extremely varied. In order to offer a panoramic view, generic names were chosen for both Figure 4.3 and Table 4.2; namely quality—no matter if service or product quality, experiential quality, relational quality, . . . ; price—as a monetary cost, corresponding sometimes to ‘value for money’ or even to non-monetary pricessuch as risk or effort and time spent (Sweeney et al., 1999) ; accordingly, Figure 4.3 does not reflect if linkages in original studies on price and other constructs were positive or negative; value (as an overall measure of ‘perceived value,’ ‘customer value,’ ‘overall value,’ etc. . . .), or satisfaction—where greater consensus is found with the term of ‘customer satisfaction’ mostly used. Last, the name ‘loyalty’ encompasses many constructs with alternative semantic expressions such as ‘intention to revisit’ (in tourism) and ‘word of mouth’ (e.g., Hutchinson et al., 2009), ‘customer retention’ (e.g., Feng and Morrison, 2007), ‘repurchase intentions’ (e.g., Chang and Wildt, 1994; Kwon and Schumann, 2001; He and Song, 2009) or ‘both recommendation intentions and repurchase intention’ (e.g., Polo-Peña et al., 2013). So, for parsimony, just the labels ‘quality,’ ‘price,’ ‘value,’ ‘satisfaction’ and ‘loyalty’ are considered in Figure 4.3 and in the first column of Table 4.2. To gain efficacy in our review of this crowded methodological intervariable perspective, we first approach one by one each of the three main linkages in the Q-V-S-L chain and second, we review other possible direct relationships between non-consecutive variables—that is, the four linkages Q-S, Q-L, V-L and Q-S.

Linkages in the Chain Q-V-S-L First, and in accordance with the origins of the value notion and the conceptual discussions reviewed in the preceding paragraphs, quality as an antecedent of value is one of the main postulates in means-end models, and this effect has been proven to be rather consistent across industries and countries (Brady et al., 2005). Nevertheless, our review has also found controversies on this linkage. For example, the surprising results of nonconfirmation of a link quality-value for Hutchinson et al. (2009) for golf resorts or Ryu et al. (2012) for upscale restaurants; and more surprisingly, a reversed link value-quality in Lee et al. (2007), or in more recent studies, such as Sun et al. (2017) which demonstrate that contrary to the general trend, perceived value has positive effect on experience quality. All these call for more research into the relationship between quality and value.

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Second, with regards to the linkages between satisfaction and value, both proposals are possible (see arrows in Figure 4.3). In fact, the lively scholarly debates from the 1990s and the 2000s on the conceptual differences and possible overlaps between value and satisfaction (e.g., Woodruff, 1997; Oliver, 1999) have had an effect on the structure of relationships between them, provoking therefore a less unanimous translation into causal models. Indeed, as Chen and Tsai (2007, p.  1121) declared “the moderator role of perceived value between quality and satisfaction is debatable.” In this sense, the reverse option S-V-L has successfully been proven with rival models in Duman and Mattila (2005). Nevertheless, in this review, and in accordance with our personal empirical work—see Gallarza et al. (2013) where two competitive models are tested with reverse chain V-S-L or S-V-L with better results for the V-S-L approach—we advocate for structures where value is an intermediate construct between quality and satisfaction. Third, for many authors in general, and for Mencarelli and Lombart (2017, p. 12) in particular, “the satisfaction–loyalty link is a foundation of marketing literature and practice.” Accordingly, satisfaction and an antecedent of loyalty can be considered as one of the few agreements in the inter-variable perspective. This linkage is clearly evident (see in Figure 4.3), but, in our opinion, a closer look at this relationship is needed. In comparison with quality, value or loyalty, satisfaction in causal models is often poorly assessed (one construct, and sometimes even mono-item scale). But when looking more closely, we can get more insights into the satisfaction-loyalty linkage, especially as far as it involves the value construct. In this sense, Mencarelli and Lombart (2017, p. 13) found out that both hedonic value and utilitarian value have a greater impact on attitudinal loyalty compared to satisfaction, arguing therefore about value and not satisfaction as the best predictor of loyalty. They state that “Although some studies validate the link between satisfaction and loyalty .  .  . the amount of variance in loyalty explained by satisfaction remains weak or even null in other studies.” Will this supremacy of value over satisfaction (as predictor of actual or intended behavior) finally lead to the nonconsideration of satisfaction in the inter-variable perspective? The answer is difficult to predict, but our guess is that future research will either a) lean towards the inclusion of other mediators to complement satisfaction in the chain V-S-L, such as trust (e.g., Bonsón Ponte et al., 2015), or b) propose a renewed interest in satisfaction in the sense of posting different types of satisfactions in causal models (relational, affective, cognitive . . .) (e.g., Gallarza et al., 2016b). The Non-Consecutive Linkages in the Q-V-S-L Chain Regarding now the non-consecutive linkages, we can also find both consensus and controversies. First, the link quality-satisfaction has been

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contrasted in cross-sectional studies by industries (e.g., Cronin et al., 2000) and also across countries (e.g., Brady et al., 2005), and became a mainstream in many works as shown in Figure 4.2 (e.g., Brodie et al., 2009; He and Song, 2009; Saha and Theingi, 2009; Correia and Forgas-Coll et al., 2014); however, it is good to mention that there are also situations of non-confirmation (e.g., Lee et al., 2007; Etemad-Sajadi and Rizzuto, 2013; Pandža-Bajs, 2015). So, nothing is guaranteed on these classical linkages, where new studies could throw more light, as the final section of this chapter suggests. Second, regarding the link between value and loyalty (Yang and Peterson, 2004), assuming that the joint consideration of loyalty as a consequence of both value and satisfaction is a widespread reality (e.g., Lee et al., 2007; Chen, 2008; Ryu et al., 2008; Hutchinson et al., 2009), the question is if value has just indirect effects (mediated by satisfaction) or can affect directly loyalty. Many works consider satisfaction as a mediator between value and loyalty, implying therefore that both quality and value (Holbrook and Corfman, 1985) influence loyalty through satisfaction (e.g., He and Song, 2009; Williams and Soutar, 2009), whereas others measure just direct links between value and loyalty (e.g., Oh, 1999; Hutchinson et al., 2009). There are even studies that explicitly test and refute the existence of the direct effects between value and loyalty, these being just indirect through satisfaction (e.g., Kim et al., 2013; Sun et al., 2017). In accordance with the conceptual delimitations that were mentioned earlier, a drive to consensus might be found in the fact that both constructs (value and satisfaction) are antecedents of loyalty, and each author might consider the direct effects of value to loyalty. Third, the link (service) quality-loyalty is very controversial. Results are divergent regarding the need for direct or indirect linkages. In this sense, results are disparate across services and contexts. In tourism, Gallarza et al. (2015) found both a direct and an indirect relationship (through overall value and satisfaction) and in retailing, Gallarza et al. (2017b) proposed and confirmed just an indirect link through other value dimensions (self-esteem and shopping enjoyment). Furthermore, we have also noted differences between service quality and product quality in two different studies with different outputs: in Gallarza et al. (2016b) for general shopping, direct effects do exist for both quality dimensions on satisfaction and they are therefore indirectly related to loyalty, but these effects on loyalty are just indirect and concatenated (product quality on service quality) in Gallarza et al. (2017b) for tourist shopping. With other authors, results are not more conclusive. Wu and Li (2017) consider value as an overall trade-off, but it is embedded in the traditional Q-V-S-L chain, with the peculiarity of researching both experiential quality and experiential satisfaction (but not experiential value!!!). They do find direct effects of both value and (experiential) satisfaction on loyalty, but no direct effect (just indirect through both value and satisfaction)

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of (experiential) quality on loyalty. Moreover, the direct link between (service) quality and behavioral intentions was hypothesized and not supported in Yuan and Jang (2008) for wine festivals, while the chain quality-satisfaction-behavioral intention was confirmed (therefore indirect linkage between quality and loyalty). Similarly, Sun et al. (2017) found no direct effects between (experiential) quality and loyalty. As a result, all options are at play. Thus, in accordance with our own work (Gallarza et al., 2017c), where competing models are tested, we advocate for structures of relationships where value mediates between quality and satisfaction, and therefore no direct links between quality and loyalty are needed to correctly apprehend predictions on loyalty. The preceding paragraphs have shown what Boksberger and Melsen (2011, p. 233) already declared, “while consensus exists that service quality, customer satisfaction and perceived value predict behavioral intentions . . . conflicting arguments have been made as to their differences, similarities, linkages, temporal order and overall relationship.” Indeed, ‘conflicting arguments’ do exist, as stages in this Q-V-S-L chain can be skipped as some studies propose that quality (sometimes), price (less often) or value (more often) influences loyalty directly. What is less common, although existing, are feedback effects from satisfaction to value (e.g., Chiou, 2004), from loyalty to value (e.g., Wakefield and Barnes, 1996) or from loyalty to satisfaction (e.g., Petrick and Backman, 2002). These are all tentative developments that have been made into the chain, mainly contrasting reversed linkages, and testing both direct and indirect effects. But indeed, as our review has shown, regarding the non-consecutive linkages in the Q-V-S-L chain, no concluding pattern of relationship legitimately surfaces upon others.

The Inter-Variable Approach to Value: Looking Ahead Out of the knowledge reviewed in this chapter, and in accordance with some of the latest directions taken on measurement of value, either from us as co-authors of this chapter (e.g., Gallarza et al., 2016a, 2016b, 2017a, 2017b, 2017c) or from others (e.g., Cronin, 2016; Mencarelli and Lombart, 2017), we now highlight several research avenues for the intervariable research on value: they should all be considered as ways to frame the context and richness of the value concept. Stretching and Broadening the Q-V-S-L Chain Although it is clear that satisfaction and loyalty are the key outcomes of value, other constructs (such as commitment, trust brand image . . . as shown in Table 4.3) can still be added to this chain of effects. Furthermore, on the top of stretching the chain by adding new constructs, we also advocate for zooming into the effects of the dimensions of quality,

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value, or satisfaction on loyalty, as a way of also broadening this chain of effects. We propose models including effects of several value dimensions on loyalty, and reversely, works exploring linkages between one value measure and several loyalty outcomes. In this sense, Table 4.3 has already proven a certain interest for contemplating a multidimensionality of the constructs inside causal models, that regard value (e.g., Williams and Soutar, 2009), but that also concern quality—such as service quality and product quality Gallarza et al. (2016b). Regarding satisfaction however, maybe snowed by the developments on the value concept, measurements of satisfaction have been over-simplified: in this sense, duplicating satisfaction in causal models into both affective and cognitive satisfaction (e.g., Gallarza et al., 2016b) is a way of enriching this basic value-satisfaction tandem. Accordingly, satisfaction in the inter-variable perspective deserves further attention, and future proposals could look for a renewed interest in research on the dimensionality of satisfaction (Oliver, 1997), alongside with dimensions of quality and value embedded in causal models, and therefore broadening and stretching the Q-V-S-L chain. Comparing Value(s) in a True Way A second way of progressing into an inter-variable perspective corresponds to comparative studies between different ‘values.’ Chapter 3 has extensively reviewed the many names attributed to the term ‘value,’ and how these many names may or may not affect the meaning and the nature of the word ‘value’ (e.g., ‘value’ in singular and ‘values’ in plural differ; but ‘perceived value’ and ‘consumer value’ are identical). But what about ‘proposed value’ and ‘delivered value’? Or ‘expected value’ and ‘perceived value’? Conceptually, further insights on these many ‘values’ may be needed, for unravelling which of these terms correspond to real differences in perceptions, and therefore progressing into the needed conceptual clarification on the value concept. However, a methodological warning in this call for further comparative value assessment must be made if we do not want to enlarge the gap between theory and method regarding value research. In this sense, comparisons should comply with the requirements of the axiological underpinnings of the notion of value that does not allow interpersonal comparison (i.e., same object, valued by different subjects), but just intrapersonal ones (i.e., same subject valuing different objects) (see Holbrook, 1999, pp. 6–7). Plainly said, interpersonal value comparisons are illegitimate, and just intrapersonal comparisons among different objects are legitimate. So, comparing perceptions of the value of the same experience (a product, a service, an event, etc.) detained by different subjects is not methodologically correct. So, comparing different ‘value(s)’ has to be made very cautiously, assuming that subjects are different, and therefore value

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perceptions are not comparative, they are just subjective. Methodologically, most of these studies can be considered as ‘pseudo intrapersonal value comparisons.’ The literature is full of empirical works on value following this unorthodox methodological path, using for instance personal indicators (age, gender, nationality . . .) as mediators of relationships in structural models (e.g., Mencarelli and Lombart, 2017), or measuring differences in value assessments according to demographics or others (e.g., Gallarza et al., 2017b), or grading consumer (cruise passengers) perceptions of two different (cruise lines) brands (e.g., Forgas-Coll et al., 2014), or comparing value perceptions of managers and customers in Nasution and Mayondo (2008) or in Mokhtaran et al. (2015) for employees and customers, both in the hotel sector. This is not to say that conclusions made after comparing different subjects’ value perceptions are not interesting. They can add more knowledge on the nature of value co-creation processes, both managerially (avoiding or reducing marketing myopia), and scholarly (by adding to an augmented value co-creation perspective). But these assessments should always be understood as subjective, but not comparative (they should not measure gaps between delivered and perceived value, for instance). Alternatively, the truly interpersonal comparisons (i.e., complying with the axiological nature of value) have a promising future, if based on the temporary axis of value, before and after consumption experience, that is, comparisons between ‘pre-use’ and ‘post-use value’ (Lovelock, 1996) or ‘required’ and ‘delivered value’ (Kotler et al., 2009), or ‘desired’ and ‘received value’ (Woodruff, 1997). This sort of empirical approach is less common because it requires longitudinal studies (e.g., Gallarza et al., 2013), which are difficult to run. However, it is good to remember that only these, and not the false interpersonal ones mentioned earlier, can bring conclusions over the (axiological) comparative nature of value. Further Combinations of Intra- and Inter-Variable Approaches In spite of the abundant theoretical literature on value dimensionality that clearly stands for conceptual relationships between value dimensions, based on sophisticated structures (e.g., Holbrook, 1999, and his 2 × 2 × 2 classification) or simpler ones (e.g., Sweeney and Soutar, 2001, and their four-dimensions scale), there are very few empirical works trying to assess these interrelations, and integrate them into causal models, combining therefore intra- and inter-variable approaches. Some works from the inter-variable perspective discover relationships between value dimensions (e.g., in Forgas-Coll et al., 2014; Gallarza et al., 2016b). But those are unexpected results. In this sense, there is a certain gap between the conceptual richness of the concept and the methods undertaken to measure it. Accordingly, Gallarza et al. (2011, p. 183), state that “there is a need for understanding the concept of value in a way that emphasizes the inter relationships and contrasts among its various types.”

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Our review has shown how some recent studies have advanced in this sense. Among them, Mencarelli and Lombart (2017) has proven the need for considering (in SEM approaches of relationships between value, satisfaction and loyalty) several value dimensions and different loyalties (not just attitudinal, but also behavioral). The study shows how perceived value (of both utilitarian and hedonic nature measured as aesthetics value, playfulness value, excellence value and economic value) has a stronger impact than satisfaction on both attitudinal loyalty and actual repurchasing behavior. Moreover, other recent empirical approaches have proven a certain dynamics among value dimensions, in the sense that they are related to each other (as stated by Holbrook (1999) but in a causal way. In this sense, Gallarza et al. (2017b) have studied the case of tourist shoppers and found a causality among experiential value dimensions (Varshneya et al., 2017), where cognitive ones lead to social and to emotional ones. A similar pattern was also found in Gallarza et al. (2016b), but with emotional values leading to social ones, for retail shoppers. All these findings reveal that there is still much to add to the research on relationships among value dimensions, in a combined intra/ inter-variable approach to value measurement. Value as a Second Order Construct Embedded in Causal Models We propose to consider a higher order overall value measure in causal models. This is an alternative way to the classical models with varied dimensions of value having direct effects on satisfaction and/or loyalty (e.g., Bani and Kim, 2001; Jin et al., 2013; Forgas-Coll et al., 2014; Eid, 2015; Eid and El-Gohary, 2015; Gallarza et al., 2017b). To us, what makes more sense in the inter/intra variable combined approach is to consider value as a higher-order construct. This methodological pattern is the one successfully contrasted by Martin Ruiz et al. (2008) for travel agency services, by Carlson and O’Cass (2010) for online retailing settings, by Lin et al. (2005) also for online settings, by Mencarelli and Lombart (2017) for French hypermarkets and by Gallarza, Arteaga, Del Chiappa, Gil-Saura and Holbrook (2017a) for Italian hotels. The structure underlying value as a second-order construct obviously differs by authors, and therefore depicts the influence of mainstream value taxonomies into value models (see Figure 4.4 in Chapter 3). Mencarelli and Lombart (2017) chooses Mathwick et al.’s (2001) structure of four indictors regrouped into both utilitarian and hedonic value, and Gallarza et al. (2017a) chooses Holbrook’s (1999) eight-dimensional structure regrouped into extrinsic (Teas and Agarwal, 2000) and intrinsic values. But in any of these cases, the underlying rationale behind the proposal of measurements of consumer value as a second-order construct faces the difficulties surrounding the measurement of direct perceptions of an overall value. As explained in Chapter 3, consumer value is a rather

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elusive and difficult to apprehend concept for the consumers. However, the many dimensions of value can be assessed directly and be integrated as first-order variables in means-end approaches, and then these value dimensions are embedded as a second-order measure for an overarching value measure. Moreover, in accordance with the richness of the value notion, researchers can eventually contrast different structures of value dimensions as higher-order latent constructs in causal models, and therefore add valuable knowledge to both intra and inter approaches.

Conclusion This chapter has focused on the inter-variable perspective of value, both conceptually and methodologically. In the conceptual realm, the present chapter has addressed theoretical delimitations between value and related concepts both diachronically and synchronically. One main conclusion to be drawn from the diachronic review corresponds to how value has been constantly important for all marketing paradigms form the last 40 years, and how in some sense, as Table 4.1 has evidenced with quotations and keywords, the last stage of the conceptual evolution of value research (i.e., SDL and co-creation) is clearly connected to the first stage (i.e., classical marketing and experience) showing how the most contemporary view of value from the SDL in some sense revisits the experiential underpinnings of the notion of value of the 1980s. Regarding the synchronic view, we conclude the validity of the conceptual relevance of value over other topics in consumer behavior and marketing literatures. Indeed, value has overcome concepts such as utility, price or quality, whereas it also helps in explaining other mainstream and seminal constructs such as satisfaction and loyalty (Chen and Tsai, 2008). New notions could be added to the list of value-related concepts, as recently done by Helkkula et al. (2017) with innovation and value co-creation. Value is conceptually still central to us as marketers that all these inter-variable inquiries addressing conceptual relationships between value and other constructs will keep on infusing our discipline with rigor, keeping interest on value alive and growing for future generations of scholars. In the methodological realm, our journals and conferences from the last 30 years have been snowed with works on the measurement of value and related constructs. Accordingly, a consensus has been reached on a chain of linkages that goes from quality to value to satisfaction and to customer loyalty as a final outcome (the so-called Q-V-S-L chain). Yet, the chapter has also viewed how non-consecutive linkages are also found to be valid, but still not in a reliable and significant way. To us, for the following decades, the inquiry on models linking (service) quality, satisfaction, value and loyalty will never abandon the marketing literature agenda, but those will be much more specific and sophisticated. What we advance is:

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a) broadening and stretching of the chain with the effects of the dimensions of each concept on others; b) the need for (true) phenomenological intrapersonal comparisons of value(s); c) more combinations of intra- and inter-variable approaches, and d) considering value as a higher-order measure, embedded in more sophisticated causal models. This chapter has its own limitations that should be mentioned. First, the breadth of literature on value (multidisciplinary by nature, and covering decades of research in marketing and consumer behavior) is incommensurable; so for sure relevant studies might have been missed. Second, the approach has tried to be systematic, but there has not been a proper systematic literature review (with keywords or specific time ranges). Indeed, while reviewing both intra- and inter-variable approaches on value, there is a fatal trap for the researcher: to get lost in the long, wide and huge range of both dimensionality and relationships of value, and therefore never get (or offer to others) the whole picture as the aphorism states, the trees that do not allow us to see the forest. Indeed, the ‘value forest’ is more of a ‘jungle’ where it might be difficult to walk, without stumbling. But in the spirit of the quotation from Arnould (2014, p. 129) about the “compelling chimera” of researching value, as enthusiastic researchers on value that we are, we would rather use the metaphor of a kaleidoscope, where the viewer can get extremely precise and colorful images (while looking into a very small hole) that changes with every small movement. The spirit and faith with which these two chapters have been written are to let the reader look into this kaleidoscope, enjoy the beautiful images and thoroughness while trying to get, somehow, a nice and meaningful overview of the past, present and future research on value.

Note 1. If we look at the number of citations obtained by their precursors, their 2004 paper is the most-cited marketing article (more than 11,000 citations in December 2017 in Google Scholar) to date.

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A Critical Review of the Value Concept in the International Marketing Context Sardana Islam Khan, Ho Yin Wong and Parves Sultan

Introduction International marketing has become exceedingly challenging in the contemporary vulnerability of the world economy. Various trends of antiglobalization come into existence and fair-trade movements are gaining ground contesting the still-prevalent free market economy concept inspired by neoliberalism (Ayres, 2004; Buckman, 2004; Moberg, 2005). This philosophical shift, combined by latest political developments, creates augmenting pressure on international marketers to understand and cater to the emerging concept of value perceived by the evolving breed of global consumers in the new complexities of the market functioning and competition. Recently, the competition among single firms has been overpowered by the competition between pairs or networks of firms (Dyer and Singh, 1998). These emergent market trends, philosophies and complexities have forced international marketers to redefine value from a narrow focus on products to an extended focus on capacity building through mutually benefitting relationships. Despite the persistent interest of researchers in international marketing (IM), a comprehensive framework on the concept of value is yet to be developed. This chapter is an attempt for the creation of an integrative framework across the evolving schools of thought on the concept of value in the international marketing discipline (Muhlbacher et al., 2006). The chapter provides a critical review the extant literature exploring the concept of value in IM. The first section of the literature review conceptualizes ‘value’ in the IM context. The next section explores the theoretical foundations of the value concept. The following sections focus on different schools of thought regarding the concept of value based on value creation activities and desired outcomes for international marketers. The literature review also addresses the variables that may influence the relationships between the perceived value and the desired outcomes. The findings from the literature review are then used to propose a comprehensive framework of value for IM. The final part of this chapter highlights the practical implication of the proposed framework and identifies avenues for future research.

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Literature Review The Concept of Value Rokeach (1968) defined human value as a prescriptive or prospective view that a specific mode of behavior (instrumental value) and end state of existence (terminal value) is preferable than the others. Schwartz and Bilsky (1990) as well as Schwartz (1994) elucidated how the social experience of individuals influences their value priorities and how value priorities are reflected in their choices or behavior. These authors identified seven distinct value domains based on three major universal human needs. The seven value domains consist of 18 instrumental and 18 terminal values identified in the Rokeach value survey (RVS). These values transcend attitudes towards goods. Some of these domains are universal in nature requiring international firms to align their strategies so that they would appeal to values universally. When other value domains are culture-bound, that requires customization. Thus, consumer behavior is predictable by the broader set of human values (Bradley, 2005). Thus, international firms need to gain a good understanding of the value system and international marketing environment to predict consumer behavior and purchasing attitude across cultures (Hollensen, 2011; Lee and Carter, 2012). In the IM literature the definition of value is not unified. Miles (1961) has acknowledged that the consumers and producers conceptualize value differently. According to Etzioni (1988), customers and managers are motivated by varying self-interests shaped by pleasure seeking and morality. Lindgreen et al. (2012) have identified two distinct value perspectives in the contemporary marketing literature, namely, value of (augmented) goods and services, and value of relationships. The value of the goods and services is widely calculated by subtracting the product price and the cost of owning it from the perceived benefit of the product (Lindgreen et al., 2012). Dissimilarly, Neap and Celik (1999) viewed product value as a reflection of buyer’s desire to obtain the product, which depends on buyer’s value system. This concept of value implies that the product value will always exceed the price as it comprises the cost of the product and a subjective marginal value dictated by consumer’s value system. A third perspective on value identifies value and price as two independent elements of product characteristics where value does not include the product price (Anderson et al., 2000). According to this perspective value represents the net benefit, i.e., benefits received minus the cost of acquiring the product excluding the price paid. Regardless of how we define the perceived or delivered value of a product or service, IM literature largely argues that customers want to maximize the perceived benefits and minimize the perceived sacrifices, namely, money, time, efforts, by comparing the competing suppliers’ offerings (Anderson and Narus, 1998). Therefore, understanding

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customers’ perceptions or criteria of value in the market is critical to the firm’s success. From international business and strategic management perspectives, the concept of value goes beyond the value of the good or service. The reputation, location, or innovativeness of the supplier and future capabilities are also valuable for ensuring sustainable international market expansion (Håkansson, 1982; Reichheld, 1996; Lindgreen et al., 2012). The contemporary IM literature categorizes these value aspects as value of relationship or process of exchange. The value of relationship can potentially play a vital role in determining the ultimate purchasing behavior especially in international market settings. For example, a study by Skarmeas et al. (2016) reveals that the relationship-specific investments, knowledge sharing, complementary capabilities, and relational norms are powerful contributors of importer-perceived value in an overseas supplier relationship that may result in consumers’ insensitivity to competitive offerings. Lindgreen et al. (2012) deal with that predictable and reassuring exchanges among parties along with learning and adaptation in the process of relationship creating new solutions can be valued by both buyer and seller. Suppliers must simultaneously offer value to and gain benefits from customers (Walter et al., 2001). Sellers and buyers co-create value in the contemporary business environment and such co-creation of value and value origination can alleviate the significance of the value of relationship in guaranteeing firm performance (Grant, 2004; Webster, 2000; Wikström, 1996).

Theoretical Framework of the Value Concept The foundation of the concept of value is embedded in the theories of behavioral psychology. In marketing, the theory of ‘Symbolic Interactionism’ (SI), formulated by Blumer (1969), and ‘Social Exchange’ (SE) theory initiated and construed by Homans (1961) are helpful for explaining the concept of value. The theory of SI explains the process of interaction in the formation of meanings for individuals. The stimulus for the development of this theory has come from the philosophy of John Dewey (the structure of experience and lived experience), who supposed that human beings are best understood in a practical, interactive relation to their environment (Dewey, 1997). Behavior is defined by a reflective, socially understood meaning of both the internal and external incentives that are currently presented as opposed to the environment forces or inner forces such as drives or instincts (Meltzer et al., 1975). This theory can explain the consumers’ purchasing behavior driven by applying both the value perception of the product and the value of relationships. In line with John Dewey’s philosophy, Blumer (1969) affirmed three basic premises of the SI perspective. The first one links human behavior to the ascribed meanings toward things. The second premise emphasizes the significance of the social interaction on the development of meanings.

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The third focuses on the process of interpretations applied by the individuals in handling or modifying the meanings while dealing with the things they encounter. The three perspectives of SI corroborate the concept of value as presented in the literature (Schwartz and Bilsky, 1990; Schwartz, 1994). The social exchange (SE) theory also emphasizes social interaction. SE theory interprets the existence of society as a series of interactions between people that are based on estimates of rewards and punishments. According to this view, our interactions are determined by the rewards or punishments that we expect to receive from others, which we evaluate by intentionally or unintentionally applying cost-benefit analysis. The basic premise of SE theory is in line with the value aspects categorized as the value of relationship or process of exchange in the contemporary IM literature (e.g., Lindgreen et al., 2012) Homans’s (1961) three propositions, namely, success, stimulus, and deprivation–satiation proposition, can supplement the value concept in IM literature. The first two propositions highlight the importance of reward in reinforcing a desired response. The benefit or value received from the product can be interpreted as the reward in the case of consumers’ perception of value. Yet, the insensitivity to competitive offerings and expansion of future purchases can be some of the outcomes desired by the producer or supplier. The third proposition of Homan (1961) indicates the diminishing appeal of a particular reward in initiating the desired response. This proposition points at the incremental challenge faced in the value creation activities and process, i.e., the issue of value sustenance. The current IM publications put exceedingly an emphasis on value innovation through co-creation (Grant, 2004; Webster, 2000; Wikström, 1996) that may help to address successfully the problem of diminishing value. In business and economics, resource-based view (Barney, 1991; Conner, 1991; Wernerfelt, 1984) in conjunction with the Porter’s industry structure analysis (Porter, 1980, 1985) have been used widely to determine the nomological network of value creation strategy for sustaining competitive advantage. The resource-based view (RVB) emphasizes identifying and nurturing the firm’s potential key resources that are valuable, rare, imperfectly imitable, and non-substitutable (VRIN). According to Barney (1991), “Competitive advantage” is an outcome of a firm’s ability to implement a value-creating strategy not simultaneously being implemented by any current or potential competitors. Therefore, the way to gain a sustainable competitive advantage is to develop unique capabilities based on VRIN key resources, such as organizational processes, firm attributes, information, knowledge, capital, equipment, skills of individual employees, patents, finance, and talented managers that improve its efficiency and effectiveness (Barney, 1991; Kay, 1999). Dyer and Singh (1998) contended that critical resources may be extended beyond the boundaries of the firm. This is an extension of the

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early handlings of the resource-based view of the firm (Barney, 2001; Skarmeas et al., 2016). The basic principle of the RBV may not explicitly identify the firm’s network or relationship with the external stakeholders as a key resource. However, the theory does not exclude the consideration of external conditions, information, and knowledge. The theory acknowledges that the firm’s capability can be created by exploiting any advantageous resources (Barney, 2001) be they internal or external. Therefore, interfirm cooperative relationships leading to a mutually beneficial relational advantage can be a valuable source of competitive advantage (Skarmeas et al., 2016) withstanding the VRIN test suggested by RBV.

The Value Creation Activities and the Desired Outcomes The creation of value is vital for the survival of any firm in the contemporary world market environment (Doyle, 2000; Hunt, 2000; Kotler and Keller, 2008). Steenkamp (2014) identified valued brands, value sources, value delivery, and valued outcomes as four value-creating activities in his 4V model that conceptualizes the process of value creation by global brands. This model identified four types of valued brands (prestige, premier, fun, and value brands) based on two key dimensions, i.e., the price relative to the category and the nature of the key differentiating benefits (emotional versus functional benefits). Steenkamp (2014) distinguishes between four types of value sources including consumer, economic, marketing, and organizational. He suggests that global brands ideally excel on at least one or several of these sources in their value creation process. In line with the research by Steenkamp et al. (2003), the 4V model has identified perceived quality, prestige, global identity, and myths of cultural origin as sources of appeal for global brands among groups of consumers. The third successive stage in this 4V value creation chain is the process of value delivery, i.e., what, how, and to whom the value is delivered. The value delivery propositions tend to address the geographic versus consumer segmentation choices of the world market, focus on the functional versus emotional attributes while positioning the global brand and the global, local, and foreign consumer culture positioning issues (Alden et al., 1999). The ‘how to deliver’ aspect of the third stage is related to the economic, cultural, and administrative arbitrage that can be exploited by the global brands to their advantage (Ghemawat, 2007). This stage also considers the adaptation of global integration, local adaptation, and worldwide learning in the delivery of the marketing mix across the world (Kotabe and Helsen, 2010; Steenkamp, 2014; Yip and Hult, 2012). The ultimate outcome of the value creation process is to build brand value and eventually firm value (Steenkamp, 2014). Brand value is essentially the net present value of its expected cash flows within a year. Steenkamp (2014) finds it useful to consider multiple valued outcomes per

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category and proposes trust and brand loyalty (consumer outcomes), market share and market share growth (market outcomes), as well as price premium and profit margin (financial outcomes) as measures of the brand value that, in due course, contribute to the creation of firm value.

The Schools of Thought Based on a literature review, Christopher (1996) sums up the concept value well. He argues that, at individual level, value exists when the perception of benefits received from a transaction exceeds the costs of ownership. Alternatively, this can be presented as follows: Value = Perception of benefits − Total cost of ownership. The previous presentation consists of two major elements, namely, perception of benefits and total cost of ownership. When the former is greater than the latter, the value is positive. Thus, at firm level, international marketers can provide value to their customers by increasing perception of benefits of their offers or lowering cost of ownership or better both. Performing well in these two aspects is not enough, international marketers need to ensure that value offered to the target customers should meet or even better exceed competitors’ offers and be in congruence with the cultural values in overseas markets. Four schools of thought have emerged accordingly. They are cost leadership school of thought (Garg et al., 2013; Porter, 1980), superior product school of thought (Sun et al., 2016; Toften and Olsen, 2004), relationship school of thought (Samaha et al., 2014; Skarmeas et al., 2016), and culture school of thought (Hofstede and Bond, 1988; Keegan and Green, 2011; Omar, 2009). Each school focuses on different descriptions and contributions of value in international marketing. Cost Leadership School of Thought International firms providing value through cost leadership endeavor to offer lowest prices to their customers. Such prices offered to the target customers are integrated efforts of actions designed to produce and deliver goods and services at lowest cost in comparison to that of competitors possessing attributes valued by customers (Hitt et al., 2014; Porter, 1980). The keeping-cost-down practices become a norm, a passion, or even an obsession for some firms. Firms committed to using the cost leadership approach to deliver value often drive their costs down by several methods. The first method is to attain a high asset utilization. This method advocates that fixed costs are amortized by a big number of goods or services sold. As a result, the unit cost becomes lower. This method uses economies of scale and experience curve effects. Economies of scale represents

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businesses working efficiently via increasing size or speed of operation (Chandler, 1993). Thus, the economies of scales can be achieved by using one advertising method universally. One major limitation of Porter’s cost leadership approach is its failure to provide insights related to “how” issues (Bowman, 2008), meaning just how to keep costs down. Here comes the value chain analysis, the second method, to help firms understand which components of their operations can create value and which cannot. The value chain represents a framework consisting of primary and support activities, which firms apply to observe their cost positions (Hitt et al., 2014; Porter, 1985). International marketers should exercise control over the value chain components to ensure costs are minimal. The third method is related to the effects of the experience curve showing how unit costs drop continuously as more units of a product or service are produced due to the “learning by doing” practices, resulted from experience (Johansson, 2009). By applying this method international marketers develop insights, skills, and capabilities that result in lowering the costs of international marketing activities. The cost leadership school of thought suggests that investments in efficiency-generated facilities, tight cost control of various value chain components, and development of learning capabilities are critical to deliver value to target customers. It is important for international marketers not to lose sight of what value is from the target customers’ points of view. Even if lower price is offered, the target customers do expect a certain level of quality or standard. The keeping-cost-down practices may be meaningless if the quality or standard is disproportionately scarified. Superior Product School of Thought Value can be delivered based on the capabilities of international firms via offering a bundle of exceptional benefits perceived by target customers. The superior product school of thought emphasizes that a competitive advantage can be achieved by providing target customers with value associated with products that ultimately bring differentiated product offerings. Dissimilarly to the cost leadership school of thought, the superior product school of thought advocates that value is not created and delivered through lower prices, but through higher perceived value of the products and services in terms of quality and uniqueness (Sun et al., 2016; Toften and Olsen, 2004). Quality value is defined as “the utility derived from the perceived quality and expected performance of the product” (Sweeney and Soutar, 2001, p. 211). Customers buy product because they perceive that they offer the expected quality and features (Kumar et al., 2009; Salehzadeh and Pool, 2017). Perceived high quality makes the product more recognizable and differentiated from that of competitors (Sun et al., 2016). Luxury products are good examples of superior offerings delivering distinctive perceptible value (Wiedmann et al., 2009).

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Unique value is considered as “the perceived exclusivity of a product” (Sun et al., 2016, p. 715). Such a value can be in the form of product features, such as design, materials, functions, and the like. In order to offer the most unique value, international marketers need to consider how many target customers want each particular feature, how long it would take to launch it, and how likely it is that competitors could copy it easily (Bertini et al., 2009; Gill, 2008; Meyer et al., 2008). The product design is a bundle of features that can influence how target customers perceive the product. It provides functional and aesthetic value and appeals to customers’ rational and emotional states (Chitturi et al., 2008). The emotional state is psychological, that is, a reflection of an extended self. An effective way to develop a unique self is to own certain material possessions (Snyder, 1992). Thus, a product becomes a projection of one’s image that is perceived as a differentiation point from others. The term ‘superior product’ is defined holistically and includes services. Services are often described by characteristics such as intangibility, heterogeneity, inseparability, and perishability (Gronroos, 1998; Knight, 1999), all of which represent the fundamental differences between products and services. These unique characteristics of services exist in both domestic and international marketing (Knight, 1999). However, from an international marketing perspective, there are so many commonalities between products and services that for some purposes there is practically no difference between them (Johansson, 2009). As stated previously, value delivery is based on the capabilities of international firms to offer a bundle of special perceived benefits to target customers. Nothing is characteristically physical about this bundle of special perceived benefits. The same idea can be applied to intangible, heterogeneity, inseparability, and perishability of services in the cases of international banking and consulting. Thus, the quality and unique values discussed in terms of products can also be applied to services. The superior product school of thought, including services, emphasizes creating and delivering value through product offerings that are differentiable. It is not the costs of the products that matters, but the perceived value offered through product quality, product uniqueness, or both. Relationship School of Thought The relationship school of thought is concerned with the development of strong and collaborative business relationships with target customers. Relationship marketing is considered as a new paradigm in marketing due to the fact that the micro-economic framework is unable to explain the marketing phenomena in the post-industrial era (Palmer et al., 2005). Generally, the micro-economic framework refers to the interaction between supply and demand. Specifically, it covers concepts such as management of demand by undertaking advertising and promotion,

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management of price to stimulate demand, and the development of new and different products appealing to different market segments at different price points (Palmer et al., 2005). International relationships have become increasingly critical (Samaha et al., 2014) and ubiquitous due to the increasing integration of international markets, liberalization of international trade, and intensifying worldwide competition (Beck et al., 2015). Since value relationship creation and delivery involves two-way interactions, it is a more challenging task in international rather than in a domestic marketing context largely due to differences in cultural, social, economic, political, and allied factors between firms in various countries (Griffith and Zhao, 2015; Katsikeas et al., 2009). The value creation and delivery according to the relationship school of thought extends beyond the costs of products, or the superior performance of products and services. From the business-to-business perspective, value creation and delivery includes factors such as partner reputation, experience, innovativeness, location, as well as product and market knowledge (Lindgreen et al., 2012). From the business-to-consumer point of view, value can be co-created by international marketers and customers. Co-creation is a management initiative that various parties, including international marketers and customers, come together with an aim to collaboratively produce a mutually valued outcome (Prahalad and Ramaswam, 2004). It is defined as “the joint creation of value by the company and the customer; allowing the customer to co-construct the service experience to suit their context” (Prahalad and Ramaswam, 2004, p. 8). Under co-creation, customers directly interact with international firms to create unique sets of new ideas, for example, new product ideas, that international firms can later develop further for international launch. Relationship value is affected by several issues. They are relationshipspecific assets, knowledge sharing, complementary capabilities, and relational norms (Skarmeas et al., 2016). Relationship-specific assets are defined as “non-fungible investments (tangible and intangible) that uniquely support the buyer-supplier relationship” (Jap, 1999, p. 464). These assets can be in the form of purchasing dedicated tools and machinery, deploying tailor-made promotional campaigns, and developing operating systems for ordering and inventory control (Skarmeas et al., 2016, p. 24). Knowledge sharing refers to “the joint exchange of information and know-how between international channel partners” (Wu et al., 2007, p. 289). Examples of knowledge sharing are joint training sessions and market intelligence sharing. Complementary capabilities refer to the degree to which partners can complement each other by supplying distinctive capabilities (Skarmeas et al., 2016). Complementary capability exchanges facilitate the synergy when partners create value. It is especially useful in a situation where international firms are unable to develop these capabilities internally or acquire them externally. Relational norms are expectations regarding behavior largely shared by exchange partners (Heide and John,

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1992). These norms play a guiding role for partners involved in suitable value creation activities. The relationship school of thought focuses on collaboration efforts between firms in the business-to-business perspective and between firms and customers in the business-to-customer context. It is built upon twoway communication and mutual contributions. International firms establish relationships with customers to create something valuable that will ultimately satisfy their needs and wants. Cultural School of Thought This school of thought is related to national cultural value. The cultural school of thought is especially relevant to international marketing because cultures in overseas markets have direct impact on the strategies of international firms (Cavusgil and Zou, 1994; Solberg, 2008; Wong and Merrilees, 2007). For example, culture is found to impact on the adaptation of export marketing mix elements (Cavusgil and Zou, 1994). Specifically, culture is an antecedent of the adaptation of product strategy (Doole and Lowe, 2008) in overseas markets (Francis et al., 2002; Wong and Merrilees, 2007). Culture is defined as “the collective programming of the mind that distinguishes the members of one category of people from those of another” (Hofstede and Bond, 1988, p. 5). Culture is not granted only to people living in a country or innate in people. Rather, people learn culture through personal and social interactions in an environment. Important components of culture are values. Values comprise beliefs about a specific mode of conduct or desirable end-state that guide the selection or evaluation of behavior (Keegan and Green, 2011, p. 140). Rooted in a specific culture, values represent the deepest level of a culture (Hofstede and Bond, 1988). Values guide actions, attitudes, and judgments of individuals; eventually influencing overseas customers’ perception of products, product preferences, and buying behavior. In general, values include components such as time, achievement, work, wealth, change, and risk-taking (Omar, 2009). The culturally defined values overseas customers place on the value components affect the selection of international marketing strategies. There are two main distinctive differences between the cultural school of thought and the other three schools of thought. International marketers have a direct influence or say as to what value to offer and how to deliver it to the target customers. According to the cultural school of thought international marketers are unable to change the cultural values in overseas markets. Instead, they can only adapt their offerings according to the cultural specifics of an environment. Another specific of the cultural school of thought takes an outward-in approach, whereas the other three schools of thought suggest an inward-out approach. Since international marketers cannot change the cultural values in overseas

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markets, understanding the cultural values of a target market becomes a critical task. That is where the outward-in approach begins. International firms start the value creation stage by learning overseas markets’ cultural value. The learning curve can be very deep, especially for firms new to international endeavors. This outward-in approach facilitates international marketers to develop appropriate international marketing strategies for each particular market. The cultural school of thought considers value from a macro perspective; that is, treating it as an uncontrollable factor. International marketers cannot develop it within their firms, like in the other three schools of thought. They have to take actions to learn it, via for example, through the creation of an office in an overseas market, and then feeding the knowledge of this market back to their business system. While international marketers cannot create cultural value, they can create values following the other three schools of thought. This section has covered four schools of thought related to value in the context of international marketing, namely, cost leadership, superior product, relationship, and culture schools of thought. Each of these schools possesses unique characteristics and has different implications for international marketers. They should not be regarded as unrelated. As argued by Omar (2009, p. 26), “values mean benefits focused on solving customer problems and not merely on the products and services that serve as the vehicle of the solution”. Thus, the essential issue for international marketers is to understand the international customers’ perception of value in a particular culture, advocated by the culture school of thought, and to ensure that proper values are created and delivered to the target customers, encouraged by the cost leadership, superior product, and relationship schools of thought. While the four schools of thought provide insight into the different propositions of value in international marketing, the following section specifies an integrative framework of value to examine the interrelationships of various value ideas in a holistic view.

A Proposed Integrative Framework of Value in the International Market Based on the fundamental differences across value perceptions, customer versus business partners, value creation activities and the desired outcomes, e.g., competitive advantage versus learning, and the value measurement process, quantitative versus qualitative, as well as the four schools of thought, we propose an integrative framework of value for international marketing. The two major views integrated in our framework are: (1) the consumers’ perception of the trade-off of the benefits and sacrifices (see for example, Skarmeas et al., 2016; Holbrook, 1999; Zeithaml, 1988), and (2) the relational view (Dyer and Singh, 1998).

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The consumer perception of value is more widely explored and used in the industrial marketing literature, most likely due to its proximal and more visible link to the competitive advantage (e.g., Doyle, 2000; Woodruff, 1997). The consumer perception of value is predominantly appraised based on the benefits-sacrifices trade-off associated with the acquisition of a good or service (Holbrook, 1999; Zeithaml, 1988). The desired outcome of the consumer perception focused on value creation activities is to gain a competitive advantage. This type of value creation activity tends to yield immediate results and market feedback. The relational view extends the concept of value beyond the price versus sacrifice trade-off and focuses on an overall assessment of a business relationship based on perceived costs and benefits (Blocker et al., 2011; Flint et al., 2002; Ulaga and Eggert, 2006; Skarmeas et al., 2016). This view is also aspired by the competitive advantage outcome pre-eminently akin to the consumers’ perception view. Moreover, the value creation activities dictated by the relational view aim at creating a sustainable competitive advantage through reputation and relationship building and facilitating knowledge or capacity development through experience and innovation (e.g., Lindgreen et al., 2012; Lindgreen and Wynstra, 2005; Skarmeas et.al., 2016; Zajac and Olsen, 1993). These desired outcomes are not necessarily quantifiable and may not yield a visible result in terms of creating an immediate competitive advantage. These two distinct schools of thought widely vary in terms of value perspective and the process of value creation and evaluation. However, these views are not completely unrelated. One of the key outcomes of both consumers’ perspective view and relational view is to create sustainable competitive advantage. The processes of value creation, according to these views, can be complementary rather than counterproductive or contradictory. The relational view inherently includes the motif of creating product or service value. Nevertheless, unlike the consumers’ value perception, which is narrowly focused on creating the immediate value of the end product or service, relational value perspective visualizes the broader picture in the long run reflected in the firm value. Lindgreen et al. (2012) used value analysis, value creation, and value delivery and structuring, bundling and leveraging activities to propose a process model based on managerial priorities for value orchestration in business and industrial markets. We have also incorporated this framework and extended it beyond managerial priorities to the greater social implications. A comprehensive value framework should contain a builtin mechanism to deal with the complexity of the value propositions. For example, consumer perceived value is widely defined as the benefit to price (money, time, effort, and so forth) ratio (Lascu, 2008). Yet, in the case of luxury brands, higher price will more likely lead to higher perceived value (Lascu, 2008; Salehzadeh and Pool, 2017) unlike other types of brands. Therefore, the value distinction between prestige, premier,

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value, and fun makes a real difference on the source and creation of value (Steenkamp, 2014). The proposed value model (see Figure 5.1) is a comprehensive process model of value creation that integrates the components of both consumer perceived value and relational value to create the ultimate firm value in the international marketing context (Cateora et al., 2009). This model primarily integrated and adapted three value models from extant literature: (1) process model for value orchestration in business and industrial marketing proposed by Lindgreen, Hingleyh, Grant and Morgan (2012), (2) the model of drivers and outcomes of relationship value by Steenkamp (2014), and (3) the 4V model of value creation by Skarmeas et al. (2016).  The culture framework of Terpstra and Sarathy (2000) has been used to define the influence of broader cultural aspects on both relational value and consumer perceived value. The eight components of culture identified in this framework include language, religion, values and attitude (broad and generic), aesthetics, education, law and politics, technology and material culture, and social organization. A complex interaction of these components creates several layers within a national culture (Hofstede, 2003) that influence the values, attitudes, and behavioral standards of individual and organizations within a certain cultural context (Tse et al., 1988). The international marketers cannot afford to be oblivious of these factors with unique value proposition of a certain market whether they pursue consumer or market acculturation strategy (Gentry et al., 1995). These factors essentially influence the perceived social, unique, emotional, and quality value across cultures (Sun et al., 2016).

The components of culture

Value analysis Relaonal Drivers

Valued brands

Value delivery

Value creaon

Bundling acvies

Relaonship value

Leveraging acvies

Relaonal outcomes Firm value Value outcomes

Value sources

Instuonal context

Internaonal markeng

Structuring acvies

Figure 5.1 A Comprehensive Value Framework for International Marketing Sources: Based on Lindgreen et al. (2012), Steenkamp (2014), and Skarmeas, et al. (2016).

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Institutional context and international marketing context (Fletcher and Crawford, 2011) have been used as the probable moderators of the link between value creation and value delivery and the value delivery and creation of the ultimate firm value. Social exchange theory and resource based view provides the basic premises for such prediction of moderators. These factors match with some of the moderators suggested by the Skarmeas et al. (2016) model of relationship value, i.e., competitive intensity, market turbulence, relationship age, firm size, distribution intensity, supply intensity.

Conclusion The notion of value has been of interest in the international marketing discipline since the emergence of the marketing concept in the 1960s. However, the value related theory and models remained too dispersed across the discipline, context, and strategic outcome orientation. The ‘value’ related schools of thought evolved sporadically over the years without a systematic linkage or direction for the future researchers in the international marketing field. This chapter is a response to the call for a systematic review of literature to identify the evolving schools of thought linking different concepts of value in international marketing. This chapter has investigated the theoretical foundations of the very concept of value and then linked it to the process of value creation by the international marketer to propose an integrated value framework. Future research can use this framework to address the relevant processes and components of value creation in a systematic and comprehensive manner in international marketing studies. International marketers can use this model to effectively create sustainable competitive advantages, i.e., firm value for their business.

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The Value of Networks and Knowledge in the Internationalization Process of Firms Challenges and Future Perspectives Kent Eriksson and Angelika Lindstrand

Introduction Internationalization is increasingly understood as a process of cumulative knowledge accumulation through experiences. The internationalization process (IP) model describes it as that the internationalizing firm has a current state of knowledge and resources, and that the firm commits resources to do international business based on the state of knowledge that they have. An example is provided by Home Depot, the US home improvement supplies retail store. In 2006, it expanded into China, and set up 12 stores. However, sales were not good, and in 2012, Home Depot had a substantive loss after which it restructured operations to close warehouses and focus on smaller specialty stores. Home Depot learned that Chinese customers like to pay for home improvement services and do not want the home improvement supplies that Home Depot offered. Having learned this lesson, Home Depot decided to change its operations to suit the local market. In the words of the CEO: ‘We have learned a great deal over the last six years in China, and our new approach leverages that experience and reflects our continuing interest in providing value to Chinese customers, as well as our shareholders’ (Home and Burkitt, 2012). The Home Depot example shows how it committed resources to the Chinese market, based on its understanding of the market at the time. When it gained experience from its initial operations on the Chinese market and understood that customers did not buy its products, it developed a new strategy towards the Chinese market, based on the acquired local market knowledge, and subsequently turned its Chinese operations to profit. Interestingly, Home Depot did not see its initial failure as a reason to divest and hence, de-internationalize from the operations in China, but rather as a learning experience that it could leverage when going forward. The Home Depot case illustrates how an internationalizing firm’s ability to create value could be preceded by an initial failure, and subsequently, local market knowledge can be developed based on that failure.

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Internationalization research has found that business commitments in international business relationships are the primary way in which internationalizing firms learn from experience and develop knowledge about international markets. The Home Depot example demonstrates how an internationalizing firm learned from retail customers, but research suggests that other actors in the network surrounding a firm can also be sources from which an internationalizing firm learns. Accordingly, firms learn from wholesale customers, suppliers, other business relationships, government agencies, and authorities when internationalizing. The internationalizing firm does its business through its network of business relationships, and it is through this network that the firm develops its experiences and consequent knowledge as it commits resources in order to receive expected gains from foreign market operations. This means that internationalizing firms can encounter serious challenges before they can gain economic value in foreign markets. Once a firm has overcome the initial struggles, network development usually results in increased value creation and profitability, not only for the internationalizing firm, but also for the customers, and for other actors in the network. As international business takes place within networks, the experiences of internationalizing firms and the knowledge they develop are embedded in these networks. The importance of networks is apparent in the growth of social networks for businesses. Social network based firms often grow very fast internationally, and they provide value because they link users to each other, and also to sellers of goods and services. The technology of social networks make it possible to connect actors internationally, but there are still cultural, cognitive, and regulative hurdles that actors need to overcome for international business transactions to take place. Overcoming such hurdles requires a learning effort, and the users and providers of goods and services inevitably develop knowledge in the process. Thus, even for social network based firms (Carrington et al., 2005), international business requires knowledge development in networks that create value. This chapter is a review of the current accomplishments in IB research on value in knowledge development and networks, and the review is used to generate a list of challenges and future directions. We argue for a broad definition of value and the argument for this is that sustained international business is only viable if the networks and knowledge developed create value for the firm. However, we also recognize that value can be defined much more narrowly, and we therefore also analyze value in terms of performance. Our analysis will thus focus on two levels of value, where the narrow definition is performance and the broader one is international business. The structure of the chapter is to first present extant IB research on networks and knowledge development, second to present the literature

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review method, and third to present findings from the literature review. Finally, we present our conclusions on the challenges and future directions for research on value.

Networks and Knowledge in Internationalization Process Research International Business (IB) is a field of research that applies methods and theories from other disciplines (Buckley, 2002; Peng, 2004; Toyne & Nigh, 1998). While a considerable number of IB publications have researched knowledge and its role in internationalization, advances in management research (Pisani. 2009) and sociology (Borgatti & Foster, 2003; Borgatti et al., 2009; Lazer et al., 2009) have led to an increase in network research in IB studies. Literature reviews of IB research accordingly view networks as an area of research that could potentially contribute to the knowledge on value in IB to a limited extent (Griffith et al., 2008). Management research serves as a model example for the benefits of including network analysis into various studies. For instance, network analysis has benefitted management research on innovations (Powell et al., 1996), supply chains, marketing, and entrepreneurship. By contrast, knowledge is an area that has featured prominently in international business. So much so, that it is difficult to confine a literature search on knowledge to an amount of articles that can be reasonably reviewed. A literature search of the words ‘international business’ and ‘knowledge’ has generated over 750 000 publications.

Methodology In the growing literature on research methods for literature reviews, the definition of the search words and the methods for searching within that literature (Webster & Watson, 2002) are identified as important. When it comes to the use of search words (concepts), literature reviews usually differ depending on the extent to which they are confirmatory or exploratory. The purpose of confirmatory literature reviews is to bring clarity to the definition, use, and relationships between concepts. An example of a confirmatory literature review is the integrative literature review, which can include one or several literature streams. The method is to define key concepts in the literature(s), and search and compare them in order to develop a theory (Torraco, 2005). The purpose of exploratory literature reviews is to develop research in new ways, for instance by the development of a theory, a model, or a framework. An example of an exploratory literature review is a grounded theory literature review, where the definition of what is included in the literature is subject to an iterative grounded theory search method (Wolfswinkel et al., 2013).

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Exploratory and confirmatory literature searches can be combined by iterating between conceptually motivated search terms and results found in the literature search. This is referred to as a forward-backward search process (Webster & Watson, 2002). Definition of Literature and Search Terms The present research is a confirmatory literature review, with limited exploration within the selected literatures. In such a review, clarity of definition of the literature, and clarity of the search terms are central for the validity and reliability of the literature review (Wilding et al., 2012). The literature that is analyzed is international business literature, and the key concepts we search for are network and knowledge. There are 798 articles on networks, and more than 750 000 on knowledge. The vast number of articles on international business knowledge presented a problem, because the volume of articles made it difficult to analyze them rigorously. We therefore chose to focus the literature on knowledge to those articles that reference a foundational article on knowledge development in the internationalization process (Eriksson et al., 1997). We henceforth call this literature the knowledge development literature. Admittedly, this is a crude truncation of much of the IB literature on knowledge. For the purpose of this review, international business literature is defined as research literature in refereed scientific journals that contains international business. Such a definition of IB research is comprehensive, meaning that it includes any scholarly articles that investigate networks in IB. Scholarly journals are available through databases, and each database has a selection of journals, so, the selection of journals is determined by which database is searched. In searching for the most suitable database, we started by databases that include IB literature, as defined in a previous literature review (Griffith et al., 2008). The result is that two databases had to be used, as some journals are only included in one of those two or the other. ABI/Inform Global/ProQuest and Business Source Premier/ EBSCO together incorporate all of the IB journals used by Griffith et al. (2008) and more than 300 additional journals that have published articles on networks and IB. In the two databases, we also tested different search terms to distinguish the ones which would give us the largest number of articles without losing focus on the key search concepts. The search for networks in IB produced 798 articles from 138 different journals. The knowledge development literature generated 599 articles in 279 journals. The majority of the journals with the most content on networks and knowledge development are IB journals, with International Business Review at the top in both. Having identified that there are 798 network and 599 knowledge development IB articles, the next step is to search within these groups of publications to be able to understand how value is used in them. The literature search method is text analysis of the

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title, abstract, and key terms of the articles. The search included 62 topical search terms, and 28 method search terms. This stage of the search is partially exploratory and involved going back and forth between searching the literature and reading the articles in the literature to understand how their content suited the search categorization. The method used for selecting IB research areas is done by considering established and emergent IB research topics. Established IB topics are deduced from reviewing the most cited IB papers, conference themes for the Academy of International Business conference meetings, and the editorial areas of international business journals. Emergent topics were identified from AIB conference themes and an article that identifies emergent issues in IB (Griffith et al., 2008). The research topics were dropped from the list if they did not appear in the literature identified in the present literature review. Sixty-two different topics were identified, and these were grouped into ten comprehensive research areas as follows; ‘General IB theories’, ‘Economic Geography, FDI, and Strategy’*, ‘Economics and Policy’*, ‘Institutions and Political Environment’*, ‘General Management’, ‘Finance and Accounting’*, ‘International Entrepreneurship’*, ‘Knowledge and Innovation’*, ‘Marketing and Supply Chain Management’*, and ‘The Multinational’.1 The title, abstract, and key words of the articles in the sample were searched for key words and coded into a research area. Data are presented and analyzed in frequency tables, where the literature is analyzed both for the entire sample of articles and for subsets that focus only on performance articles in the literature. So, for network research in IB, frequency tables are analyzed for the two samples: articles on networks in IB (N = 799), and articles on networks in IB and performance (N = 109). Correspondingly, for IB knowledge development research the samples are for articles on IB knowledge development (N = 599), and for articles on IB knowledge development and performance (N = 92). The data is also analyzed with statistical association techniques, such as correlations and cluster analysis. The purpose of statistical analysis of association is to gain additional insights into how topic areas are combined. For instance, performance, knowledge, and multinational research is combined in some articles, suggesting a particular research contribution. The statistical analysis is combined with reading of the articles and manual combination and identification of research contributions and challenges for future research.

Results Network Research in IB: Accomplishments, Challenges, and Future Research Areas The review of 798 network research articles starts by selecting a subset only of those articles that cover performance as a topic, resulting in

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Table 6.1 Performance in International Business Network Research (N = 109) Statistics

No

General IB theories Economic geography, FDI, and strategy Economics and policy Institutions and political environment General management Finance and accounting International entrepreneurship Knowledge and innovation Marketing and supply chain Multinational

11 22 9 5 109 1 19 49 12 42

a sample of 109 articles. All of those 109 articles on performance also cover general management in IB (Table 6.1). Apparently, general management and performance of IB networks are researched together. The second most frequent topic among IB network research is knowledge and innovation, with 49 out of 109 articles. Knowledge and innovation often take place in networks and IB research has made great strides in enhancing the understanding of network performance. IB network and performance research has also made progress in the area of multinationals and the fundamental research question is whether the multinational organization delivers better performance than independent firms that cooperate. The articles on multinationals and knowledge and innovation are often combined, suggesting a strong research contribution. The combination is evidenced in a correlation of 0.3. Turning to research topics that are less well represented in IB network and performance research, we find that there is only one article in the area of finance and accounting. This is surprising, given that performance is a main topic for accounting and finance researchers. Presumably, there is a lack of interdisciplinary research cooperation, resulting in that IB research is not published in finance and accounting journals. There is also a striking lack of articles on performance and networks in economic geography, FDI, strategy, institutions and political environment. Thus, this review points to a challenge for future research to be more multidisciplinary and this can be accomplished in two ways: Firstly, by integrating other disciplines into IB, elaborating on how other disciplines add to the theoretical and methodological domain of IB; and secondly, by making IB a relevant research platform in other disciplines on the grounds that IB is a growing phenomenon and a distinct research domain, including its own unique theoretical, methodological, and empirical onthology. The full sample of articles on IB network research is presented in Table 6.2. The three research topics with most articles are: knowledge and innovation (308 articles out of 799), general management (291),

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Table 6.2 International Business Network Research (N = 799) Statistics

No

General IB theories Economic geography, FDI, and strategy Economics and policy Institutions and political environment General management Finance and accounting International entrepreneurship Knowledge and innovation Marketing and supply chain Multinational

109 215 62 56 291 13 151 308 102 274

Table 6.3 Methods Used in International Business Network Research Method

All network research (N = 799)

Performance (N = 109)

Network analysis method (SNA) Quantitative methods Qualitative methods

31 358 256

4 80 16

and multinational (275). However, none of these three areas is significantly correlated with another when being combined into pairs in different combinations. Although each of these areas represents important contributions to IB, there is a research challenge in combining them. An example of a research effort would be to study how management of multinational knowledge and innovation results in value creation. Economic geography, FDI, and strategy form the fourth most frequently published article group with 215 articles. Strategy accounts for about half of those, or 119 articles. International entrepreneurship has 151 articles on IB networks, while general IB theories—109. If general IB theories are seen as the overall core of IB, and international entrepreneurship, economic geography, FDI, and strategy include academic papers that are more specific and limited in scope, then it is striking that there are relatively fewer articles that include an emphasis on general IB theories than articles that cover specific topics that are limited in scope. Perhaps this reflects what is unique about IB as a field of research with a weak theoretical core that gets input from multiple theoretical applications. While it is a research accomplishment that the specific and limited research areas are included in IB, it is also a future research challenge to integrate more specific areas with limited scope into the field of IB. In addition, a research challenge is to do more IB network research in the research domains of economics, policy, institutions, political environment, finance, and accounting. The research methods used in IB network articles are predominantly quantitative (see Table 6.3), both when it comes to the entire sample

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and the performance subsample. While reading the qualitative network research, it turns out that some use qualitative network descriptions to illustrate network concepts. Other qualitative network research does more data-driven theoretical development. There is a corresponding difference in quantitative methods, with some articles using data more for description of network concepts, and other articles that analyze data to advance theory. The only method that is more strictly devoted to theory development is SNA, which is why we see it as a method that can be used more in future research. In particular, IB network research that combines SNA with quantitative and qualitative methods can make a strong contribution. For instance, future research would benefit from regressions that include SNA variables, such as network centrality, with other variables, such as degree of internationalization, multinationality, institutional distance, profit, value creation, and so on. The internationalization process research identifies a firm’s network position as important and one that is reflective of a firm’s state of knowledge development. The SNA method can be used to describe network position in terms of relations (ties, lines, graphs) between the actors that can take many forms and be of varying strength dependent on their features. The ties can either function as connection ‘pipes’ or as a co-ordination mechanism (Borgatti & Halgin, 2011; Powell, 1990). For instance, we can think of flows moving through a network, reaching certain nodes at certain times, but then continuing to flow (Freeman et al., 1991). Moreover, ties can also coordinate limited resources through social exchange (Cook & Emerson, 1978). Position can be studied on different levels, such as the actor’s position in its own ego-centred-network, or in the dyadic relationships within a network (Anderson et al., 1994), or in terms of actors’ positions in regards to the whole network. Looking at these two parts of the network as a whole we might find that a firm is actually in a bridging position through two dyadic relationships and can therefore gain access to resources from both parts of the network without much competition. The connection also lowers the distance between the nodes in the two parts (components) of the network, as distance measures the number of ties needed to connect the nodes. An actor’s ego-centred network can be measured by the relations going out from the actor, ‘outdegree’, and/or by measuring the lines or relations coming in ‘indegree’. This leads us to the concept of centrality, which expresses an actor’s total incoming and outgoing relations. The centrality can be close; when an actor has the shortest paths to all other nodes in the network, or a bridge (betweenness centrality); when an actor has few direct ties but is in between two components. The earlier internationalization example shows betweenness centrality. The centrality of the network is on the other hand calculated based on the degrees of all actors in the network. The extent to which an actor’s immediate relations and nodes are connected to each other measures the density of that neighbourhood. It is a measure of how embedded an actor is in

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the network. So in the example, the firm has a domestic network with high density. The global density of a whole network is measured by the number of ties connecting the nodes in proportion to the total number of ties that could exist in the network. (See for instance Scott, 2013, for a more elaborate discussion of the concepts and measurements in network analysis.) To summarize, key challenges for future research on value in international business network research are: •

•

•

•

•

•

There is a great need for articles on performance and networks in finance, accounting, economic geography, FDI, strategy, institutions and political environment. IB research on networks and performance can become more multidisciplinary by integrating other disciplines into IB, elaborating how other disciplines add to the theoretical and methodological domain of IB. IB research on networks and performance can become more multidisciplinary by making IB a relevant research question in other disciplines, on the grounds that IP is a growing phenomenon and a distinct research domain, including its own unique theoretical, methodological, and empirical onthology. It should combine the strong research contributions in individual IB network research topic areas to advance knowledge of how they relate to each other in value creation. In particular, there is a need to study how value is created by combining knowledge and innovation, general management, and multinational organizations. Use advances in international entrepreneurship, economic geography, FDI, and strategy to advance general IB theories, and vice versa. At present, the mutual benefit of general IB theories and other topic areas is poorly utilized. Utilize the benefits of SNA and qualitative research methods more, and more particularly—in combination with quantitative methods.

Knowledge Development in IB Research: Accomplishments, Challenges, and Future Research Knowledge development in international business is part of the internationalization process theory (Eriksson et al., 1997; Johanson & Vahlne, 1977, 2009). Central to the process is the cumulative knowledge accumulation that internationalizing firms make as they expand internationally. The process is that the firm makes decisions to commit to a foreign market or increase its foreign market commitment based on the current state of its knowledge about the target market, and that the firm subsequently has experiential learning from the business operations in that market, which bring new knowledge or expand existing one thus bringing the firm’s

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knowledge about the market in question to a new state. The case of Home Depot entering China tells us how it thought that one kind of store would be perfect for China, but as it committed to build those stores, it turned out that Chinese customers did not want to engage in business relationships with Home Depot. Having gained that experience, Home Depot developed its knowledge of the Chinese market and re-designed its stores in the host country so that it would be better at building customer relationships. There are two kinds of knowledge that the firm develops from experiences in international business relationships. One is the knowledge developed from a specific experience about the local market that the firm is in. In the Home Depot case, this knowledge is about Chinese customer preferences, regulations, and institutions. Such knowledge is called market-specific knowledge and consists of institutional knowledge and knowledge about business relationships and networks in the foreign market, or foreign market knowledge. The firm also accumulates general knowledge from multiple local markets, such that it is procedural knowledge about internationalization. In the Home Depot case, this knowledge is about the company knowing that its initial mistake was a ‘normal’ stumbling stone along the way to establishing profitable business in a big, attractive new foreign market. This internationalization knowledge is about procedures that are useful to the firm in order to successfully expand internationally. The various types of knowledge from a host market are interrelated in such a way that internationalization knowledge makes it easier for the firm to acquire market-specific knowledge about local business relationships, networks, and institutions. The knowledge development process incorporates experiences from commitments to market-specific business relationships and institutions and it develops the internationalization knowledge of the firm. The literature review on performance and knowledge development is presented in Table 6.4. The topics are the same as for the network

Table 6.4 Performance and International Business Knowledge Development (N = 92) Statistics

No

General IB theories Economic geography, FDI, and strategy Economics and policy Institutions and political environment General management Finance and accounting International entrepreneurship Knowledge and innovation Marketing and supply chain Multinational Knowledge development and internationalization process

11 28 3 8 92 0 34 34 13 11 54

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literature review, with one exception. The last category is ‘Knowledge development and internationalization process’, and it contains search words for the key terms related to the internationalization process and the knowledge development model. Interestingly, only 54 articles concern knowledge development and internationalization process. Reading the articles, it appears that many articles position themselves as contributing to the general area of knowledge development and internationalization process without actually intending to contribute to the specific components of the model. In some cases, authors position their research against, or even contradicting the model. There are 92 articles on performance out of the 599 on knowledge development. This may seem not too many and can be an indication that research and model development often treat performance as an implicit outcome, without explicitly incorporating it in the model. Incorporating performance into future research on knowledge development is a challenge for future research. Of those 92, all concern general management in IB. This is not surprising, given that knowledge is such a central concept in IB. Perhaps it is a bit surprising that as few as 34 articles concern knowledge and innovation, since the selection of articles is on performance and knowledge development. Possibly, this points to a greater need to integrate knowledge and innovation research more with performance, value, and knowledge development. There are 34 articles on international entrepreneurship, and the content of those articles covers the importance for knowledge development in international entrepreneurship and global research. The articles also contain a vibrant debate on the relevance of the knowledge development process for firms that grow very fast. In some cases, scholars have maintained that learning processes are impossible in fast international expansion, because there is too little time. Other scholars argue that knowledge development takes place in international entrepreneurship (Hoang & Antoncic, 2003; Keupp & Gassmann, 2009), it is just that the cycle in the knowledge development process is much faster than with firms that internationalize more slowly. This question is a great challenge for further research. The 28 articles in the areas of economic geography, FDI, and strategy contain research that links strategic issues to geographic location. That is interesting because it links physical geography, which is usually microlevel with strategic considerations that are usually more macro-level. There are several topic areas shown in Table 6.4 that point to limited research. Performance and knowledge development could be researched further in view of general IB theories, since knowledge development and the internationalization process are central to IB. Multinational firms could also be better researched in terms of their performance and knowledge development because the multinational firm creates value by knowledge flows between its units (Ghoshal & Bartlett, 1990; Gupta & Govindarajan, 1994). The need for multidisciplinary research

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Table 6.5 International Business Knowledge Development (N = 599) Statistics

No

General IB theories Economic geography, FDI and strategy Economics and policy Institutions and Political Environment General management Finance and accounting International entrepreneurship Knowledge and innovation Marketing and supply chain Multinational Knowledge development and internationalization process

115 138 24 26 172 0 158 188 52 11 54

is highlighted by some, yet rather few, studies that take the perspective of finance, accounting, political economy, and institutional theory. Turning to knowledge development articles that are not specifically on performance, but rather on IB in general, we find that most articles are on knowledge and innovation (188 articles in Table 6.5). The articles on knowledge and innovation are correlated with other topic areas, and together with the results from cluster analysis, we find that the following areas are in the primary cluster: general IB theories, economic geography, FDI, and strategy, general management, international entrepreneurship, knowledge and innovation, knowledge development and internationalization process. Among these, knowledge development is the strongest predictor, which is not surprising, given that it is the selection variable for the sample. The analysis suggests that knowledge development is an integral part of these areas of study. However, it does not necessarily mean that the relationship between the variables has been extensively explored and understood. For instance, the relationship between knowledge development and international entrepreneurship incorporates a discussion that is somewhat contentious on the speed at which knowledge can be acquired. The areas that show little covariation and are not part of the primary cluster are the following: economics and policy, institutions and political environment, finance and accounting, marketing and supply chain, and multinational. If anything, the fact that these areas have not been examined in an integrated way together with the others points to a need for further research. For instance, institutional theory with its analysis of normative, cultural-cognitive, and regulative factors should be highly relevant to knowledge development. Early internationalization process research produced a concept called ‘psychic distance’, which was defined as ‘factors preventing the flow of information to and from a market’ (Johanson & Wiedersheim-Paul, 1975). The psychic distance concept incorporates institutional, economic, political, and accounting differences between countries. As such, psychic distance is evidence that knowledge development and IB research strives towards a multidisciplinary

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Table 6.6 Methods Used in International Business Knowledge Development Method used

All knowledge development research (N = 599)

Performance subset of knowledge development research (N = 92)

Social network analysis method Quantitative methods Qualitative methods

2 270 88

1 78 6

perspective. Our literature review analysis finds that utilization of a multidisciplinary perspective still eludes IB knowledge development research, and it is therefore a future research challenge. The methods used in empirical studies are displayed in Table 6.6. The relatively high use of quantitative methods is striking, and there are only two articles that use SNA, despite that knowledge is embedded in networks. A future research challenge is to utilize SNA and qualitative research methods more. Given that there are 599 articles on knowledge development, it is striking that relatively few articles use any empirical method at all. Some articles use multiple kinds of methods and the total number of articles that use empirical methods and data is 342 out of 599. The articles that do not use empirical data or methods are conceptual. In general, there seems to be a need for more empirical research, and in particular qualitative, SNA, or combinations of qualitative, quantitative, and SNA methods. To summarize, the key challenges for future research on value in international business knowledge development include the following: • •

• • •

•

Incorporating performance and value explicitly in model development and empirical studies; Better understanding knowledge development in international entrepreneurial firms, and in particular, the relationship between value and performance; Unravelling the role of knowledge development in IB theory; Exploring the relationship between multinational firms, knowledge development, value creation, and performance; Including multidisciplinary perspectives on knowledge development and performance, and in particular in finance, accounting, political economy, and institutional theory; Engaging in empirical research, and in particular qualitative, SNA, or combinations of qualitative, quantitative, and SNA methods.

Future Research Challenges on Value in IB Network and Knowledge Development Research Value in IB can be seen both in sustained internationalization and in performance. The internationalization process theory identifies that value is

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embedded in the ongoing processes of internationalization of the firm. These processes are determined by the state of knowledge development in the firm, and knowledge is developed by international business networks. Networks change over time, partly because of purposeful development by network members, and partly as a result of unintended evolution. For internationalizing firms, the composition of the network at one point in time contains the firm’s state of experience and knowledge at that time. Going back to the Home Depot example, it is clear that its state of knowledge of China at market entry was embedded in the composition of its pre-existing network. After it restructured, its increased experience and improved market knowledge was embedded in the restructured network. To summarize, this review finds a striking lack of articles on performance and networks and the associated value creation and capture, in finance, accounting, economic geography, FDI, strategy, institutions and political environment. For IB knowledge development, this chapter calls for incorporating performance and value explicitly in model development and empirical studies. It is thus both in IB network and knowledge development research that we find performance and value research lacking, and particularly when it comes to explicit measurement and modelling of this relationship. Future research should combine the strong research contributions of individual IB network research topics to advance knowledge of how they relate to each other in value creation. In particular, there is a need to study how value is created by combining knowledge and innovation, general management, and multinational organization. Similarly, there is a need to understand better how knowledge development creates value and applies to international entrepreneurship. Future research could also add much by studying the relationship between multinational firms, knowledge development, value creation, and performance Finally, a great challenge is to better utilize the benefits of SNA and qualitative research methods. This is true for both network and knowledge development research addressing value creation. The reason is that international business knowledge is developed by firms’ international operations (Hymer, 1976) that are informed and embedded in business relationships and networks.

Note 1. Areas with asterisk * were taken from JIBS editorial areas.

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Borgatti, S. P., Mehra, A., Brass, D. J., & Labianca, G. (2009). Network Analysis in the Social Sciences. Science, 323(5916), pp. 892–895. Buckley, P. J. (2002). Is the International Business Research Agenda Running Out of Steam? Journal of International Business Studies, 33(2), pp. 365–373. Carrington, P. J., Scott, J., & Wasserman, S. (2005). Models and Methods in Social Network Analysis. Cambridge: Cambridge University Press. Cook, K. S., & M. Emerson, R. M. (1978) Equity and commitment in exchange networks. American Sociological Review, 43(5), pp. 721–739. Eriksson, K., Johanson, J., Majkgård, A., & Sharma, D. (1997). Experiential Knowledge and Cost in the Internationalization Process. Journal of International Business Studies, 28(2). Freeman, L. C., Borgatti, S. P., & White, D. R. (1991). Centrality in Valued Graphs: A Measure of Betweenness Based on Network Flow. Social Networks, 13(2), pp. 141–154. Ghoshal, S., & Bartlett, C. A. (1990). The Multinational Corporation as an Interorganizational Network. Academy of Management Review, 15(4), pp. 603–626. Griffith, D. A., Cavusgil, S. T., & Xu, S. (2008). Emerging Themes in International Business Research. Journal of International Business Studies, 39(7), pp. 1220–1235. Gupta, A. K., & Govindarajan, V. (1994). Organizing for Knowledge Flows within MNCs. International Business Review, 3(4), pp. 443–457. Hoang, H., & Antoncic, B. (2003). Network-Based Research in Entrepreneurship: A Critical Review. Journal of Business Venturing, 18(2), pp. 165–187. Home, L., & Burkitt, L. (2012) Depot Learns Chinese Prefer ‘Do-It-for-Me’. Wall Street Journal, Sept. 14. Hymer, S. (1976). The International Operations of National Firms: A Study of Direct Foreign Investment. Cambridge, MA: MIT Press, 139–155. Johanson, J., & Vahlne, J.-E. (1977). The Internationalization Process of the Firm: A Model of Knowledge Development and Increasing Foreign Market Commitments. Journal of International Business Studies, 8(1), pp. 23–32. Johanson, J., & Vahlne, J.-E. (2009). The Uppsala Internationalization Process Model Revisited: From Liability of Foreignness to Liability of Outsidership. Journal of International Business Studies, 40(9), pp. 1411–1431. Johanson, J., & Wiedersheim-Paul, F. (1975). The Internationalization of the Firm: Four Swedish Cases. Journal of Management Studies, 12(3), pp. 305–323. Keupp, M. M., & Gassmann, O. (2009). The Past and the Future of International Entrepreneurship: A Review and Suggestions for Developing the Field. Journal of Management, 35(3), pp. 600–633. Lazer, D., Pentland, A., Adamic, L., Aral, S., Barabási, A.-L., Brewer, D., Christakis, N., Contractor, N., Fowler, J., Gutmann, M., Jebara, T., King, G., Macy, M., Roy, D., & Van Alstyne, M. (2009). Computational Social Science. Science, 323(5915), pp. 721–723. Peng, M. W. (2004). Identifying the Big Question in International Business Research. Journal of International Business Studies, 35(2), pp. 99–108. Pisani, N. (2009). International Management Research: Investigating its Recent Diffusion in Top Management Journals. Journal of Management, 35(2), pp. 199–218. Powell, W. W. (1990). Neither Market Nor Hierarchy: Network Forms of Organization. In B. Staw & L. L Cummings, eds. Research in Organizational Behavior, Vol 12. Greenwich, CT: JAI Press, 295–336.

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Appendix Number of IB Articles on Networks and Knowledge Development per Journal

Journal title

Number of articles on networks

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

71 42 34 27 25 24 22 17 16 16

11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

International Business Review Journal of International Business Studies Management International Review Journal of International Entrepreneurship Journal of World Business Strategic Management Journal Journal of International Management Journal of Business Research International Marketing Review The International Journal of Human Resource Management Industrial Marketing Management Thunderbird International Business Review Research Policy Journal of Management Studies Asia Pacific Journal of Management International Journal of Entrepreneurship and Innovation Management Journal of International Marketing Journal of Business Ethics Columbia Journal of World Business European Business Review Global Strategy Journal Journal of Small Business and Enterprise Development European Journal of Marketing European Management Journal International Studies of Management & Organization Journal of Business & Industrial Marketing Organization Science R & D Management Regional Studies Critical Perspectives on International Business

14 13 12 11 10 10 10 9 8 8 8 8 7 7 7 7 7 7 7 6

Journal title

Articles on knowledge development

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

59 34 24 22 20 14 14 14 8 8 8 7 6 6 6 6 6 5 5 5

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

International Business Review Journal of International Business Studies Journal of World Business Journal of International Entrepreneurship Management International Review International Marketing Review Journal of International Management Journal of International Marketing Asia Pacific Journal of Management European Business Review International Small Business Journal Journal of International Business Studies Baltic Journal of Management European Management Journal Journal of Business Research Journal of Business Venturing Small Business Economics Entrepreneurship Theory and Practice Industrial Marketing Management International Journal of Entrepreneurship and Small Business Journal of Small Business and Enterprise Development Advances in International Marketing European Journal of Marketing Family Business Review International Business Review International Journal of Business and Globalisation Journal of Asia Business Studies Journal of Management Journal of Management Studies Journal of Small Business Management

5 4 4 4 4 4 4 4 4 4

7

Value Co-Creation in Social Media Networks Svetla Marinova, Jonas Eduardsen and Marin A. Marinov

Introduction The concept of value has been studied by a number of researchers implying variations in its interpretation. Zeithaml (1988) defines value as the outcome of the individual’s assessment of the benefits relative to the cost associated with buying a specific product or service, or a combination of these. Marinova, Larimo, and Nummela (2017) suggest that value is the worth or benefit of a product or service to an individual, albeit, in some cases, value can have negative connotation when the cost substantially exceeds the benefit in acquiring a product and/or a service. In this view, value is subjective and dependent on the contextual situation and the exchange associated with it (Zeithaml, 1988; Ravald & Grönroos, 1996), which can be often determined by the bargaining power of a customer or the position of a customer in a value chain, or in the buying process (Ravald & Grönroos, 1996). Similarly, Woodall (2003) defines value associated with the benefit of a product and/or service to a customer as “any demand-side personal perception of advantage arising out of a customer’s association with an organization’s offering, and can occur as reduction in sacrifice: presence of benefit (perceived as either attributes or outcomes): the resultant of any weighted combination of sacrifice and benefit (determined and expressed either rationally or intuitively) or an aggregation, over time, of any or all of these” (p.  21). Hence, value is dependent on the individual’s perception of a product and/or service, perception of the relationship between costs and benefits at a given point in time, or a combination of these over a period of time when value cannot be determined at the point of purchase, e.g., tourist travel, holiday purchases, and other service provision or purchasing a product the use of which does not take place at the time of the purchase. In line with Normann and Ramírez (1993), Prahalad and Ramaswamy (2004a), Vargo and Lusch (2004) and Vargo, Maglio, and Akaka (2008), O’Hern and Rindfleisch (2015) argue that value creation was initially placed in the firm, whereby customers had little influence on the process. This effectively left value creation in the firm, while customers were receiving and using this value through exchange. However, Grönroos

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(1997) suggests that the very product could be acquired by a customer in a transaction, but it alone is not adequate and sufficient for the customer perceived value as the value or worth of a product is manifested in the relationship between a customer and a product and between a customer and a seller where value should be seen from a relationship marketing perspective. In such a view, the performance of a product in its use (value-in-use) and the additional service following a transaction, as well as associated with the relationship costs and benefits, should also be considered. Such a view placed the customer as an actor in the value creation process, contributing to the overall value of an offering, related to product use and service provision. In recent years, social media such as Facebook, LinkedIn, and Twitter have experienced wide adoption by people across all countries, with billions of users actively using these social media to connect, communicate, and collaborate (Kane, Labianca, & Borgatti, 2014). Because of this extensive adoption by people across all countries, organizations are increasingly exploring how they can use social media to create, communicate, and deliver value (Felix, Rauschnabel, & Hinsch, 2016). For example, organizations are actively using social media to monitor and analyze conversations taking place in various social media to understand how customers view their organization, its actions, and products and services (Felix, Rauschnabel, & Hinsch, 2016). Yet, there is relatively little academic research seeking to explore the impact of social media for organizations in the context of marketing, despite social media introducing substantial changes to the communication between organizations, communities, and individuals (Kietzmann et al., 2011). Thus, managers are left with little knowledge about the challenges and opportunities afforded by social media. Against this background, we explore the impact of social media for organizations in terms of value co-creation and identify how firms can use social media as a platform for facilitating value co-creation. Based on this, we develop a holistic framework for social media–driven value co-creation. Thus, we contribute to the literature on social media marketing and value creation by addressing an important theoretical and managerial research gap. To do this, we will first explore the concept of value and value creation. Next, we introduce value co-creation, including the main reasons highlighted in the literature for engaging customers in the value creation process. Finally, we discuss how social media can act as an engagement platform to co-create value.

Value Creation and the Role of the Customer As Grönroos (1997) suggests that the services provided by the relationship between exchange parties should be considered when evaluating value, Vargo and Lusch (2004, 2008) in their argument for a shift from a product-dominant (P-D) to a service-dominant (S-D) logic place the

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customer in the focal point in marketing and suggest that value is defined by the customer who can participate in and influence or even define the acquired value, instead of focusing on the outputs that a seller delivers to a customer. This effectively brings value to the forefront of marketing research arguing that customers are not only recipients of value, but more so initiators and creators of value together with the product and/ or service provider. Along a similar vein, Grönroos and Voima (2011), Gummerus (2013) as well as Grönroos and Gummerus (2014) argue that service logic (SL), which is somewhat different from the S-D logic, is most important in understanding the role of the customer in value creation. According to them in the S-D logic the value creation is firmdriven, while value “gets created in customer processes, and value creation is customer driven” (Grönroos & Gummerus, 2014: 206) in SL. This is a subtle, yet important differentiation of the role of the customer as an initiator or as subjected to the initiative for value creation and co-creation in relation to a product and/or service offering. Moreover, customer empowerment has led customers to embrace a pro-active role as they have access to more information, can accumulate knowledge, experience, and other resources to influence their own value creation (Normann & Ramírez, 1993). The S-D logic, using Aristotle’s differentiation between exchange value and value-in-use, emphasizes the importance of value-in-use as it allows for creation of value in the usage of a product and/or service, which in effect means that it is at the core of the value co-creation process. In that process the roles of the supplier and customer are not distinct, rather they allow for joint input, interaction, reciprocal relationship development, and trust so that “value is always co-created, jointly and reciprocally, in interactions among providers and beneficiaries through the integration of resources and application of competences” (Vargo, Maglio, & Akaka, 2008: 146) and “there is no value until an offering is used—experience and perception are essential to value determination” (Vargo & Lusch, 2006: 44). Correspondingly, Grönroos and Voima (2011) describe the concept of value-in-use as emerging for the customer in using a product and or service: “Logically value does not exist before it is created (or emerges) in the usage process, where it is accumulating and it cannot be assessed before usage” (Grönroos & Voima, 2011: 5). Ballantyne and Varey (2006) adopt a somewhat different view as they relate the value-in-use with the value proposition a firm makes to a customer and the customer actually adopts. They also relate the value creation to relationship development, communication in the interaction in this relationship, and knowledge renewal. Thus, they explicitly associate value with knowledge and knowledge development, i.e., renewal that stems from the relationship development, but also from the usage experience of the customer, which indicate the processual nature of value-in-use.

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Value Co-Creation: Actors and Activities The relational characteristics that stress the interactive and co-creational nature of value are located in the productive exchange connections between the customer and the supplier. Furthermore, Grönroos and Voima (2011) argue that value creation is not an act at a specific point in time nor is it with a single actor. Instead, it happens in three different spheres: provider, customer, and a joint sphere where value creation takes place as an all-encompassing process and as value-in-use. Thus, the former takes place both in the provider and in the customer sphere, whereas creation of value-in-use happens in the customer sphere and in interaction, which means that co-creation of value can be observed in the joint sphere with mutuality and reciprocity (Grönroos & Voima, 2011). Subsequently, O’Hern and Rindfleisch (2015) define value co-creation as: “A collaborative new product development (NPD) activity in which customers actively contribute and/or select the content of a new product offering” (p. 86). Thereby the customer can become an active participant in the creation of the product offering of the company and thus co-create value. In this new customer role, customers have become “from isolated to connected, from unaware to informed, from passive to active” (Prahalad & Ramaswamy, 2004b: 4). In this process “co-creation transforms the consumer into an active partner for the creation of future value” (Roser et al., 2009: 4), and co-creation “occurs whenever consumers interact with companies or products and thereby have an active role in the shaping of their experience and ultimately value perception” (Roser et al., 2009: 5). The notion of customers being at the core of the value co-creation process challenges the traditional distinction between supply and demand and the focus on products. Product characteristics are found to be expressive of the products, services, and related experiences customers seek to co-create, and the specific experience environment. Prahalad and Ramaswamy (2004a) argue that the consumer and the firm are intimately involved in co-creating value that is unique to the individual consumer and the firm. This understanding of co-creation of value indicates the evolving and changing role of the customer from a passive target to an active participant providing input in the value creation process. Similarly in the S-D logic, Vargo and Lusch argue that “the customer is always a co-creator of value” (Vargo & Lusch, 2007: 7). This expresses that customers no longer receive value through purchase of products and services alone, but the individual customer creates value through interactions with an organization, i.e., in a creative collaboration process between the organization and its customers (Roser et al., 2009). Consequently, “if there are no direct interactions, no value co-creation is possible” (Grönroos & Voima, 2011: 290) and it is the customer who is in charge of the value creation process while the organization can be considered as

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the facilitator in the co-creation process. Thus, a company may produce products or services with a potential value, but it is only when customers engage with, adopt or adapt, and use these products and services that value emerges. The direct interaction between customers and companies enables value co-creation. Such an argument redefines the notion of the companies developing and offering own pre-determined or set value propositions to customers. Instead, companies may have developed value propositions, reflecting their core capabilities, competencies, and positioning strategy, but these cannot create value independently of customers; companies should engage with customers and utilize the opportunity to inform, assist, influence, and support the value co-creation process together with customers (Grönroos & Voima, 2011). Based on this approach, the DART model of value co-creation of Prahalad and Ramaswamy (2004b) extrapolates the main constructs in value co-creation as dialogue—including interactivity and engagement, access to information, risk assessment of participating in the co-creation, and greater transparency by decreasing the information asymmetry between customer and company. According to Prahalad and Ramaswamy (2004b), these represent the fundamental building blocks of value co-creation and enable companies to better engage customers as collaborators in the values creation process. Smith and Colgate (2007) also identify information access and interactions, but suggest that the nature of products, the environment, and ownership may also be added to the key constructs defining value co-creation. Value co-creation as a process should not be associated with information exchange between a company and a customer in order to reduce information asymmetry only. Indeed, value co-creation takes place in the interaction between an organization and a customer and thus social exchange and its embeddedness, advocated by the social exchange theory, is a point of reference. The theory of social exchange propagates the exchange of goods, both material and non-material, between social actors (Homans, 1958), mostly in a dyad (Ekeh, 1974). In interactions dominated by individualism, it is then generally accepted that “Not only does he [the individual] seek a maximum for himself, but he tries to see to it that no one in his group makes more profit than he does” (Homans, 1958: 606), to achieve an equilibrium between the personal reward and the work put into the exchange (Homans, 1958). Dissimilarly, Lévi-Strauss (1949) suggests that social exchange is underpinned by the principle of the marriage system that defines restricted exchange and generalized exchange. Restricted exchange is characterized by reciprocal exchange in dyads (Lévi-Strauss, 1949; Ekeh, 1974), while the generalized or indirect exchange is explained as a circular pattern in which giving and receiving happens across groups—triads or multi-party (Ekeh, 1974). Furthermore Lévi-Strauss (1949) explains that “direct exchange is possible only in what we have called disharmonic regimes (. . .) while

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indirect exchange arises, as the only possible mode of integration of groups, in harmonic regimes” (Lévi-Strauss, 1949: 442). With this being said, it seems that Lévi-Strauss (1949) favors the generalized/indirect exchange, and the possibility of integrating groups within this model of exchange. In these two perspectives, Homans (1961) proposes that the motivating force in exchange comes in forms of rewards or punishment, whereas Lévi-Strauss (1949) suggests that exchange is a regulated form of behavior in the context of societal rules and norms and has a social value. In a value co-creation perspective, the dyadic individual benefit oriented view indirectly proposes that the motives for a customer and a firm to co-create value lie in the expectation of receiving some benefit from the exchange (Füller, 2010)—extrinsic or intrinsic incentives and whether this benefit expectation is self-orientated or other-orientated (Roser et al., 2009). The combinations of these four aspects show the consumer motives for engaging in value co-creation—e.g., a consumer with intrinsic incentives and with other-orientation will co-create with the motive of helping others and/or belonging to a group, whereas a consumer with extrinsic incentives and a self-orientation will co-create to receiving material rewards. The other two combinations could be described as either co-creation for learning and enjoyment or for image, status, or recognition (Roser et al., 2009). Füller (2010) contributes with the notion that “consumers’ motives in contributing to co-creation . . . may be heterogeneous and depend on their personality” (Füller, 2010: 99) and elaborates that groups of consumers with different motivations for cocreation may also have different expectations towards co-creation when it comes to the process, the co-creation content, and the co-creation partners. He also discusses extrinsic and intrinsic motivations, but adds to them internalized extrinsic motivation by placing it between the intrinsic and extrinsic motives, and includes learning and reputation (Füller, 2010). Personal characteristics are found also to affect consumer motives for participating in value co-creation, i.e., those associated with innovation or technical competences, and define the consumer motives summed up as curiosity, intrinsic, need, and reward associated with four different consumer types in value co-creation, i.e., reward-oriented consumers, need-driven consumers, curiosity-driven consumers, and intrinsically interested consumers (Füller, 2010) In the context of online services, Blazevic and Lievens (2008) identify roles consumers take for knowledge co-production. These encompass passive users who show rather limited interest in value co-production as they search for solutions to problems themselves; active informers who wish to help companies improve and serve them better, motivating these roles to provide information about problems; and bidirectional creators who do not only inform about problems, but also seek to solve them and by doing so actively co-produce new knowledge (Blazevic & Lievens,

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2008). Arguably, the bidirectional creators are consistent with the premise of Vargo and Lusch (2007) that the customer always is a co-creator of value. The bidirectional creators are consumers that seek social interaction, which can be provided by an online community in which the customer can also provide solutions (Blazevic & Lievens, 2008). Apart from participating actors, value creation involves activities and critical junctures that can effectively deliver greater value to the actors or minimize the value they can get. Saarijärvi, Kannan, and Kuusela (2013) suggest that creating value “captures the activity or way; the mechanism through which the resources provided by different actors are integrated into value creation processes and then developed into value-in-use” (p. 11). Any actors—being companies, customers, community, society— can take the lead in the value co-creating activities, i.e., in terms of coproduction, co-development, and co-design, while engaging other actors in the process using enabling mechanisms such as technology in the form of distant communication platforms, the Internet, and so on. For example, O’Hern and Rindfleisch (2015) identify collaborating, tinkering, co-designing, and submitting with reference to the degree of power and control exercised by the customer and the company as key actors in the value co-creation process. These imply a different level of customer engagement in co-creation. Whereas a customer may have relative power in collaborating activities by developing and improving the core constituents of a new product or/and service, in co-designing a customer may have ideational autonomy from the company, yet, working with or competing against other providers of new product ideas, content, and design. In tinkering, a customer may demand or initiate modifications to a product, thus defining specific product/service features that would meet the unambiguous customer needs. In doing so, the customer has a relatively high degree of power, but the control over the key characteristics of the product/ service and the fulfillment of the modifications are determined by the company. In submitting, the company holds full control over the process (O’hern & Rindfleisch, 2015). For instance, technology can facilitate the transfer of resources between actors in an effective and cost-efficient way. For instance, in the context of product and/or service innovation, technology has long been acknowledged as a key enabler and facilitator of customer aggregation and value co-creation (Schiavone, Mettalo, & Agrifoglio, 2014). Technology breakthroughs create opportunities for value co-creation in view of changes in customer preferences and needs; development of innovative goods, services, and experiences; changing industry channels for reaching customers; and by re-defining industry boundaries to enable sharing and enacting competences, knowledge, and capabilities in a different way for value co-creation (Payne, Storbacka, & Frow, 2008). Such changes are most often company-, customer-, or competitordriven. Adopting a slightly different perspective, Zhang and Chen (2008) suggest that the main value co-creation activities encompass involving

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customers in marketing and sales, involving customers in service care, involving customers in new product development, and managing customers as part-time employees. To better understand the arguments about the value co-creation activities and their mechanisms, we need to identify the type of value that is targeted in the process of co-creation, or at least to be aware of “what value” is co-created, i.e., whether the emphasis is on economic, functional, emotional, or symbolic customer value as defined by Saarijärvi (2012). To exemplify, companies that establish their business on an economic customer value proposition can focus on co-production and co-distribution as a value co-creating mechanism. Companies should initiate co-development and co-production of the whole shopping experience if they focus on a functional customer value proposition, whereas an emotional customer value proposition requires detailed attention to co-design and co-experiences as value co-creation mechanisms (Saarijärvi, 2012). Thus, the appropriate value co-creation mechanism in any value co-creation process is defined by the focus in the positioning strategy of a firm and its desired value proposition for the customer. We see the value proposition as a “proposal” or an “invitation” to a customer and a community of other actors, such as a brand-associated community (Merz, He, & Vargo, 2009), to engage in a co-creation process and eventually build up a lasting relationship in order to gain benefits from the engagement. The value that a company can strive to create for a customer can encompass functional/instrumental value, experiential/ hedonic value, symbolic/expressive value, and cost/sacrifice value. The distinction between these four kinds of value is on the extent to which the product/service delivers desired characteristics, creates appropriate experiences, feelings and emotions, whether the customer attaches psychological meaning to it, or the transactional cost associated with it, respectively (Smith & Colgate, 2007). Seen from a company perspective, this can contribute to differentiated offerings targeting individual customers or customer segments.

Value Co-Creation in Social Media Networks Social media refers to “a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of User Generated Content” (Kaplan & Haenlein, 2010: 61). In addition to enabling the creation and exchange of user-generated content, social media also enable individuals to “(1) construct a public or semi-public profile within a bounded system, (2) articulate a list of other users with whom they share a connection, and (3)  view and traverse their list of connections and those made by others within the system” (Boyd & Ellison, 2008: 211). Variations in social media networks are linked to identity, conversations, sharing, presence,

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relationships, reputation, and groups (Kietzmann et al., 2011) that define the specifics of their user experience (Kietzmann et al., 2011). Kietzmann et al. (2011) explains how these seven functional building blocks of social media are present in varying degrees across different social media. While social media is often used as an all-encompassing term, it is important to note that the term is applied to various technologies that differ in scope and functionality. For example, Kaplan and Haenlein (2010) distinguish between different types of social media by their social/presence/richness and self-presentation/self-disclosure and distinguish between blogs, collaborative projects (e.g., Wikipedia), content communities (e.g., YouTube, Soundcloud), social networking sites (e.g., Facebook, LinkedIn), virtual social worlds, and virtual game worlds. These different social media differ in their functionalities, with social networking sites such as Facebook and LinkedIn focused on relationships, sharing, conversations, and identity, while content communities such as YouTube are more dedicated to the sharing and consumption of richer forms of media like video (Kietzmann et al., 2011). In order to fully exploit the opportunities afforded by social media for value co-creation, organizations must pay close attention to the differences in the social media functionality and their implications for facilitating customer engagements. It is the collaboration in the online social media between diverse groups of users and the technology enabling such collaboration that can trigger and sustain a specific user community to connect, participate, generate content, share information, and collaborate. Users engage in these on websites that encompass social networking sites, wikis, podcasts, blogs, vidcasts (or vlogs), games, and various online virtual worlds (Henderson & Bowley, 2010). The main difference from mainstream media usage is the collaborative aspect, meaning that everyone has the possibility to create, comment, and add to the media content in the form of text, pictures, audio, video, self-created images, and communities (Gyimóthy & Larson, 2015). This collaborative element is key to understanding how social media platforms enable value co-creation as no user accepts a given value proposition, but a social media platform enables a value proposition to be shaped, re-shaped, or even initiated by social networks that are based on shared ideas and interests. Therefore, social media swing power from producers to users, from a value proposition that is given to a customer to a value proposition in which customers are active participants as this leads “to a shift from the individual to the collective, as they leverage the power of relationships and the collective wisdom of many” (Berthon et al., 2012: 263). Effectively, individuals and communities creating, sharing, and consuming the media content get the power previously embedded in marketing and public relations only (Kietzmann et al., 2011). Consequently, the boundary between content producers (be they companies developing products and/or services) or customers, bloggers, interested online communities is blurred and hence, the position of

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producers and customers may become somewhat fuzzy (Berthon et al., 2012). This enables co-creation not only between producers and customers, but also involving other social media users that have an interest in the product and/or service, although they may not be direct customers as suggested by Prahalad and Ramaswamy (2004b) and Roser et al. (2009). The traditional customer who can use websites and the Internet in general as recipients of content that might be useful for purchase decisions has evolved to become an active participant in creating, modifying, sharing, and discussing the Internet content with relevance to products and services of self- or peer group interest. Of course, one should recognize that according to the social presence theory, media platforms differ in the degree of social presence, whereby the larger social presence leads to greater influence of the communication actors on each other’s behavior (Kaplan & Haenlein, 2010: 61). The Internet and Web 2.0 technologies are media platforms that have enabled the conversion of a one-to-many to a many-to-many communication and discourse (Berthon et al., 2012). The social media sites create new virtual contacts and strong ties within communities of interest forming social networks (Boyd & Ellison, 2008) connecting on common views or activities (Boyd & Ellison, 2008; Kaplan & Haenlein, 2010). The user-generated content, i.e., content created by end-users on social media platforms, allows users to exchange ideas, opinions, new inputs, and commentaries regarding any product and/or service. It can also provide a direct exchange link between individuals (including customers and users with interest in a product and/or service) and organizations, which allows them to interact in an interconnected environment of a wide range of feedback and linking systems (Aula, 2010). The exchange can be on product/service characteristics, usage, development, innovation, marketing, and sales. In addition, such an environment has challenged companies by changing the power and control relationship with customers with the latter acquiring actual power to influence, develop, manage, and even sometimes manipulate or destroy the relationship with the firm on social media platforms. Hence, customers have become active participants in product and/or service development and promotion for value co-creation by using various social media (Yadav, Kamboj, & Rahman, 2016). It enables access to information for both customers and companies, with customers having greater knowledge of the company’s activities, whereas the company can gain information about customer preferences and ideas, their geographic position, and their social media profiles. Moreover, social media can act as a low-cost knowledge sharing and value co-creation platform and as a result with its high interactivity to substantially reduce the cost of gathering the input of many customers (Piller, Vossen, & Ihl, 2012; Kao et al., 2016), irrespective of their geographic location. The interaction on social media leads to value co-creation, but social media users

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or customers should engage, act upon their intent to participate with input, and create an effective interaction. The very social media interaction can extend the benefits for users as they become a community of common interest, enriching their knowledge and experience through shared input. The benefits could be cognitive and learning, social integrative and personal integrative, and hedonic benefits, which may significantly influence customer participation in value co-creation (Nambisan & Baron, 2009). Customers can learn more about the product and/or service sought creating a cognitive benefit. The social integrative benefits are associated with the possibility to develop social bonds. Personal integrative benefits stem from consumers being able to enhance their reputation and status. Hedonic benefits come from the pleasure of interacting on social media (Lorenzo-Romero, Constantinides, & Brünink, 2014). Consequently, in such a virtual social environment the DART model (Prahalad & Ramaswamy, 2004b) could be applied, but it should be extended with the additional benefits for customers who can co-create value with the firm. For example, Kao et al. (2016) have developed a stage model, including interaction, engagement, proposition, action, and realization. Schiavone, Mettalo, and Agrifoglio (2014) suggest that social media platforms have radically changed the interaction between firms and customers during value co-creation and propose that cocreation can happen through technology management, i.e., “the abilities to aggregate customers and engage them, to carry out actions through social media” (p.  277). As Homans (1961) proposes in the theory of social exchange, customers can participate in the value co-creation based on their motivation level (Lorenzo-Romero, Constantinides, & Brünink, 2014) and the benefits they perceive in the exchange on social media platforms. Effective value co-creation requires some form of engagement platform that enables actors to share their resources and adapt their processes to each other. It has been argued that social media platforms can act as such engagement platforms by enabling resource sharing and function as a systems resource integrator and facilitate higher-order resources (Singaraju et al., 2016). Singaraju et al. (2016) argues that using the functionalities offered by social media platforms, organizations and customers can more seamlessly integrate their own resources for the mutual benefits of both customers and the organization. Thus, social media platforms act as a technological platform, where resources can be pooled to allow for value co-creation opportunities to appear and be sustained. One should also note that customer subjective norms can affect engagement in social media platforms, as well as peer pressure, perception of social media as enabler of communication or as a threat to customer privacy, or an innate belief that social media is trustworthy or not. In other words, customers’ co-creation experience is not only affected by

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the process itself, but is influenced by customer characteristics and the co-creation environment. Appreciation from others in the co-creation process, interaction quality, as well as customer readiness, consisting of customer motivation, role clarity and ability, are customer characteristics that affect value co-creation experience and outcome. The expected co-creation benefits for the customer co-creation effort can be hedonic, cognitive, social, personal, pragmatic, and economic (Verleye, 2015). As discussed previously, customers have different motives for engaging in co-creation (Füller, 2010; Roser et al., 2009), and hereby the expected benefits also differ. Verleye (2015) extends the combinations of intrinsic-, extrinsic-, and internalized extrinsic benefits presented by Füller (2010). Intrinsic relates to the hedonic benefits, extrinsic to pragmatic and economic benefits, while internalized extrinsic benefits refer to cognitive, social, and personal benefits (Verleye, 2015). As these expected benefits are different among customers, the co-creation experience dimensions, which define what customers actually gain, will not have the same importance for all customers. In terms of the co-creation environment, “(. . .) co-creation environments with high technologization and connectivity—such as online customer communities or VCEs—can generate better overall co-creation experiences than other co-creation environments by generating significantly more learning opportunities” (Verleye, 2015: 336). However, similar to the previous discussion of customer motives by Füller (2010), Verleye (2015) also underlines the importance of customer heterogeneity in terms of the different expectations of co-creation benefits. For example, high levels of technologization and connectivity can positively affect the intrinsically interested individuals. Multiple environments are a way of reacting to customer heterogeneity in terms of expected co-creation benefits (Verleye, 2015). Customer heterogeneity has also been acknowledged by the world-renowned producer of brick construction toys Lego (Antorini, Muñiz, & Askildsen, 2012: 78) from experience that multiple platforms motivate participation of more users (Antorini, Muñiz, & Askildsen, 2012). Central to the S-D logic is the proposition that customers should become a co-creator of value. There are different ways in which customers can be engaged in the value creation process. Romero and Molina (2011) distinguish between four different roles that customers and online customer communities can play as co-creators: (1) customers as co-designers, i.e., engaging customers in both the front-end (e.g., idea generation, conceptualization) and back-end phases (e.g., design and testing) of product development, (2) customers as innovators, i.e., providing customers and customer communities with the necessary tools to develop their own products and services, (3) customers as marketers/branders, i.e., using social media and its word-of-mouth mechanisms to facilitate user-generated marketing/branding and dialogue, and (4) customers as

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socially responsible actors, i.e., using social media to engage online communities of so-called conscious consumers to create products and services that meet these consumers’ expectations and requirements in terms of both economic, social, and environmental performance. Thus, value cocreation occurs when customers and organizations interact and thereby actively participate in the value creation process that can range from codesign and co-conception to co-production and co-promotion in various co-creation models (Roser, DeFillippi, & Samson, 2013; De Koning et al., 2016). A framework of research on value co-creation in social media is proposed in Figure 7.1.

Types of co-creaon acvies (Roser et al., 2013) • Co-design • Co-concepon • Co-producon • Co promoon

Roles of customers and online customer communies as co-creators (Romero and Moina, 2011) (1) customers as co-designers (2) customers as innovators (3) customers as marketers/branders (4) customers as socially responsible actors

Co-creaon environment (Verleye, 2015) o Technologizaon o Technology management (Schiavone et al., 2014) o Connecvity o Mulple social plaorms

Customer heterogeneity Customer characteriscs o Subjecve norms o Customer readiness o Ability

• • • • • • • •

• • •

Customer movaon (Füller, 2010; Verleye 2015) o Appreciaon from others o Interacon quality o Role clarity o Peer pressure o Intellectual interest o Percepon of social media

Co-creaon experience Speed of communicaon Self-managed parcipaon Transparency Communicaon feedback Input opportunity (engagement) Learning opportunies Resource sharing and integraon Shaping higher order resources (Singaraju et al., 2016)

Customer benefits (Füller, 2010; Lorenzo-Romero et al, 2014; Verleye 2015) Intrinsic benefits (hedonic), Extrinsic benefits (pragmac and economic benefits), Internalized extrinsic benefits (cognive, social and personal benefits).

Figure 7.1 Value Co-Creation in Social Media—An Overview Source: The authors.

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One example of how organizations can use social media to engage customers in the value creation process is Danske Bank. In 2013, Danske Bank introduced MobilePay, which is an application that makes money transfer easier by allowing its users to transfer and receive money via their smartphone. This product development process was developed as a co-creation process. During the product development process, Danske Bank involved its users in the development and improvement of the application. Specifically, Danske Bank used its Facebook page to facilitate a dialogue with its users in an open forum, where the users could write about their experiences with the application and their ideas for future functionalities. The company then used this feedback to get new ideas for design and functionalities and to more deeply understand the aspiration, motivations, and needs of their customers. Thus, Danske Bank used social media to engage customers in the value creation process by using its online community to gather innovative ideas from its customers and screen existing ideas. However, organizations do not automatically reap the benefits from incorporating social media into their product or service development processes. Successful value co-creation requires a number of specialized competencies in actively engaging and involving customers in the value creation process, collaborative and relationship-building skills, and knowledge about how to engage, identify, and select the right customers to participate in the co-creation process (Roberts & Piller, 2016).

Conclusion Value co-creation in social media platforms is a complex process of actor engagement where firms and heterogeneous customers and/or customer communities interact on technologically enabled platforms to co-create value in co-design, co-conception, co-production, and co-promotion. Thus customers do not only consume value created by companies, but they proactively engage in a timely, transparent, self-managed approach for mutual learning and resource sharing to enhance product and service provision. Thus, customers assume various roles in the co-creation process and gain intrinsic (hedonic), extrinsic (pragmatic and economic), and internalized extrinsic benefits (cognitive, social, and personal) benefits. Companies also participate in this co-creation process in order to design, initiate, launch, and augment product/service offerings and thus enhance their organizational explorative and exploitive innovation capabilities, promotion appeal, and consumer reach. Internet platforms serve as enablers and a meeting ground for customers and companies to co-create, but they also bring in new organizational capabilities of creating communities of common interest, providing information, speed and transparency in the co-creation process. In order to develop these higher-order capabilities (Singaraju et al., 2016), social media offers various platforms to respond to customer

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heterogeneity, as well as to diverse company needs, develop new functionalities and capabilities, empower customers, while customers have become proactive participants who have embraced these new responsibilities and opportunities of co-creator empowerment. Thus, while social media can provide a rich source of external knowledge that can be used to co-create value, organizations must acquire new skills and competencies to adequately benefit from social media. Without such competencies, organizations will simply not be able to benefit from the mass of customers consistently engaging with the organization (Martini, Massa, & Testa, 2013).

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8

Value Creation in Context A Value Chain Locus Perspective Svetla Marinova, Susan Freeman and Marin A. Marinov

Introduction Value creation and co-creation is often associated with buyer-supplier operations in global value chains or global production networks (Chetty and Holm, 2000; Moore and Manring, 2009). In these value chains, small and medium-sized enterprises (SMEs) can act as suppliers and customers vis-à-vis other firms and have different impacts on enhancing overall supply chain performance (Bhosale, Kant and Shankar, 2018). Despite this, we still know little about value creation in value chains as perceived by participating SMEs. Smaller companies exchange inputs and/or outputs with domestic and foreign firms, and in this process, economic value is accumulated through business-to-business (B2B) exchanges until the final end-customer is served with a product/service/solution with a unique value proposition (Ritchie and Brindley, 2000; Kumaraswamy, Mudambi, Saranga and Tripathy, 2012). While marketing literature has captured and discussed value, there has been little discussion on the value created by firms and co-created with other firms and both have often been used interchangeably. SMEs along a single international value chain have varied power and control and engage differently in the creation of value based on their position and competitive advantage. Research has mostly explored in which activities of the value chain (Porter, 1985) value is added or derived by a firm. In line with neoclassical economics, it is generally assumed that value is created through firms’ participation in value chains in some primary or support activities and is to be ultimately “consumed” by targeted customers, in B2B or business-to-consumer (B2C) markets. The firm-specific structural or contextual factors play a role in conditioning the value a firm creates and/or co-creates. In this sense, a firm acts as an incubator, facilitator and enabler of value creation. However, research has rarely explored a value chain participant firm and that of multi-firm satisfaction in co-creating value along a supply chain that includes suppliers and customers. Increased participation has shifted more power to customers (Hsieh, Yen and Chin, 2004) and to the dominant

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integrator firm within supply chains. However, such a power shift has the potential to decrease the value exchange in co-creation and increase conflict along the supply chain among participant firms. In academic literature, our meaning of value, in spite of its unique functional, operational or strategic perspectives, demonstrates an evident consensus and explicit assumption in developing the notion that it is central to the purpose of any business and is essential to the business, its network of suppliers, customers and stakeholders (Payne, Storbacka and Frow, 2008). Therefore, we need greater recognition of the benefits of a service-ecosystem perspective that places centrality to context in value creation. By introducing a systems perspective into the study of marketing and supply chain position, we acknowledge that creating value takes multiple actors who work together to create a supportive environment for value creation (Nadgrodkiewicz, 2013; O’Connor and Reed, 2015). Thus, we need to place greater significance on research that explores the roles played by various firm constituents along shared supply chains. This would then address the implied assumption that customer satisfaction alone is only half the process, if we really want to fully understand the value creation process, the manner in which resources are integrated, what types of value are co-created and explicitly place the centrality of value-in-context (Akaka, Vargo and Lusch, 2013). Therefore, we argue that social structures shape contexts and context enables social structures within which value emerges and benefits its constituents. In this interaction, sociocultural forces and individual and personal trajectories (Burke, Joseph, Pasick and Barker, 2009) interplay and influence the perceptions of the value created by the firm. This premise is particularly important as this chapter does not seek to explore the exchange value that our case firms present. Rather, we will explore the following research question—How is value created and co-created within a specific context of relationships and how is this value shaped by the social context? Thus, we move away from what Bagozzi (1978) discusses as exchange value whereby a company produces a product that it exchanges with a customer for a certain monetary value, i.e., when one type of value is exchanged for another type of value. This chapter explores the bundles of value created by SMEs operating in different parts of a single international value chain situated in different social contexts. This allows us to address two recent gaps in current research in marketing and value co-creation. First, holistic understanding of multi-firm participants along rather than at a single point of a supply chain recognises different meanings of value. Second, the implied cultural differences to what is value can be observed from multiple perspectives, in context (locations and networks) and in time. This enables an extended exploration of value co-creation from a multi-firm perspective that explores different meanings of value, underpinned by diverse social contexts and networks. Therefore, we are able to ensure that cultural

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traditions and ways of doing things that derive from different countrylocations, such as advanced market (AM) compared to developing market (DM) contexts, likely to be different, given the histories, politics and macro-economic governance structure, are embedded in the notion of value-in-context (Zhu, Freeman and Cavsugil, 2018). Our study offers a novel multi-firm participant perspective demonstrated through a new conceptual model (typology). We do this by adopting a critical realistic approach (Sobh and Perry, 2006), evaluating offerings of value for endcustomers but also for communities and society at large, from a multi-firm perspective. Thus, the focus of this investigation is on understanding how SMEs perceive the value (‘benefit’ or ‘worth’) they create for themselves and for their customers, their communities and the type of value they create overall. Therefore, the arguments and our contribution are distinct from value chain and value proposition analysis by adopting a firm-focused perspective to value creation in order to unveil the firm-specific meanings and interpretations of value creation. Our chapter is structured as follows: it proceeds with a theoretical background exploring context, participation and co-creation, SMEs and value co-creation, and value as an interactive and participatory process. The methodology presents the research design, firm selection and data collection method. Finally, the research findings are presented with in- and cross-case analysis, leading to the conclusion, suggestions for future research and managerial implications.

Theoretical Background Context, Participation and Co-Creation Scholars have long applied value terminology in axiology (the philosophical study of value) (see, e.g., Bengtsson, 2004; Mattsson, 1992; Hartman, 1967) and offered various extensions to the interpretation of value. For instance, Hartman (1967) proposes that value should be seen as systemic, i.e., as defined by a system and thus existing within the limits set by that system and therefore, conditioned by it. Marx (2011 [1867]) also sets value within contextual boundaries as he suggests that value exists in use and is realized in the process of consumption. Such an argument deserves attention as it purports that value exists in time and space, it can manifest itself in a context and in use. In this manner, we can associate value created by a firm in a certain space, at a specific time in which value is created in interactions with various network attachments. Thus value is difficult to imitate and derive the same value in another firm within a different context. In extending the arguments about the relationship between value and context, Giddens (1979) and Chandler and Vargo (2011) point to the interplay between individuals and the context in which they exist, thereby mutually constituting each other. Giddens’s

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(1979) perspective suggests that within a specific context individuals are engaged in exchanges with others. Thus, people and ‘things’ are connected in different ways and ‘things’ can be a resource for some people, while being liabilities for others in the same context. This suggests the application of a critical realist perspective (Welch, Piekkari, Plakoyiannaki and Paavilainen-Mäntymäki, 2011; Sobh and Perry, 2006) could be helpful, because it might offer deeper insights than currently available, into the processes, histories and complexities around SME relationships and participation along their supply chains, thereby allowing more extensive and meaningful exploration into how SMEs perceive what they add to the bundle that co-creates value offered to the customer, to their relationships or constituents along the supply chain and to society at large during the process of value co-creation. SMEs and Value Co-Creation Successful supply chain management is predicated on the belief that integration of these various value chain entities into co-operative and collaborative environments is required to facilitate information exchanges, resources and cash flows (Kukalis, 1989; Sundram, Chandran and Bhatti, 2016). SMEs are increasingly playing a pivotal role in supply chain management as they participate in value-creating activities along various supply chains and international networks (Hong and Jeong, 2006; Sundram, Chandran and Bhatti, 2016; Kumar and Singh, 2017). They supply raw materials, produce products and distribute end goods to customers. This combined effort by SMEs has a significant impact on supply chain processes (Huin, Luong and Abhary, 2002) and performance (Bhosale, Kant and Shankar, 2018). The majority of studies of supply chain management focus on the practices of larger firm views, and SMEs are perceived from the viewpoint of a larger firm (Chopra and Meindl, 2001). The long-term sustainability of SMEs is dependent upon where and how they compete and the nature of their utility. Thus, decisions about their supply chain position and operational focus should be strategic ones (Hong and Jeong, 2006; Sundram, Chandran and Bhatti, 2016; Kumar and Singh, 2017). However, what is still missing from research and why we undertake this study is to address some overarching and interrelated questions: Are more participatory service relationships between dominant firms and their less powerful service providers desirable? How effective is firm participation in creating value and affecting service outcomes for both dominant and less powerful firms along the supply chain? What are the boundary conditions associated with effective firm participation? This contextual, value-laden and bounded-rationality discussion is often found in market settings where the AM and DM firm dynamics operate on an uneven playing field. Indeed, value in the context of SMEs is generally founded on the ‘utility’ they create along their supply chain.

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Value in an Interactive and Participatory Process Managing the supply chain and hence the position of the firm centres around how ‘utility’ is perceived not only from the perspective more commonly understood, by the customer, but also less understood, by the producer. Boztepe (2007) identified four sub-categories of value: utility (convenience, quality and performance, and economy), social significance (social prestige and identity), emotional (pleasure and sentimentality) and spiritual. From a theoretical perspective, Holbrook (1999) suggests that value is an interactive, relativistic and preferred experience, and customers participate in the creation of that experience. Such a theoretical approach has been advocated by the service-dominant logic (Vargo and Lusch, 2004) that perceives the customer not only as part of the experience, but as a ‘participant’ in the acquisition and usage of the experience in which firms can offer value propositions and the customer determines, co-creates and gains the value in a specific context—at a certain place and time. Encouragement of ‘customer participation’ represents a key component of competitive effectiveness (Bendapudi and Leone, 2003), and is reflective of the significant shift of more than a decade ago, from a goods-centred to the service-centred logic for marketing (Vargo and Lusch, 2004). The notion of proactive value co-creation rather than as producers of standardised value is particularly salient among SMEs, who are in less powerful positions to exert influence than larger organisations in their supply chain position (Kumar and Singh, 2017). However, outcomes of effective supply chain management, integration and position are normally couched as increased customer satisfaction, on the one hand and productivity gains for producers, on the other hand (Bhosale, Kant and Shankar, 2018). While the service-dominant logic has been mostly applied to firm-end customer-value creation, Vargo and Lusch (2008) propose that value is not created by a single party, rather, it is created by the integration of resources pertaining to various parties involved in an exchange process (Chandler and Vargo, 2011). This specificity is notable, as within a mutual service provision, all parties can be both in the role of providers and customers (Vargo, 2009). Therefore, based on the previously mentioned arguments, in our chapter we draw on the servicedominant logic (Lusch and Vargo, (2006). and in doing so, move beyond the notion of firm-end customer-value creation. Thus, we advocate that multiple parties need to be evaluated and included with more focus on the different positions/focus/path and activities along the supply chain. Such transactions create multiple network attachments for value creation instead of a linear, chain-resembling sequential flow of value creation where every next part of the chain adds further value and thus value added grows as purported in global value chain studies. The majority of studies on value creation have initially had a B2B (Prahalad and

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Ramaswamy, 2000) and later a business-to-customer (B2C) focus (Chan, Yim and Lam, 2010). However, we have little research enquiry into a dyadic (i.e., multiple supply chain partners in different supply chain positions in the same supply chain) perspective. The advantage of such an investigation would be to provide a more holistic understanding of how value is created along international supply chains for SMEs, to not only enhance productivity, but also the relational qualities and outcomes that provide greater avenue for strategic positioning, supply chain integration and business sustainability (Sundram, Chandran and Bhatti, 2016). This is particularly pertinent, when we look at international supply chains operating across AMs and DMs (Kumar and Singh, 2017). In the latter, SMEs potentially provide value opportunities for co-creation that sustain not only immediate actors along their supply chains but extend within networks to local communities and their ability to recognise, develop and provide entrepreneurial outcomes for business growth, expansion and community renewal in which they are situated (Du and O’Connor, 2017). This calls for a more encompassing approach in which to explore a multi-firm-focused approach to value co-creation across SMEs along the same international supply chain that denotes a multifaceted approach to understanding value at the intrinsic-extrinsic; self-oriented versus other-oriented; and active-reactive categorisation of value dimensions (Holbrook, 1999). It also calls for research to be able to simultaneously address different sub-categories of values, namely utility, social significance, emotional and spiritual value (Boztepe, 2007). Finally, it provides a more holistic discussion on SMEs compared to larger organisations by exploring how they differ in terms of strategic and operational choices, including competitive priorities, key strategies, external and internal control structures, and goals of their supply chain management processes (De Toni and Nassimbeni, 1996; Kumar and Singh, 2017). By doing so, the argument is posited based on the first premise that value will be more meaningful to multiple SME providers where there is co-creation and thus ultimately more sustainable for their mutual supply chain. This is based on the second premise that allowing entrepreneurial and innovative problem solving along the supply chain by all providers increases autonomy, and moves away from one-way transactional decision making by the most powerful in the supply chain to dyadic participatory value co-creation. Increasing autonomy can increase creative and cost-saving solutions, as well as reduce employee disengagement through empowerment. Empowerment allows for the possibility of new ideas, ways of doing things, and thus links closely to notions of innovation. Innovation and creativity are linked through an ecosystem perspective (O’Connor and Reed, 2015). We also know from research into headquarter-subsidiary autonomy that centres of excellence can be developed and sustained through different types of autonomy displayed by subsidiaries with the additional benefit of offering learning

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advantages, vertically and horizontally to the overall organisation (Cavanagh, Freeman, Kalfadellis and Cavusgil, 2017). The same argument could be extended to SMEs, as they too can offer learning advantages and creative, innovative outcomes through various activities, vertically and horizontally along the supply chain. This could benefit the entire supply chain by recognising different types of activities and how they represent value for the individual firm involved, and as a whole along the supply chain, by adopting a system thinking approach. We also apply a contingency approach (Govindarajan, 1988), to allow for greater opportunity to examine potential moderating factors such as individual culture and value orientations that may influence the strength of relationships between customer-supplier participation and value creation (Zhu, Freeman and Cavsugil, 2018). In our study, we go one step further, and refocus onto supply chain multi-firm participation, particularly in cross-border contexts where the potential for cultural variation and creative co-creation exist, such as in the AM versus DM context. This argument is built on the primary assumption that strength of relationships is a powerful influence on business performance for SMEs (Sundram, Chandran and Bhatti, 2016). In the case of our study, this is especially so for SMEs, as a strategic response to building their own performance outcomes (financial, organisational and operational effectiveness) through differentiation from larger organisations. Finally, relationship management for intra- and inter-organisation competitiveness along SME international supply chains offers new ways to understand how SMEs create utility in the same supply chain in order to support overall sustainability and supply chain engagement for creative and innovative customer-focused performance advantages. Based on the previously laid conceptual and theoretical foundations, the value co-creation in three clothing companies, provisionally called ClearBlue, Tara and Suri, is investigated in this chapter. The names are fictitious as the identities of the firms remain anonymous (due to signed confidentiality agreements between the company management and the researchers). ClearBlue promotes British design. It is present in numerous large to mid-upper-market retail outlets, has its own boutique shops, and since the financial crisis of 2008, it has developed an Internet selling platform. The company serves the mid-to-upper segment of the clothing market by relying on brand, country-of-origin, design and quality. It initially began as a small, creative, designer-led company to become an internationally recognisable clothing brand. Tara is an Indian company that organises the production, manufacturing and supply of garments on order to ClearBlue, but also has its own clothing line for the Indian and neighbouring markets with which it targets middle-income consumers. Suri is based in Sri Lanka and manufactures on order clothing for ClearBlue, using materials and designs supplied by ClearBlue and other international buyers.

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Methodology Research Design We adopt a systems approach through which we can analyse the elements of the contextually defined reality that are mutually dependent on each other and thus identifying the parts, the linkages between them and their interactions. We apply a critical realist perspective, which while accepting that reality exists independently of an observer; it maintains that the world is socially constructed (Welch, Piekkari, Plakoyiannaki and Paavilainen-Mäntymäki, 2011) as the observation is by its nature a subjective interpretation of reality (Easton, 2010). Thus, we aim at explaining “the entities and the mechanisms that connect and combine them to cause events to occur” (Easton, 2010: 122) by considering their dependence on the context, as in other contexts the same mechanism may lead to different outcomes (Sayer, 2000). In the typology of theorising from case studies by Welch, Piekkari, Plakoyiannaki and PaavilainenMäntymäki (2011), our critical realist case studies refer to contextualised explanation as we are concerned with accounting for the type of value created and the underlying reasoning of the managers (Welch, Piekkari, Plakoyiannaki and Paavilainen-Mäntymäki, 2011: 749).

Firm Selection The objective of this chapter is to compare the value created by the three companies and to unveil the complexity of value creation in its specific context. We have chosen three different cases positioned at different places of the value chain. Two of the firms are in the DM context and one in an AM context (see Table 8.1). As we are looking at how value is created within the three firms, in which resources are used for the firm’s own benefit and for the benefit of other actors, we simultaneously explore exchange processes that occur across actors in complex service-providing and value-creating relationships (Chandler and Vargo, 2011). Hence, we apply an inductive theory building approach in which an initial set of empirical observations lead to generally applicable theorising, which can be refined using subsequent new data (Dyer and Wilkins, 1991). The firms were intentionally chosen in view of the objectives of the research by implementing sampling strategies required by inductive research. As suggested by Miles and Huberman (1994), we selected information-rich cases of SMEs in a traditional garment industry in three market contexts as the value that such SMEs in AMs create, control and capture is more substantive compared to similar SMEs in less DMs. The British SME treats its garment production as fashion, emphasising the leading role of design. It creates value through exchanges with

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Table 8.1 Firm Characteristics Company name

ClearBlue

Tara

Suri

COO Type of market

United Kingdom Advanced (developed) market

Sri Lanka Less developed market (e.g., developing market)

Supply chain activity

Design

India Big emerging market (although the economy varies from emerging to developing, as this is not uniform) Production on order and local design

Market position

Global uppermiddle fashion market

Approx. turnover 2015 Age of the firm Number of employees Range of international markets

Entry modes

Euro 43 million

ClearBlue and own regional value chain serving domestic and regional markets Euro 19 million

Production on order with design of the client ClearBlue and other international buyers Euro 7 million

14 135

23 244

12 212

EU, USA, Canada, Japan, China, UAE, Australia, New Zealand, Africa

India, Bangladesh, Nepal, Bhutan, Sri Lanka, Thailand, Singapore, Malaysia Other: International Buyer—ClearBlue (UK) Direct exporting, sales agents, sales office in Singapore, production in Bangladesh

International buyers: ClearBlue (UK) and 5 others

Sales offices, outsourcing, insourcing, boutique sales outlets and space in international stores, direct exporting, sales agents

Sales to international buyers

network attachments in its home market and internationally. Moreover, the British garment sector has experienced a shift from traditional production of clothes to high-end fashion where more transaction value can be captured. The Indian SME captures economic value by producing for the British SME, but it has also developed its own design and production with local design for regional markets thus capturing value both from its global customer and regional customers. The garment sector in India is vibrant and developing fast and many of its firms are experiencing a shift from a

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position of a dependent supplier to a more diversified economic value captured through the building up of their own regional value chains. Our last firm from Sri Lanka is a production house supplying on order to regional and global clients with no skills in design or fabric selection. Data Collection Data were collected through 15 in-depth interviews. Interviews lasted between 40 and 150 minutes. The following managers were interviewed in each company (see Table 8.2). We asked questions in interviews based on a protocol (set of questions) with two broad open-ended questions to prompt a full explanation: (a) what is the value your firm creates and co-creates, and (b) how do you create and co-create value in the firm. We also observed the worksites for each company, and were granted access to collect a range of

Table 8.2 Interviewee Roles Interviewees

Firm

Role

Interviewee 1

ClearBlue Owner (Ocb)

Interviewee 2 ClearBlue General Manager (GMcb) Interviewee 3 ClearBlue Marketing Manager (MMcb) Interviewee 4 ClearBlue Brand Manager (BMcb) Interviewee 5 ClearBlue Lead Designer (LDcb) Interviewee 6 ClearBlue Lead Buyer (LBcb) Interviewee 7 Tara Owner (Ot) Interviewee 8 Tara General Manager (GMt) Interviewee 9 Tara Export Manager (EMt) Interviewee 10 Tara Sales Manager (SMt) Interviewee 11 Tara Designer (Dt) Interviewee 12 Tara Production Manager (PMt) Interviewee 13 Suri Owner (Os) Interviewee 14 Suri General Manager (GMs) Interviewee 15 Suri Production Manager (PMs)

No. of Secondary sources Interviews

Length of interviews

1

105 mins

2 2 1

Design, brand, delivery, order communications, meeting notes, company memos, meetings with designers and suppliers, customer, sales agents, feedback and advice notes

1 1 2 2 1 1 1 1 1 1 1

125 mins 90 mins 45 mins 65 mins

Designs, samples, internal documents, awards, correspondence with ClearBlue, production notes, design meeting notes

58 mins 142 mins 96 mins 55 mins 50 mins 46 mins 38 mins

Samples, internal 78 mins communications 50 mins on batches, colors, defects, 66 mins etc.

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documentary evidence. Company records, such as contracts, and memos, including batches, design schedules and supply/buying arrangements were also used as secondary sources and provided in confidence, given the competitive sensitivity of such information. Case Analysis The case data were described in a narrative form and explored by comparing theory in extant literature and emerging from the data constructs (Yin, 2009) in order to ensure in-depth case analysis (Miles and Huberman, 1994) that served as a basis for construct identification, conceptual clarification and development. Themes were developed from the “careful reading and re-reading of the data” (Rice and Ezzy, 1999: 258), which were then analysed closely. This study utilised an inductive coding approach, in conducting the thematic analysis. The inductive coding approach was reliant on the identification of themes arising from the data collected. The justification of using the inductive approach is so that the themes can be determined from the data itself, while enabling the objectives of the research question to identify themes integral to the data analysis process (Fereday and Muir-Cochrane, 2006). As part of this iterative process, themes were continually refined, with some removed and others refined in their place, until a comprehensive set of themes and sub-themes emerged through the analysis process. This allowed for the conceptualisation of the emerging patterns within each case and across the three cases. Although we applied a focal actor perspective (see Halinen and Törnroos, 2005) we aimed not only to describe meaning, interpretations and actions, but also to identify patterns (Pettigrew, 1992, 1997). In such an approach, holistic explanations become most important where the generalisation is analytical (Yin, 2009), and leading to theoretical propositions (Easton, 1998), which we provide in our Conclusion.

Research Findings Case Analysis ClearBlue ClearBlue has been driven by the concept it is selling to the market and in this sense, it is characterised as a niche company with a differentiated focus strategy that emphasises its own style and image. All its activities and functions are aligned with this niche approach. Its organisational structure also supports its activities by allowing greater focus on the core competence of the company. Thus, its competitive priorities are consistent with SMEs (Hong and Jeong, 2006). As such, the well-established global brand is the fundamental pillar around which all types of value (i.e., economic, in-use, in context and relational/intrinsic and extrinsic) are created

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in the firm. The firm output is not production of clothing; rather, the company is design, brand-driven with an appropriate support structure: “We create a brand, . . . an image . . . we live with the brand . . . and we have a different organizational structure compared to a production company. Of course . . . we have a commercial structure with commercial activities for sales, licenses, royalties and the like; and a corporate part with HRM, finance, etc. The heart of the firm is the creative part, the brand; the mind, I suppose is the corporate part”. (GMcb) “We design and sell clothes, different lines of clothes, but I would like to think that we are a fashion brand company. At least, I think this is what we have become over time”. (Ocb) “The brand and our networking skills, the way we work with all our partners makes the business what it actually is, . . . this is the source of all value we create”. (MMcb)

The shift from a manufacturing to a brand focus has led the company to outsource and offshore all its production and support activities and focus on its core activity. The change in focus has strengthened the work of the company with its customers (increased its customer proximity), which has increased its ability to co-create emotional and in-use value with the customers as they not only monitor, but also share experiences. Specialised markets, building unique competencies and effective customers/suppliers management are consistent with SMEs’ strategic and operational choices. This development came about as a result of the financial downturn in 2008, when the company realised that to withstand competitive and financial pressure, it had to increase its flexibility and engage closely with the market. “Since 2008, we have outsourced IT, part of the financial processes, the production, fabric sourcing . . . we have focused on the core business: design, service . . . product, service and design, sales, marketing design, marketing . . . we do a lot from it . . . and it’s difficult, really difficult in a crowded market, but now we work very closely with our customers (B2B) and we follow up our B2C customers and their ideas and feedback. We work together with our suppliers as well, we want them to deliver what we need at the right price and the quality we expect. Our customers want to experience our brand, to be part of this brand. . . . ” (Ocb) “We have had some designs suggested by customers, colours, too. . . .” (LDcb) “Social media has given us direct access to the voice of end customers, which is great, . . . we are engaging with them to know what they want and their experiences”. (MMcb)

A key consequence of the company’s shift of focus is the increased agility, which gives them the opportunity to respond and foresee changes, to deliver new lines of fashion faster to the business and end-customers. This approach is also in line with the thinking about the international market, which is

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aligned with the key contacts, those that can make it possible for them to realise the economic value. In order to do this, the company does not have a product sales approach, instead it bundles products and services in an offering. Moreover, such thinking about the market and the consequent flexibility are enabled by the nature of the firm as a design and sales platform for fashion clothing. Interestingly, their decentralised, structured and highly specialised approach favours a larger firm strategy for internal control structures. “We are focused . . . —to respond to the customers . . . to answer to new trends faster—the international market for us is our agents, distributors, end clients . . . we try not to sell a single product, instead we try to sell a complete image, several products and a competent service bundled together to create that image . . . we are a design and . . . sales platform”. (BMcb) “Our core business is design . . . British design . . . everything is about the brand and the logo. . . .”(MMcb)

The company is engaged in various formats of internationalisation, direct exporting, Internet sales and shipping, has sales representative offices, agents and distributors, but has divested from its own production facilities overseas. Thus, it creates value, in the first place, by its global brand and by working together within ‘a complex net of relationships’ on the demand side and stable ClearBlue defined relational exchanges on the supply side. These create knowledge flows that contribute to the creation of value through the combining of skills, know-how and experience, to attain partially shared objectives in the supply chain (Bhosale, Kant and Shankar, 2018). The GMcb described his role as someone who has to fine-tune all relationships always staying in close contact with customers, agents and distributors and making sure that all specified details in production and quality are followed to the detail. In this sense, the company has to integrate the efforts of the net of relationships to deliver value to the market, the network partners and itself. Moreover, the Brand Manager argues that the network cannot be closed, rather it should allow for new creative sales and production input. Interestingly, key strategies are focused on exerting influence in the supply chain—both upstream and downstream; and developing strategic alliances with suppliers and distributors which exhibits more of a large-firm approach to organisational behaviour. “You are asking about how we create value . . . we have a global brand, a brand with a global appeal and customers all over the world—here is one level, we have agents, sales offices, distributors, we work with fashion retail chains, and we have our own stores overseas; next we have designers we source in—another level, then we have suppliers—this is a different type of value creation in internationalization”. (Ocb) “My role is to co-ordinate, integrate, fine-tune all activities, inputs and outputs, I feel I lead an orchestra, . . . it is a globally dispersed orchestra where we are creating a distinctive music . . . value for all participants, for us and for the customer”. (GMcb)

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“We have to be open, flexible to bring in new designers, new ideas, new concepts, new partners, but we are also careful . . . we have to know that we can work with the new partner and there will not be big issues. We are in Russia and China, doing very well, but we have great partners in these countries . . . so it is difficult, but for us, it is very good. . . .” (BMcb)

The openness of the partner network and the importance of design were also brought into the interview by the Lead Designer. External control structures focus on the typical command and control towards their smaller suppliers and this is more in keeping with a larger, dominant firm strategic approach. This suggests a willingness to collaborate with more dominant suppliers, typical of external control structures for larger firms. “Design for us is very important, . . . we need to get this special knowledge from outside to keep the British authentic appeal . . . so we find this knowledge and then work with the designer . . . we share concepts, we compare models, we design together a style . . . actually, designers design, but together with us . . . what our brand needs . . . and they sell it to us, but we know what we are buying . . . if they don’t sell—they don’t earn money. . . .” (LDcb) “It is about us together . . . the brand cannot go without the designers, . . . you know, they cannot go without us . . . not sitting under one roof, but . . . it is a concert and if there are problems, nobody will enjoy it . . . no, no, . . .” (MMcb)

The General Manager and the Lead Buyer discussed these issues by adding reflections on the whole process that requires a joint effort and a lot of integration of efforts, processes and relationships. From a key strategy perspective, it is also noted the SME’s approach is to focus on specialised markets, building unique competences, closely connected to effective customers/suppliers management. “We have buyers sitting here for each clothing line—they work with our suppliers, telling them what we want, what price, what material, sizes, colour— OK, . . . and then they work with us and we work with them to make the best sample to take to the spring-summer and autumn-winter fairs. There, we get the customers and we have them all in . . . we say: what a nice piece of clothing, fantastic, great. . . . Then they like it or want some changes, we can decide if we can make them and agree with them . . . six months later we get the product in our warehouse, pack it, send it . . . it is all like . . . .putting all together as it adds up and then we all get great satisfaction . . . and the wallet is full”.(LBcb) “Five years ago, it was come in, take a look, do you like it . . . and all done . . . see you in six months. Now it is getting much more integrated with our customers . . . to reduce the time of holding items in stock or on the shelf, so we know all the time how goods are performing, what is needed, when new ones have to come in, what is preferred . . . it is highly integrated . . . we follow all these key performance indicators . . . not because we or our clients want, . . . the bank wants . . . otherwise, it will close their business . . . so we need to be integrated”. (GMcb)

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The Owner, the General Manager and the Brand Manager were very much questioning the controlling position of ClearBlue in the network of relationships. The control element is noted, and appears typical for a dominant firm, to behaviour as a larger firm utilising external control structures focusing on typical command and control towards their smaller suppliers and distributors, as it appears that other SMEs along this supply chain usually accept command and control, common external control structures for less powerful SMEs as we will illustrate shortly. “It is not about control, . . . it is about talking it through, discussions, finding solutions and then to contract . . . and of course some of it has become more like friends—people we know and work with closely . . . but we say what we want and then, they say and then we find a way”. (GMcb) “Of course we have to control quality and make sure quality is as we want it, we visit, we talk, we exchange many e-mails . . . and finally, we do quality checks before we ship it here”. (Ocb) “On the basis of our experience, we have developed a supplier manual . . . we can always bring a supplier and say “Make a sample for this or that”, but we want to secure quality, otherwise, we find a new supplier; we are partners as long as our wallets . . . you know the wallet is very important . . . if it’s full then we are OK”. (BMcb)

The geographic spread of the firm is quite extensive and the MMcb commented on it. He was confident that psychological value is created across markets with customers who support the brand identify. From an internal control structure, ClearBlue operates similar to a larger organisation, favouring decentralised, structured and highly specialised approaches, and a focus on multiple core competencies development. “Where we create value . . . good question: in England, Scotland and Wales, in Northern Ireland, so in the UK, . . . then we are in Germany—across Europe, Canada, the US, the Middle East, South Africa and some other African countries, although modest presence there, even in China, Australia, Russia . . . there are some specifics, but . . . it’s all ClearBlue brand. . . .” (MMcb) “. . . [T]he brand is a life-style: British lifestyle: a feeling of beautiful nature, understatement, sophistication, quality, authenticity . . . and then all customers and partners buy in that universe. . . .” (BMcb)

Tara Tara was initially producing traditionally designed clothing for the Indian market only. In the beginning of the 2000s, the Owner found buyers in the big near markets of Bangladesh, Pakistan and Sri Lanka. Since then, it has sold its own design traditional clothing that targets the mid-market segment of customers in those markets. In the last six years, the company is set in a small town and provides jobs mostly to women from the

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town and neighbouring villages. In 2010, it was approached by ClearBlue through a diaspora contact in the UK and after some visits, negotiations and adjustments in production, Tara started manufacturing clothing on order to ClearBlue. As a result, the image of Tara in the domestic and near export markets has also improved because it is perceived by domestic clients as a successful international company that had built a longterm stable relationship and legitimacy with a significant foreign buyer, yet a company providing secure jobs for local women. Tara’s owner interprets value not only in terms of its economic meaning, but also within an ecosystem, and drawing on psychological and sociological dimensions, which provide underexplored meanings of value within value chain business relationships. The sociological dimension of value is particularly relevant for local jobs and welfare thus reflecting the organisational social fit and contribution, as well as self-esteem and recognition, i.e., belonging and meaningful life in a social context for the owner. The ecosystem perspective associated with mutuality and reciprocity, mutual economic gains and shared drivers is transparent and recognisable. We can argue that this interpretation falls within the understanding that different stakeholders see different value, yet, it is a fresh view on value, which may be associated with value-in-context or the idea that value should be explored within its ecosystem of relationships, including effects on the organisation, ecosystem and society. Key strategies are typical for SMEs, focusing on specialised markets, building competencies and especially effective customers/suppliers management. “We earn money, good money, for our big family, and we can live well . . . .we can send our children to study abroad . . . this is value . . . but we create value for the local people, social value and women can have jobs, income, so they get something and we get. What is value—money, but also local respect, recognition by the town mayor, recognition by the people—then I can hire the best of people”. (Ot) “We sell a lot across India, so we make good money and we grow as a company, but . . . we also give some clothing with defects almost free, for very little money, to poor village women from the neighbouring villages and to our employees . . . they are happy and support us more, work for us better . . . and we sell more. I work with buyers in India and it is always “how much can we earn”, but they have realised they earn well from our products and we do well, too. So, everybody gains”. (SMt)

Value is repeatedly interpreted as economic value, yet, it is also seen as value-in-use from the local and regional customer perspective and as client value-in-use being delivered to ClearBlue. It is notable that the relational value is seen as a communication and learning channel, yet, it is mostly informed by the dominant and controlling role of ClearBlue. From an internal control perspective, Tara’s approach is typical for a less dominant SME that are likely to favour centralised, semi-structured and moderately specialised approaches, and specific core competencies development.

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“We create value through sales, . . . we sell in India, Pakistan, Bangladesh, Sri Lanka . . . yes, we have our home market and foreign clients . . . so we can have increase in income and profit, we have grown in size, we have invested in new machines and provided good paid jobs to more local people . . . our clients also make money from selling our products. What else, yeah . . . our customers like our clothing and wear it because it is good quality, natural fabrics and interesting, yet traditional designs, bright colours . . . so we get bigger and bigger orders. We have learned a lot from ClearBlue about quality management, about timing deliveries, about design, but . . . we do not have a lot of say . . . we can express views, but we produce the way they want it and when they want it”. (GMt)

Exporting is seen as a key source of increased economic value, but the company’s legitimacy with ClearBlue is perceived as key to the increased economic value and value-in-use in the domestic and neighbouring markets. However, it is noted that ClearBlue’s key strategies focus on exerting strong influence in the supply chain—both upstream and downstream; and developing strategic alliances with specific suppliers and distributors, typical of larger organisational strategic approaches. Tara perceives this as adding to their operational effectiveness, typical for an SME, having to rely on performance outcome requirements (e.g., specific definition of order qualifiers and order winners) with limited scope of information and product flows in reality. “Value . . . value—we create in exporting. Pricing is good for us, volumes are OK. I want to stress, that our income has increased from export quite a lot in the last 5 years. Our exports on order to ClearBlue are like a stamp of quality and reliability in the other export markets, and even here, in India. So, people say: “Oh, they sell to Britain, quality should be excellent, . . . and we get more Indian buyers””. (EMt)

The value-in-use is product-specific and context-specific. The worth of the traditional designs and products can be a source of a much greater psychological value within the context of India and regional markets than the worth of the global product with its brand. It may well be that the psychological value may change not only with the client and end-user, but also with the situation/context in which the value-in-use of a product is sought by a potential customer. “I design the clothes for our markets, for our customers . . . it is traditional designs, but I am always searching for something different . . . something original . . . from plants, birds, flowers, from the Mother Nature . . . this is how I create value to our clients, traditional, yet original . . . using natural dyes, fabrics, beautifully decorated . . . and those who work here must like it . . . if they say “wow”, it is nice . . . if sales go up . . . I am doing the right thing. I cannot learn a lot from the ClearBlue designs, they are simple, not much colour, but . . . sometimes I help them with a colour or idea . . . they usually think they know more, but sometimes it works. I also learn from them in terms of cuts, new shapes and can get some ideas. . . . ”(Dt)

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The value created by Tara differs a lot between the two parts of the company’s product lines. One is transaction-oriented value, while the other has a greater psychological value for those manufacturing the products. From the perspective of their goals of supply chain management processes, they typically behave like SMEs in a weaker power position, with operational effectiveness typically focusing on performance outcome requirements in a global value chain (i.e., specific definition of order qualifiers and order winners) with smaller scope of information and product flows to influence designs, colours or production runs. This becomes more apparent in further analysis. The psychological aspect of happiness emerges as an important dimension of value creation on user and at organisational levels, but it is also related to social fit and belonging on a sociological level. “I think we create value through our production— . . . but, you saw, I manage two parts of the business—one for the traditional clothes and one for ClearBlue. This is very different value—design, process, customers, ha, ha . . . not easy . . . and different money and happiness”. “We deliver to ClearBlue, but we are happy with our traditional clothes as they are beautiful, colourful, really about our life . . . the ClearBlue style is a bit dull, but it is sold across the world as it is British design. There is market for everything, but we cannot be a global brand, we enjoy our roots and traditions . . . and we do good to the local community. This is real value, isn’t it?”

Suri Suri has a cost leadership strategy based on cost-plus price per unit of production. It aims to work at full capacity by serving Western buyers on order. It gets the designs, fabrics and cuts from the buyer and has to manufacture the products. Quality control of each batch is performed by the buyer. This appears to be typical SME competitive priorities based on more market niche strategies through sustainable profitable market position. Additionally, from an external control structure, this is a typical approach by SMEs, focusing on acceptance of command and control by OEM or first-tier suppliers, with some minimal attempt to use their negotiation strength on new designs or colours, and pursuing collaboration with other regional SME suppliers. “We were a small company before we started producing for our clients. Now, we produce only for them . . . whatever they want—we do it. Value, what do you mean? Profit—we make good money, we have a healthy profit, . . . our buyers come here because we offer low prices . . . we can afford this, our employees need a job, work long hours and take money home to support their family. I am also happy as my wealth has increased, but our clients are our Gods—they want, we make”. (Os)

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The Owner equates his interpretation of the value the firm creates with profit and income—economic value based on the value-in-use defined by the client ClearBlue. It is evident that the value proposition is built on low price/high quality of the manufactured product, which emphasises the product and client orientation of the firm. As such, the value added created by Suri is perceived as comparatively low, yet providing some sociological value for the employees and more so for the owner. The intrinsic value is in the product, but the economic value allows employees and the owner to acquire more economic utility for their existence. Similar is the interpretation of the General Manager; however, he brings in the importance of the value-in-context associated with the relational strength and learning from its relationships with clients. Thus, from a key strategies perspective, Suri adopts an SME approach focusing on building effective customers/suppliers management, along its international, regional and local supply chain. “The value for me is the profit we can make for the company and the quality product we deliver to our clients so we can have long-term business with them . . . well we have also become better at quality checking. . . .” (GMs)

The economic and psychological value is also emphasized by the Production Manager. The former is mostly associated with the end worth of the product, while the value-in-context is linked to the relational value in the process of product creation. The relational value is seen as a mechanism for ensuring the economic value. Thus, for Suri, key strategies typically follow an SME approach, denoting a less powerful position, emphasising a focus on specialised markets and building unique competencies, largely through relationships, and effective customers/suppliers management. “If the product is good for my clients, I have done my job . . . they get what they ordered and we get paid, . . . .but if I have problems, I am asking them what exactly they want, so that I do not make mistakes and tell my people how it should be. . . . If we do not get any returns for defects, it means the product does what it should do for the client”. (PMs)

The psychological value for the employees manufacturing the product is also important. It seems that while value-in-use for the buyers and economic value are perceived as positive due to the legitimacy gained from their buyers, the lack of perceived recognition of the worth of the company’s production expertise and efforts is actually a source of negative emotional value. Thus, the possibility of implicit conflict is revealed here, with the strong emotional response that Suri is not being able to show its real value. Typical of SMEs with little influence along the supply chain, its operational effectiveness mostly focuses on performance

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outcome requirements (i.e., specific definition of order qualifiers and order winners), with smaller scope of information and product flows. However, mutual respect and trust, factors that drive effective supply chain integration, are weak. This may have long-term implications for the sustainability of the relationship and overall supply chain performance. “We are good in production . . . can be even better, but it does not say anywhere that Suri produced this item, . . . OK, it says “Made in Sri Lanka”, but Suri is not there . . . so our name has no value. . . . ClearBlue means something to customers . . . well, why should we think life is fair . . . no it is not fair, is it?” (GMs)

The Owner has also noted that value is a relatively loose concept that can be interpreted differently by stakeholders, i.e., owner, managers, employees and clients. “Value is a strange word to me—maybe if you ask the women we employ, the value for them is the pay they get to feed their families; for me—it is the profit I make and allows me to look after my family; for ClearBlue—it is perhaps the good profit they make by getting the products from us and selling them at a much higher price”. (Os)

Cross-Case Analysis The three case firms presented previously are part of a buyer-driven value chain in which the branded fashion-design AM company plays an essential role in locating other producers that form its production network partners in a variety of DM exporting countries, in this case India and Sri Lanka. This arrangement is made possible by the availability of labourintensive producers of consumer goods who can capture a fraction of the final economic value, which is attained by the brand-led company, supplying the specifications. Thus, the DM contractors produce (cut and sew) the finished garments for their foreign buyer, but they are far apart from the final economic value. The fashion designer firm (ClearBlue) is a lead firm in the global fashion industry in the UK and controls access to key resources such as product design, brand name and consumer demand that generate the most profitable return or the highest economic value. Such a position requires the lead firm to create and “orchestrate” relational value with “designers”, “agents”, “suppliers”, “customers” with the objective of creating and maintaining psychological value embedded in and communicated to consumers through the brand. The two supplier-companies, Tara and Suri, also create relational value, but it is of a different nature. For Tara, it is embodied in the relationships with local and regional sales agents and retailers, on the one hand, and on the other hand, with ClearBlue as key buyer. For Suri, it is mostly with its buyers who supply the specification.

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An important part of the psychological relational value is the learning for both Tara and Suri in terms of quality, organisation and delivery as well as the trust of the buyer. Although ClearBlue talks about its role in orchestrating these relationships, it is obvious that it is in a position to change/switch the suppliers if they cannot meet the requirements. However, in looking more closely into the statements of the interviewees, we can argue, that for Tara and Suri the relational value is noticeably interlinked with social or perhaps more specifically, community welfare value that is not associated with the brand, but with a strong sense of community. For example, the job provision for local women, with “giving work to employees” who can “feed their families”. Notably, in Tara, the relational value spills over not only to the “local town”, “village women”, but is also what it brings to the immediate family “the education of the children”. This may indicate that cultural cognition is important in the interpretation of value creation across contexts. The emotional value is not only related to the user as promoted by ClearBlue—“the feeling of Britishness”, as a brand association. For Tara it is mostly the pride associated with local skills and colour in local design, as well as “local respect, recognition by the town mayor, recognition by the people”. This is articulated implicitly as a feeling of self-respect and esteem in the community. These are interesting nuances in the interpretation of the psychological value that the two firms create as it is obvious that ClearBlue’s designs are equated with pride with “Britishness”, while for Tara—the designs are “dull”, “simple, not much colour”. Hence, the psychological value in both firms, as far as the product is concerned, is actually related to distinct country-of-origin perceptions as well as cultural perceptions of beauty, colour, design and ultimately, emotional satisfaction, although they are rather different contextually. The economic value seems important for the three case firms. ClearBlue is in a controlling and orchestrating position leading to the final exchange value and hence, enjoys the greatest value captured in the value chain. However, while Tara and Suri recognise that they make “profit”, they have “a good business”, they are also at the lower value end of the value chain. ClearBlue knows it has a dominant position and regards itself as able to replace suppliers quickly if they do not meet the requirements: “we are partners as long as our wallets . . . you know the wallet is very important”. What they are perhaps less aware of is the vulnerability that switching suppliers might have for their overall operation effectives, given the considerable care, attention to detail and willingness to constantly adapt to their product requirements that both Tara and Suri offer them—“but we [ClearBlue] what we want and then, they [Tara and Suri] say and then we find a way”. Developing strong strategic alliances with suppliers and distributors distinguishes dominant organisations that have outsourced production and manufacturing, in terms of performance. The reality is that ClearBlue is completely dependent upon reliable suppliers

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as it no longer manufactures itself. Thus, more awareness of the need to exert influence upstream and downstream that positively reinforces ‘most favoured suppliers’ status might be prudent for long-term sustainability of the competitive edge they desire over their supply chain. Tara is in a more favourable position as it has its own products and sales in the region and as such, it has another, local and regional, value chain from which it obtains transactional value. This provides a different position for Tara in terms of control over the exchange process and seems to be a source of emotional value to the management and owners of the firm. Hence, Tara has a more diversified structure of its economic value compared to Suri. However, Suri happens to be in a much more dependent position in gaining economic utility for its outputs, as it is wholly dependent upon international buyers. The value-in-use for the three firms is also different. For ClearBlue, the value-in-use is defined by the global aspirational customer seeking a global identity brand based on “British lifestyle: a feeling of beautiful nature, understatement, sophistication, quality, authenticity”. The value-in-use for Tara and Suri is expressed in the quality and just-in-time deliveries to ClearBlue. For Tara—the community recognition of “local respect, recognition by the town major, recognition by the people—then I can hire the best people” is very important, as is the design of traditional clothes for its domestic and regional customers that deliver value-in-use because “our traditional clothes . . . are beautiful, colourful, really about our life”, which draws attention to regional and local customer values and preferences. The value that Suri offers its local community is much more elusive.

Discussion and Conclusion Global value chain and supply chain management research rest on the presumption that SMEs are usually suppliers to larger lead companies (Arend and Wisner, 2005; Hong and Jeong, 2006; Sundram, Chandran, and Bhatti, 2016; Kumar and Singh, 2017). There is little research on the interpretation of value, especially value creation dependent upon participants’ cultural value orientations. Results by Chan, Yim and Lam’s (2010) study of supply chain co-creation across cultures in the professional service sectors, “implies that arranging customers and service employees with ‘matched’ cultural value orientations could facilitate the creation of value through CP [customer participation]” (p. 48). We extend their insightful research by demonstrating in our findings that arranging supplier-to-supplier ‘matched’ and mutually respectful cultural value orientations could facilitate long-term value co-creation along SME supply chains in the manufacturing sector. Thus, drawing on our findings and analysis we offer a new typology (Figure 8.1) supporting the value of a multi-firm perspective in supply

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Figure 8.1 A Typology: Context, Positions and Implications for Value Creation

chain integration, management and performance. Our typology highlights the many ways in which value is created by SMEs with different positions/ focus/paths along the value chain. While industry has been referred to as differentiator for the various business models adopted by firms and the value proposition is placed at the core of business models, the diversity of value interpretation and value creation in firms belonging to one and the same industry has been under-researched (Zhu, Freeman and Cavsugil, 2018). The position of the three SMEs along the value chain is presented in the typology. The range in positions is defined along a range of dimensions, including: closeness to product and/or end customer; and the value added with the output (high vs. low value), reflective of the context and cultural value orientations of the value-chain firm participants.  Our data show that lead SMEs in the global garment industry can play a focal role creating and promoting the utility of the brand to the end-customers. Using Gereffi’s (1994) conceptualisation of global value chains, we demonstrate that ClearBlue plays the role of a lead brand integrator, a broker (Miles and Snow, 1986) and an orchestrator of activities that include designers, clients and suppliers in the same value chain. In the orchestration, ClearBlue uses weak and strong ties that complement each other to secure sustained value-in-use for the end-consumer (Granovetter, 1973). This orchestration creates agility and allows the company to sustain its brand vitality and meet ever-changing market demands. Therefore, drawing from our findings we suggest that: Proposition 1: An integrator SME in a global value chain is focused on creating self-oriented—economic and psychological—value,

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and external end-user psychological value by co-creating value with designers, consumers, customers and suppliers. The brand has been at the core of ClearBlue’s value creation. The globally established brand of ClearBlue sustains its relationship with customers and suppliers and creates its own brand emotional experiential space (psychological value) allowing value co-creation to take place. For ClearBlue the brand is ‘eternal’, while its products and designs have a short life span. The brand impersonates the psychological value, where the material and ideational co-exist in an image for the firm, its network of designers and retailers and its customers. Consequently, buyers and customers are endogenous to the brand value creation (Mertz, He and Vargo, 2009). Hence, we suggest that: Proposition 2: The psychological value co-created by a lead firm is impersonated in its brand, with buyers and customers who are endogenous to the value co-creation process. In particular, highlighting the benefit of supplier-to-supplier ‘matched’ and mutually respectful cultural value orientations that could facilitate long-term value co-creation along SME supply chains, we offer four final propositions. Pertinent to DM SMEs, an essential component of a global value chain, we demonstrate that they may create economic value for the buyer, in this case, originating from an AM context, but complement this with local/regional psychological and sociological value that reflects the context-specific values of its own regional and local customers. The DM SMEs’ willingness to constantly adapt their offering to the needs of the AM SME provides the latter with a unique value, described as flexibility in co-creation. The high level of adaptability, agility and alignment displayed by DM SMEs, which they are willing to quickly implement, provides the AM SME with the ability to be responsive, and thus the source of their competitive advantage is contingent upon downstream relationships residing outside their firm. Thus, drawing from contingency theory, the flexibility and responsiveness that they display is contingent upon the willingness of other participants along the supply chain. Moreover, the sociological value of the participatory firms reflects their sense of belonging to a community, social responsibility and meaningful life, reflective of systems thinking and marketing ecosystems thought. Hence we suggest: Proposition 3: The position of a firm in a global value chain and its embeddedness in contextually distinct values defines its perception of internal and external value co-creation. Proposition 4: The more diversified the position of a developing market (DM) firm in a global value chain, the greater the perceived internal self-oriented—economic and psychological—value and external—sociological and psychological—value it creates.

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Svetla Marinova et al. Proposition 5: The psychological value created by a firm is intrinsically linked with the sense of belonging and happiness, relational and emotional satisfaction reflective of its cultural value orientations. Proposition 6: Internal and external value creation should be analysed as embedded within the contextual boundaries of a marketing ecosystem, and therefore conditioned by it in terms of economic, psychological, sociological and ecological value.

We now draw on our findings and interpretation of the data and propositions to develop and present our new conceptual model (see Figure  8.2). We begin by summarising the assumptions in our conceptual model, based on our analysis of our findings, which build on our propositions previously outlined. The analysis of the value perceptions in the three firms, all SMEs, demonstrates that the value analysis should consider the contextual specifics, reflective of its cultural value orientations, as firms have diverse resources, community of networks and institutional capital available to them (Child and Marinova, 2014), different strategic and operational choices (e.g., competitive priorities, key strategies, external and internal control structures and goals of their supply chain management processes), pathways and scope of activities (Kumar and Singh, 2017; Bhosale, Kant and Shankar, 2018). The cases suggest that value co-creation in the examined SMEs is informed by the characteristics of the business model of the firm (Hong and Jeong, 2006; Sundram, Chandran and Bhatti, 2016) and their position in the value chain. Its value

Value

Economic

Psychological

Sociological

Utility

Emotional and

Social significance

Ecological

co-creation: Perspectives

spiritual value Parties User

Value for money

Happiness

Belonging

Brand meaning

Organization

Cash flow and profit

Core and aspirational

Social fit

Natural methods

values

Contribution and

Close to nature

Relational satisfaction

responsibility

Emotional satisfaction Ecosystem

Mutual economic

Shared drivers

gains Society

Wealth and income security

Mutuality and reciprocity

Wellbeing and safety

Meaningful life in context

Figure 8.2 Perspectives and Participants in Value Creation Source: Case data presented using ideas from Holbrook (1999), Boztepe (2007) and Den Ouden (2011).

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proposition and cultural value orientations (Chan et al., 2010) are associated with its product, customer and delivery system (Hennart, 2014) as well as the socially constructed reality (Sobh and Perry, 2006) of the marketing ecosystems (O’Connor and Reed, 2015) that are communitybased in which the business model operates. We suggest that value should be analysed in terms of economic, sociological, emotional and ecological benefit, but not at a single point of reference identified as individual user, but also including organisations, ecosystems and society.  The economic perspective of value that embodies the utility, with valuefor-money, profit, stability and wealth for both the user and the organisation is essentially dependent upon the flexibility, responsiveness, adaptability, alignment and agile operations of a firm within a supply chain. The psychological value, with happiness and shared values, core and aspirational values, relational satisfaction, emotional satisfaction and social wellbeing is associated with both the product and the contextual cultural embeddedness of a firm. Finally, the sociological value is associated with belonging, social fit, contribution and responsibility, mutuality and reciprocity and is underpinned by social norms and values (see Figure 8.2). Drawing on a systems perspective (Vargo and Lusch, 2011), it is also important to recognise that value co-creation operates at many levels, including the user, organisation, the marketing ecosystem and society at large. However, drawing from a contingency perspective, not all SMEs in the supply chain show awareness of the multiple levels from which they draw resources and thus, their ability to provide flexibility and responsiveness in value through co-creation. The value provided by firms at the lower end of the supply chain draws directly from the communities, socially, psychologically and economically, in which they are embedded. The lack of awareness was more obvious with ClearBlue, consistent with a single firm transactional approach to value creation. Yet ClearBlue’s co-creation is contingent upon the behaviour of lower-end participatory firms’ willingness to display adaptability, agility and alignment. In contrast, both Tara and Suri showed relatively high levels of awareness of the value they desire to co-create across multiple levels, consistent with a systems thinking approach. Such differences could be attributed to cultural idiosyncrasies of high- and low-context cultures (Hall and Hall, 1990). In particular, the concrete meanings and interpretations, the sources of and approaches to co-creating these values are rather distinct to each firm. Thus, it is, indeed, interesting to note that all respondents have reflected upon value from a user, organisational, ecosystem, psychological and societal perspective to a different degree. However, the ecological perspective of value co-creation has found limited supportive evidence in the interviews, although it may well be ingrained in the brand meaning acclaimed by ClearBlue and in the natural dying methods, for example, adopted by the Indian firm, Tara.

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Conclusion Dominant AM firms acting as orchestrators of global value chains are embedded in their host country context but seek global appeal by promoting psychological and social value co-creation with customers and high-value knowledge suppliers such as designers, while on the production supply side they control economic value co-creation. With such firms, psychological value is brand focused and stemming from contextual values that are uplifted into international and/or global aspirations. DM firms participating in global value chains are embedded in a local (country and industry) and international (industry) context and thus, exhibit a dichotomy impelling the meanings and interpretations of the value they co-create. It reflects on the one hand the values of the lead orchestrating firm in terms of product requirements and on the other hand—local economic, social, psychological and environmental values. Consequently, value co-created by firms should be analysed as a multidimensional concept that is embedded in a multitude of contexts and interconnecting ecosystems. Moreover, value co-creation reflects socio-cultural norms which extend the interpretations of value co-creation beyond the individual and organisation to marketing ecosystems, families, local communities and the society at large. This emphasises the need to better understand the role of the firm not independently of, but as a contributor to psychological, sociological and environmental value in these social systems. Finally, data show that economic value has a more nuanced context-dependent meaning than the traditional profit orientation. Further research may explore the specific mechanisms for value cocreation in an SME global network of suppliers, buyers and customers. Such research requires in-depth interviews with different parties in order to differentiate the specific ways in which economic, psychological, sociological and ecological value is co-created, how context affects these mechanisms and how their combinations are impacted by different cultural value orientations within interlinked ecosystems. In light of the opportunities offered by the Internet platform, the process of value cocreation with business customer and end-consumer engagement strategies may also bring greater insight into value co-creation, which can benefit SMEs, as consumers may have similar preferences but their behaviour may vary. The managerial implications suggest elements of dependency and mutual needs. Such transactions create a system of network attachments for value creation. It is important for managers to be aware that value creation is not a linear process of sequential flows, where each firm provides value that is clear, recognisable and consistent with the values and objectives of others. However, for value to be sustained for all participants in a shared value chain, and thus offer benefits of flexibility and responsiveness to upstream firms, lower-end firms need to be willing to constantly adapt, align and be agile. This implies that the latter must

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draw from and attach to important cultural and socially based networks within their communities, and that the former are in a dependent, not dominant position, as their manufacturing and production are based on relationships outside their firms.

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Contributors

Jonas Eduardsen is Assistant Professor of International Business and Marketing (since 2016) at the Department of Business and Management of Aalborg University, Denmark. He completed his PhD degree in International Business at Aalborg University focused on how decisionmakers in small and medium-sized firms perceive risk associated with doing business abroad and the coping mechanisms used for dealing with risks. His current research interests are firm internationalization, with a specific focus on explaining firm’s internationalization behavior, the relationship between firm internationalization and performance, and studying approaches for improving firm performance in foreign markets. Kent Eriksson is Professor at The Royal Institute of Technology—KTH and Director of the Center of Construction Efficiency in Stockholm, Sweden. He was awarded a PhD degree from Uppsala University, Uppsala, Sweden. His research is on international business and retail finance attempting to find the factors in the constricted environment and the economy that determine socio-economic development, and how to use the acquired knowledge to develop applications for improved socio-economic development. Kent has published in numerous academic journals among which are: International Business Review, International Journal of Entrepreneurship and Small Business, Journal of International Business Studies, Industrial Marketing Management, International Journal of Bank Marketing and Journal of Business Research. He has co-authored numerous books. Susan Freeman has a PhD degree in Marketing from Monash University, Australia. She is Professor of International Business at the University of South Australia Business School, Adelaide. She has been Associate Editor of International Marketing Review since 2013 and Rutgers Business Review since 2015 and sits on the Editorial Review Boards of several journals. Her research interests include: international business strategy and early accelerated internationalizing small firms; international entrepreneurship; parent-subsidiary company autonomy;

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internationalization of services; and emerging economies, with a specific focus on the Asian region and qualitative research. She is widely published in the fields of international business, management, entrepreneurship and marketing in leading academic journals including Global Strategy Journal, Management International Review, Journal of World Business, Journal of International Marketing, Journal of Business Research, Journal of Business Ethics, International Business Review, International Human Resource Management, Asia Pacific Journal of Management, Journal of Services Marketing, Journal of Brand Management and International Marketing Review. From 1990 to 1995 she lived and worked in universities in the Netherlands and Austria, as well as in Belgium and Finland. Martina G. Gallarza has a PhD degree and is Associate Professor of Marketing at the Marketing Department of the University of Valencia, Spain. Previously, she worked at the Catholic University of Valencia, where she served as Dean of the Business Faculty. Her research interests include consumer behavior and services marketing. She has authored more than 50 articles published in Journal of Service Management, Annals of Tourism Research, Tourism Management, Journal of Consumer Behavior, Journal of Services Marketing, International Journal of Hospitality Management, VOLUNTAS, Journal of Hospitality Marketing and Management among others. She has been guest scholar at Columbia University, New York City, US; Ecole Supérieure de Commerce de Paris, France; Sassari University, Sardinia, Italy; Strathclyde University, Glasgow, UK. She is on the Editorial Boards of several academic journals. She is a member of the American Marketing Association (AMA), Asociación Española de Marketing (AEMARK) and the Association Française de Marketing (AFM). Morris B. Holbrook is the now-retired W. T. Dillard Professor Emeritus of Marketing, the Graduate School of Business of Columbia University, New York City, US. He received his Bachelor degree from Harvard College in 1965, his MBA degree from Columbia University in 1967, and his PhD degree in Marketing from Columbia in 1975. From 1975 to 2009, he taught courses at the Columbia Business School in Sales Management, Marketing Strategy, Research Methods, Consumer Behavior, and Commercial Communication in the Culture of Consumption. His research has covered a wide variety of topics in marketing and consumer behavior with a special focus on issues related to communication in general and to aesthetics, semiotics, hermeneutics, art, entertainment, music, jazz, motion pictures, nostalgia and stereography in particular. His books and monographs include Postmodern Consumer Research: The Study of Consumption as Text (with Elizabeth C. Hirschman, 1992); The Semiotics of Consumption: Interpreting Symbolic Consumer Behavior in Popular Culture and Works of Art

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(with Elizabeth C. Hirschman, 1993); Consumer Research: Introspective Essays on the Study of Consumption (1995); Consumer Value: A Framework for Analysis and Research (Ed. 1999); Playing the Changes on the Jazz Metaphor: An Expanded Conceptualization of Music-, Management-, and Marketing-Related Themes (2007); and Music, Movies, Meanings, and Markets: Cinemajazzamatazz (2011). Sardana Islam Khan is Lecturer at Central Queensland University, Australia. She earned her PhD degree in Management from La Trobe University, Australia. She has published in international journals, such as Personnel Review, Journal of Developing Areas, International Journal of Economics and Management, and International Business Research, among numerous others. She edited two volumes of the East West Journal of Business and Social Studies, serving as Assistant Editor. Her main research interests are the roles of human resources in international business, high performance work systems, decent work as well as organizational performance. Angelika Lindstrand holds a PhD degree in Business Administration from Uppsala University, Sweden. She is affiliated researcher at the Department of Marketing and Strategy at the Stockholm School of Economics, Sweden. Her research is on firm internationalization; how firms expand into foreign markets with a special focus on how firms use their networks to gain knowledge and acquire resources to reduce risk and create opportunities in their international operations thereby improving their performance. She researches biotech firms, more specifically studying personal and business networks and aiming to map factors, such as individuals, businesses, institutions and resources. Marin A. Marinov holds a PhD degree in Management and is Professor of International Business at Aalborg University, Denmark. His research interests include internationalization of business, multinational firms and business development in emerging economies, as well as business policy and strategy. He has taught and done extensive research on both sides of the Atlantic and in Asia in countries including Austria, Bulgaria, China, Finland, France, Germany, Portugal, Spain, Sweden, the United Kingdom and the United States among numerous others. He has consulted for many multinational firms and national governments, including those of Brazil, Pakistan and the Sultanate of Oman, on country- and firm-specific strategies in the process of internationalization. He is on the Editorial Review Boards of numerous academic journals and periodicals. He has published 19 books, numerous book chapters and more than 90 articles in academic journals. His papers have appeared in academic journals, among which are European Journal of Marketing, Journal of Marketing Management and International Marketing Review. He is Co-Editor of the book series Routledge

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Contributors

Frontiers in the Development of International Business, Management and Marketing and is joint Series Editor of Palgrave Studies of Internationalization in Emerging Markets. Svetla Marinova has a PhD degree in International Business from Copenhagen Business School, Denmark, and is Professor of International Business and International Marketing at Aalborg University, Denmark. Her research interests include company internationalization and the role of institutions, strategy of multinational firms from emerging economies and the management of firms undergoing intensive internationalization processes, value creation and co-creation. She has published more than seventy papers in scholarly journals and edited seven academic books. Two of the books she co-edited with Jorma Larimo and Niina Nummela published by Palgrave Macmillan in 2017 are Value Creation in International Business: An MNC Perspective and Value Creation in International Business: An SME Perspective. Her papers have been published in the Journal of World Business, International Business Review, Management and Organization Review, International Marketing Review and numerous other leading academic journals. She is on the Editorial Review Boards of numerous academic journals and periodicals. She is Co-Editor of the book series Routledge Frontiers in the Development of International Business, Management and Marketing and is joint Series Editor of Palgrave Studies of Internationalization in Emerging Markets. Raquel Sánchez-Fernández is Associate Professor of Marketing at the Department of Economics and Business of the University of Almería in La Cañada de San Urbano, Spain. She received her Bachelor degree in Economics and Business Management in 1999 and her PhD degree in Business Administration and Business Management in 2005 from the University of Almería. Her research has covered a wide variety of topics in marketing and consumer behavior with a special focus on issues related to perceived value, relationship marketing, market segmentation, personal values, life-long learning, and sustainability strategies in such research contexts as tourism services, restaurants, public transportation, and higher education. She has been visiting scholar at Columbia University, New York City, US, under the sponsorship provided by Professor Morris B. Holbrook. She has published articles in scientific journals, including Journal of Business Research, International Journal of Market Research, The Service Industries Journal, Marketing Theory, Environmental and Engineering Management Journal, Managing Service Quality, Journal of Retailing and Consumer Services, Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior and Innovations in Education and Teaching International.

Contributors

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Parves Sultan has a PhD degree in Marketing from Central Queensland University, Australia. He is Senior Lecturer in Marketing at the same university. His research papers are published in the Journal of Brand Management, Managing Service Quality (Journal of Service Theory and Practice), Journal of Business and Industrial Marketing, International Journal on Disability and Human Development, Asia Pacific Journal of Marketing and Logistics, International Journal of Bank Marketing, Australasian Journal of Regional Studies, Journal of Food Products Marketing, Quality Assurance in Education and International Journal of Quality and Service Sciences among others. His research interests include customer value, service quality, branding, corporate social responsibility and firm performance. Ho Yin Wong is Senior Lecturer in Marketing at the Department of Marketing of Deakin University, Melbourne, Australia. He has published in International Marketing Review, Journal of Strategic Marketing, Journal of Business and Industrial Marketing, Journal of Brand Management, Managing Service Quality (Journal of Service Theory and Practice), and Journal of Global Marketing, among numerous other outlets. His research interests include international marketing, strategic marketing and branding.

Index

acquisition value 71, 93, 98 axiology 12–13, 45–46, 72, 182 brand 10, 14, 29, 58, 61, 104, 114, 130, 137–138, 186, 189–194, 196–197, 199–200, 202–203, 206 brand image 3, 112 brand loyalty 11, 24, 27, 32–33, 131 brand positioning 48, 96 brand value 130–131, 203 competitive advantage 46–48, 71, 96, 98, 129–130, 132, 136–137, 139, 180, 203 Concept of Consumer Value 3, 4, 9, 12–13, 25–26, 28–30, 34, 47 consumer behavio(u)r 15, 17, 22, 27, 43, 46–48, 50–52, 71–73, 90, 95–98, 101, 108, 116–117 consumer value 3, 13–14, 16, 19, 22–33, 42–44, 47–55, 60, 63, 65–70, 72, 74, 76, 90–92, 95–97, 101, 108, 113, 115 consumption experience 4, 9–11, 13, 16–17, 20–22, 24, 26, 29, 32–33, 53, 66, 68, 70, 72, 99, 107, 114 context 5–6, 15, 46, 53, 61–62, 64, 67–68, 72–76, 92, 94, 111–112, 126, 134–136, 138–139, 164, 168, 169, 181–184, 186–187, 190, 195–196, 200, 202–204, 206 culture 29, 49, 52, 67, 127, 130, 135–136, 138, 186, 201, 205 design 6, 47, 133, 169, 171, 174, 176, 182, 186–189, 191–194, 196–197, 199–201, 203

ecological value 204, 206 economic value 45, 115, 146, 180, 188–189, 192, 195–196, 198–201, 203, 205 ecosystem 6, 185, 195, 203–206 efficiency 3, 18–20, 23, 25, 33, 72, 104–105, 129 emotional value 31, 72, 115, 198, 200–201 esteem 18, 20, 23, 25–27, 33, 72, 74, 106, 200 ethics 18, 21, 23, 25–26, 33, 72, 76, 105 excellence 18, 19, 23, 25, 31, 33, 72, 93, 115, 185 extrinsic value 3, 17, 72 goods 2, 4–5, 16, 45, 50–51, 64, 68, 71, 73, 127, 131, 146, 167, 169, 183, 193, 199 international business 5, 128, 145–148, 153 international marketing 5, 126, 131, 133, 135–136, 139 inter-variable approach 4, 43–44, 90–91, 95, 97, 108, 112, 114–115, 117 intra-variable approach 4, 43–44, 90–91 intrinsic value 3, 17, 46, 72, 115, 198 knowledge 3, 5, 6, 33, 49, 74–75, 95–97, 99, 108, 112, 114, 116, 128–130, 134, 136–137, 145–156, 158, 164–165, 168, 172–173, 176–177, 193

Index loyalty 31, 44, 46–47, 75, 90–92, 95–96, 98, 100–101, 105–113, 115–116 marketing concept 47, 98, 139 marketing thought 42, 97 network 4, 5, 95, 126, 129–130, 146–158, 170–172, 180–181, 183, 185, 192–194, 199, 203–204, 206 network attachments 6, 182, 184, 188, 206 performance 2, 3, 5, 11, 17, 19, 25–26, 45, 56, 60–61, 63–65, 107, 128, 132, 134, 146, 149–158, 164, 175, 180, 183–184, 186, 198–200, 202 platforms 6, 169, 171–174, 176 products 5, 10, 11, 14, 27, 46, 48, 51–53, 55–56, 60–61, 64, 70, 73, 126, 132–136, 145, 164, 166–167, 171–172, 174, 183, 192, 195–197, 199, 201, 203 psychological value 194, 196–200, 203–206 relationship 2, 5, 6, 13, 19, 31, 50, 55–56, 58, 60, 71–72, 90, 93–98, 100–101, 107–112, 114–117, 126–137, 139, 146–147, 152, 154, 156–158, 163–165, 170–172, 181–183, 186–187, 192–195, 198–200, 203, 207 satisfaction 10–11, 20, 22, 24, 26, 31, 44, 47, 56, 65, 75, 90–95, 98, 100–101, 104, 106–113, 115–116, 180–181, 184, 193, 200, 204–205 services 2, 4, 5, 16, 31, 45–46, 48, 50–52, 56, 58, 60–64, 68, 70, 73, 90,

217

93, 98, 99, 111, 115, 127, 131–134, 136, 145–146, 164, 166–169, 171–172, 174–175, 192 social exchange 128–129, 152, 167, 173 social media 5, 6, 164, 170–177, 191 social value 31, 104–105, 168, 195, 206 society 2, 33, 45, 48, 129, 169, 182–183, 195, 204–206 spirituality 18, 23, 25–26, 33, 72, 76 status 8, 18, 20, 23, 25–27, 33, 72, 74, 168, 173, 201 supply chain 6, 47, 150–151, 154, 156, 180–181, 183–186, 192, 194, 196, 198, 201, 203, 205 taxonomies of value 43, 74 transaction 2, 24, 47, 50, 93, 131, 146, 164, 184, 206 transaction value 47, 71, 98, 188 value chain 6, 7, 45, 95, 132, 163, 180–182, 187–188, 189, 197, 199–204, 206 value co-creation 2, 5, 6, 65, 76, 99, 114, 116, 164, 166–173, 175–176, 181–186, 201, 203–206 value creation 2, 3, 6, 17, 47, 62, 68, 74–75, 95, 130, 134, 137–139, 146, 151–153, 157–158, 163–169, 174–176, 180–182, 184, 186–187, 192, 197, 200–206 value-in-context 2, 94, 99, 181–182, 195, 198 value-in-use 2, 68, 94, 99, 164–166, 169, 195–196, 198, 201–202 value proposition 6, 63, 65, 94, 137–138, 165, 167, 170–171, 180, 182, 184, 198, 202