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To receive full credit there must be one primary posting of 200 words (3pts) to the discussion questions and at a minimum two secondary posts (1 pt. each) to another student’s post. Try to post your primary posts before Thursday of each week. This will help in creating a higher level of discussion as the week progresses. Final postings each week must be made before Monday at midnight. Please use proper grammar/spelling, and complete sentences. Try to use “critical thinking” and apply material from the text and your work experience if applicable. If you use online sources – please cite the source in your posting. (CH 2).
This week we focus on creating customer value in a cross cultural market. I have downloaded 3 research papers from the Lasell Library (made it easy for you!), Pick one of these papers, and use any and all of the resources this week; Power Point, sources from Module 6 & 7, McKinsey research papers, 2 TedX videos. With the information from the resources, tell us how it relates to whatever of the research papers you picked. In some cases your discussion will be an overview with many specifics, or more of an overview with less specifics, depending upon the paper you pick. I gave you a lot this week, so don’t get overpowered, I am not looking for a thesis.
Journal of Business and Behavioral Sciences
Vol 28, No. 2; Fall 2016
81
VALUE CO-CREATION IN RETAILING IN THE U.S.
AND JAPAN: A CROSS-CULTURAL COMPARISON
Miwa Y. Merz
Michael A. Merz
Kenneth C. Gehrt
San José State University
Ikuo Takahashi
Keio University
ABSTRACT: This research examines value co-creation in retailing in the U.S.
and Japan. Specifically, it examines the extent to which different levels of
customer participation (i.e., firm-creation, joint-creation, customer-creation) are
valued in both cultures in the pre-purchase and post-purchases phases. The
results of an experimental study show that customers in the U.S. and Japan are
most favorable toward joint-creation in the pre-purchase phase but toward firm-
creation in the post-purchase phase. These effects are significantly more
pronounced for U.S. customers. Unexpectedly, in the pre-purchase phase
Japanese (versus U.S.) customers are more favorable toward customer-creation
whereas U.S. (versus Japanese) customers are more favorable toward firm-
creation.
Key Words: Value co-creation, customer participation, service-dominant logic,
retailing, value dimensions, cross-cultural comparison
INTRODUCTION
WeBook provides aspiring writers a platform to easily publish their
books with the help of other writers, editors, and reviewers. Nike+ constitutes a
platform that brings together millions of runners helping Nike co-design Nike
shoes. Through MyStarbucksIdea, Starbucks takes advantage of crowd creativity
to provide customers with the opportunity to share their ideas and vote on ideas.
Finally, Apple’s iPhone has been successful, largely because of the many
applications available that were co-developed with outside programmers.
These examples illustrate the value of integrating customers into the
value creation process. In fact, one of the key foundational premises of the
evolving service-dominant (S-D) logic in marketing is that value is always co-
created between the firm and its customers (Vargo and Lusch, 2004). S-D logic is
philosophically grounded in a commitment to collaborative processes between
firms and their customers, partners, and employees (Lusch, Vargo, and O’Brien,
2007). Co-creation is considered an important manifestation of customer
engagement behavior (van Doorn, 2010; Hoyer, Chandy, Dorotic, Krafft, and
Singh, 2010).
Merz, Merz, Gehrt and Takahashi
82
Despite its importance, research on co-creation in consumer settings is
limited (Hoyer et al., 2010). Most of the existing work on consumer co-creation
has been conducted in the context of business-to-business markets (Baumann, Le
Meunier-FitzHugh, 2015; Chan, Yim, and Lam, 2010; Hoyer et al., 2010; Spann,
Ernst, Skiera, and Soll, 2009). In addition, most of the existing work on
consumer co-creation has focused on two levels of customer participation (i.e.,
firm-creation, joint-creation), neglecting the possibility of the customer doing
most of the work (i.e., customer-creation; Bendapudi and Leone, 2003).
Furthermore, prior research has focused on examining co-creation in pre-
purchase service encounters, but has neglected the examination of co-creation in
post-purchase service encounters (Edvardsson, Enquist, and Johnston, 2005).
Moreover, most of the existing work on consumer co-creation has been
conducted in the U.S. with little knowledge about its applicability in other
cultures and potential cross-cultural differences (Chan, et al., 2010; Merz and
Takahashi, 2011). To fill these gaps, this study aims to advance existing research
by examining value co-creation (1) in the business-to-consumer context, (2)
across three levels of co-creation (i.e., firm-creation, joint-creation, customer-
creation), (3) in pre-purchase and post-purchase service encounters, and (4) in a
cross-cultural context (i.e., U.S. and Japan).
Specifically, the purpose of this research is threefold. First, it examines
whether joint-creation (versus firm-creation or customer-creation; Bendapudi and
Leone, 2003) affects customers’ perceived service quality and satisfaction with
their retail experience. Lusch, Vargo, and O’Brien (2007) have pointed out the
importance for retailers to use joint-creation as a competitive resource. Second,
this research examines the effects of different levels of co-creation on customers’
perceived service quality and satisfaction with their shopping experience in a pre-
purchase and post-purchase retail service encounter. Edvardsson et al. (2005)
have pointed out the importance of not only examining co-creation in the pre-
purchase service encounter, but also the post-purchase service encounter. Finally,
this research examines in two very different national cultures – the U.S. and
Japan – whether cross-cultural differences regarding customers’ preferred level
of co-creation exist.
THE CONCEPT OF CO-CREATION IN RETAILING
Marketers are increasingly realizing the importance of learning from and
collaborating with customers to create value that meets their individual and
dynamic needs (Chan et al., 2010; Prahalad and Ramaswamy, 2000). Involving
customers in the value creation process is discussed as customer participation in
the marketing literature (e.g., Bendapudi and Leone, 2003). Value co-creation is
the main premise of customer participation (Vargo and Lusch, 2004).
Encouraging customer participation in the service delivery process benefits both
firms and customers. It helps firms increase customer satisfaction and
productivity (Chan et al., 2010; Mills and Morris, 1986). It helps customers have
a better service experience, which includes improved service quality, more
customization, and better service control (Xie, Bagozzi, and Troye, 2008).
Journal of Business and Behavioral Sciences
83
However, Chan et al. (2010) point out that customer participation might
not necessarily create positive value. For example, if customers’ increased
participation shifts power from service employees (i.e., the firm) to customers, it
might result in an increased workload for customers (Gehrt, O’Brien, and
Sakano, 2009). As the beneficiary always determines the value (Vargo and
Lusch, 2004), this increased workload might not always be perceived as
favorable.
This suggests that customers might have different preferences with
regard to their desired level of participation (Bendapudi and Leone, 2003).
Therefore, the concept of customer participation is one that employs many forms
and degrees, ranging from firm-creation to joint-creation to customer creation
(Bendapudi and Leone, 2003; Meuter and Bitner, 1998). In line with prior
research, therefore, we define customer participation as a behavioral construct
that measures the extent to which customers provide or share information, make
suggestions, and become involved in decision-making during the service creation
and delivery processes (Auh, Bell, McLeod, and Shih, 2007; Bolton and Saxena-
Iyer, 2009; Chan et al., 2010; Hsieh, Yen, and Chin, 2004). Dabholkar (1990, p.
484) defines customer participation similarly as “the degree to which the
customer is involved in producing and delivering the service” (see also
Bendapudi and Leone, 2003).
Given this definition of customer participation, we adopt Meuter and
Bitner’s (1990) model of co-creation to distinguish between different levels of
co-creation, in line with previous research (e.g., Bendapudi and Leone, 2003).
The authors distinguish between three types of co-creation: firm creation, joint
creation, and customer creation. Firm creation is a situation in which the service
is provided predominantly by the firm and its employees, without much
participation by the customer. Joint-creation is a situation in which the customer
and the firm’s contact employees interact and participate, in similar measure, in
the service encounter. Customer creation is a situation in which the service is
provided predominantly by the customer, without much participation by the firm
or its employees. As a result, the level of customer participation is highest in a
customer creation condition, whereas it is the lowest in a firm creation condition.
The existing research on co-creation in the context of retailing includes
conceptual or empirical work. Regarding the existing conceptual work, Arnould
(2005) substantiates the importance of co-creation in retailing by arguing that a
Consumer Cultural Theory (CCT)-based approach to retailing is important as it
accounts for the concept of co-creation. In the retail context, CCT provides a
basis to explain how consumers deploy their own cultural resources, aided by
retailer-provided resources. Verhoef et al. (2009) in their conceptual model of
customer experience creation in retailing identified co-creation as one of the key
service interfaces. Regarding existing empirical work, Grissemann and
Stokburger-Sauer (2012) investigated the degree of co-creation in the tourism
industry in Austria. The authors find that co-creation positively affects customer
satisfaction with the service company (i.e., travel agency), customer loyalty, and
service expenditures. Furthermore, Cheung and To’s (2011) experimental
Merz, Merz, Gehrt and Takahashi
84
research suggests a positive relationship between customer participation and
perceived service performance. Auh, Bell, McLeod, and Shih (2007) examined
co-creation in the financial services and medical services industries. The authors
find that co-creation directly affects attitudinal loyalty and indirectly behavioral
loyalty. Baumann and Le Meunier-FitzHugh (2015) examined value co-creation
between sales personnel and end-customers. Their exploratory interviews suggest
that co-creation leads to episode value in discrete transactions, and to mutual
episode and relationship value in relational exchanges.
Finally, Andreu, Sánchez, and Mele (2010) examined value co-creation
among retailers and consumers. On the basis of in-depth interviews and
observations of retailers and customers, the authors propose a framework of
value co-creation that differentiates between three types of co-creation processes:
customer value-creating processes, supplier value-creating processes, and
encounter processes. The authors also identify different phases of value co-
creation: before visiting the store, in the store, preparation, delivery-installation,
and follow-up. The latter two are particularly interesting as they suggest that
value co-creation is not only important during the service encounter (i.e., prior to
the purchase), but also after the actual encounter (i.e., post purchase). Given this,
we distinguish in our examination of co-creation between two phases of customer
co-creation: the pre-purchase phase and the post-purchase phase. Table 1
provides an overview of our conceptual framework.
Table 1: Conceptual Co-Creation Framework in Retailing
Firm-Creation Joint-Creation Customer-Creation
Pre-Purchase Phase Service contact
employees participate
predominantly in the
decision-making process
Customers and service
contact employees
participate equally in the
decision-making process
Customers participate
predominantly in the
decision-making process
Post-Purchase Phase Service contact
employees participate
predominantly in the
order fulfillment process
Customers and service
contact employees
participate equally in the
order fulfillment process
Customers participate
predominantly in the
order fulfillment process
CONCEPTUAL DEVELOPMENT
Cultural Value Dimensions: The question arises whether there exist
cultural differences with regard to customers’ perceived service quality and their
shopping experience satisfaction across the different levels of co-creation and
different co-creation phases. Prior research has argued that cultures differ in
terms of various value dimensions (Hofstede, 2012; Schwartz, 1992). According
to Hofstede (2012), national cultures differ along five main dimensions: power
distance, uncertainty avoidance, individualism versus collectivism, masculinity
versus femininity, and long-term versus short-term orientation. The former three
appear particularly relevant to our framework. Therefore, we will focus on those
three in the following.
Hofstede’s (2012) individualism versus collectivism distinction describes
the degree to which a culture values independence, freedom, and personal and
individual time. Thus, it focuses on the extent to which culture reinforces
Journal of Business and Behavioral Sciences
85
individual or collective achievement and interpersonal relationships. Customers
in individualistic cultures stress self-esteem, self-centeredness, independence
from others, personal goals, and self-expression. Their focus is their own self-
image (“I”) and the forming of a larger number of looser relationships. In
contrast, customers in collectivistic cultures are more group-focused and
interdependent. Their focus is their in-group’s self-image (“We”) and their
saving face in front of their in-groups. Conformity to group norms and values are
highly valued in collectivistic cultures. The U.S. ranks relatively high on
individualism (91 of 100), whereas Japan ranks relatively low on individualism
(or high on collectivism; 46 of 100).
Power distance describes the extent of cultural inequality that underlies
the functioning of each particular society. Its focus is on how a culture shapes its
individuals and groups with regard to authority, prestige, power, status, wealth,
and material possessions (Javidan and House, 2001). Cultures high in power
distance emphasize social status, class affiliation (rich versus poor), wealth, and
hierarchic values. Customers in such cultures are motivated to maintain, increase,
and show their “power” or social status as a source of satisfaction (Roth, 1995).
Members of high power distance cultures tend to be reluctant to trust one
another. In contrast, cultures low in power distance do not place an emphasis on
hierarchic values thereby believing in equal rights for all members of the society.
They de-emphasize the differences between their citizens’ wealth and power and
embrace consultation, participation, cooperation, and practicality (Hoftede,
2012). The U.S. ranks relatively low on power distance (40 of 100), whereas
Japan ranks relatively high on power distance (54 of 100).
Uncertainty avoidance describes the extent to which members of a
culture feel either comfortable or uncomfortable in unstructured, ambiguous, and
uncertain situations (Hofstede, 2012). Its focus is on the extent to which cultures
value novelty, surprise, predictability, stability, and low stress rather than change.
Javidan and House (2001) discuss that uncertainty avoidance is the extent to
which people see orderliness, consistency, structure, and laws. Customers in high
uncertainty-avoidance cultures prefer consistency, structured lifestyles, certainty,
and clearly articulated expectations. They feel threatened by ambiguous
situations and are less tolerant of ambiguity, more risk averse, and more resistant
to change (Roth, 1995). In contrast, customers in low uncertainty-avoidance
cultures are more tolerant of a variety of opinions and less concerned about
ambiguity and uncertainty. They take more and greater risks and more readily
accept change. They accept new ideas, develop innovative products, and are
willing to take risks to try something new or different (Hosftede, 2012). The U.S.
ranks relatively low on uncertainty avoidance (46 of 100), whereas Japan ranks
relatively high on uncertainty avoidance (92 of 100).
Level of Co-Creation: The evolving S-D logic suggests that value
creation is always a dynamic and interactive process between service recipients
and service providers (Vargo and Lusch, 2004). This suggests for all customers
irrespective of cultural background that joint-creation is likely to result in more
favorable outcomes than firm-creation or customer-creation where such dynamic
Merz, Merz, Gehrt and Takahashi
86
and interactive processes between service recipient and provider are limited. In
support of this view, Bendapudi and Leone (2003) found in the context of
retailing that participating customers are more satisfied than non-participating
customers. Similarly, Ennew and Binks (1999) found that customer participation
in the context of retailing positively affects service quality and satisfaction.
To the extent that customer participation is embodied most obviously in
joint-creation, we expect that joint-creation in retailing will positively affect U.S.
and Japanese customers’ perceived service quality and satisfaction with their
shopping experience in both purchase phases. Because prior research has shown
a positive relationship between perceived service quality and satisfaction with the
shopping experience, we hypothesize the following relationship for both U.S. and
Japanese customers:
H1: Customers will (a) have a higher perceived service quality and (b)
be more satisfied with their shopping experience across both
purchase phases when the context is joint-creation versus firm-
creation or customer-creation.
Cultural Differences Across Levels of Co-Creation During the Pre-
Purchase Phase: As mentioned, service provider and recipient are likely to
engage in more dynamic and interactive processes during the pre-purchase
(versus post-purchase) phase. Because a service encounter constitutes a social
exchange, it is likely that culture influences customers’ and service employees’
norms, roles, and expectations (Chan et al., 2010; Patterson, Cowley, and
Prasongsukarn, 2006) in particular during the pre-purchase phase. Therefore, it is
likely that culture moderates the relationship between level of co-creation and
outcome variables. This seems likely especially during the pre-purchase phase
where a more intensive interaction between service provider and customer is
possible. We will look at each type of co-creation separately in the following.
The first type of co-creation is firm-creation. In the pre-purchase phase it
is likely that Japanese (versus U.S.) customers feel more comfortable with a
shopping experience where the customer is less involved in the decision-making
process and where the recommendations come from the firm (i.e., the service
employee). To illustrate, the more collectivist Japanese customers try to fit in
with their in-group. Thus, they might desire to have the advice of a service
employee to help them avoid negative consequences associated with the selection
of a “wrong” product. They are high in uncertainty avoidance. Having a
knowledgeable salesperson help them make their decision might be beneficial.
Firm creation might effectively reduce their perceived uncertainty and fear that
their selection does not conform to group norms and values that are highly valued
in their in-group. In contrast, the more individualist U.S. customers might try to
at least partially get involved in the pre-purchase decision-making process as part
of their desire for self-expression. As a result, we hypothesize the following
interaction between level of co-creation and culture:
H2: In the pre-purchase phase, Japanese customers will (a) have a higher
perceived service quality and (b) be more satisfied with their
Journal of Business and Behavioral Sciences
87
shopping experience than U.S. customers when the context is firm-
creation.
The second type of co-creation is joint-creation. Members of cultures
low in power distance do not place an emphasis on hierarchies and embrace
consultation, participation, cooperation, and practicality (Hofstede, 2012).
Consequently, the lower power distance customers in the U.S. are likely to
embrace a joint-creation context. Furthermore, U.S. customers might feel
accepting and even be looking for new insights and a diversity of opinions prior
to making a decision. For U.S. customers, variety is good and they are tolerant
toward other people’s opinions. In contrast, the higher power distance customers
in Japan are likely to place less emphasis on consultation, participation, and
cooperation (Hofstede, 2012). It is likely, therefore, that U.S. customers are more
favorable toward joint-creation than their Japanese counterparts. Hence, we
hypothesize the following interaction between level of co-creation and culture:
H3: In the pre-purchase phase, U.S. customers will (a) have a higher
perceived service quality and (b) be more satisfied with their
shopping experience than Japanese customers when the context is
joint-creation.
The third type of co-creation is customer-creation. The more
individualist U.S. customers might feel more comfortable than their Japanese
counterparts in service encounters where they have to do all of the work (i.e.,
customer creation). This is because they like to make independent decisions.
They take such situations as opportunities for enhancing their self-esteem and
finding something that matches their personal goals. Their lower level of
uncertainty avoidance suggests that they are likely to feel more comfortable with
the many options they might face than their Japanese counterparts. In addition,
they are likely to be more willing to take risk in their product selection when not
being helped and without a third opinion. As a result, we hypothesize the
following interaction between level of co-creation and culture:
H4: In the pre-purchase phase, U.S. customers will (a) have a higher
perceived service quality and (b) be more satisfied with their
shopping experience than Japanese customers when the context is
customer creation.
Pre-Purchase Phase versus Post-Purchase Phase: In addition to
culture, we expect the purchase phase to moderate the relationship between level
of co-creation and the dependent variables. Previous research has examined joint-
creation predominantly in the pre-purchase phase. While the S-D logic and the
above-cited literature suggest that joint-creation is important, we hypothesize that
it is less important after the purchase transaction has been made than prior to the
purchase transaction. Due to the nature of order fulfillment, customers might not
feel that they need to get involved to the same extent in the post-purchase phase
as they do during the selection and decision-making processes in the pre-
purchase phase (Edvardsson et al., 2005). Therefore, we predict for the joint-
creation condition and for both cultures that customers will have higher service
quality perceptions and be more satisfied with the shopping experience in the
Merz, Merz, Gehrt and Takahashi
88
pre-purchase versus post-purchase condition. Consequently, we expect the
following purchase phase type main effects for both U.S. and Japanese
customers:
H5: In the joint-creation condition, customers will (a) have a higher
perceived service quality and (b) be more satisfied with their
shopping experience in the pre-purchase phase than the post-
purchase phase.
METHOD
295 (U.S.) and 300 (Japan) undergraduate students participated in this
study in exchange for course credit. We assigned subjects randomly to one of
three pre-purchase scenarios and one of three post-purchase scenarios that were
each followed by the dependent and independent measures. The scenarios varied
in level of co-creation (firm-creation, joint-creation, customer-creation).
The stimuli were refined through a pre-test involving 62 U.S. subjects
who were randomly assigned to one of the three pre-purchase and post-purchase
conditions. The ultimate stimuli were scenarios about a person visiting a
department store to purchase a bookshelf. The pre-purchase scenarios described
the purchase experience prior to the financial transaction and in the department
store. The post-purchase scenarios described the experience after the financial
transaction in both the department store and the person’s house. We generated a
total of three pre-purchase and three post-purchase scenarios varying the extent
to which co-creation between the customer and the department store personnel
takes place. The scenarios were back-translated by two native speakers for the
Japanese sample (Brislin, 1980).
Subjects filled out an online survey at their own pace. The survey
contained three parts. First, we randomly assigned subjects to the pre-purchase
scenario and asked them to complete several measures related to the scenario (in
this order): satisfaction with shopping experience, service quality, co-creation
manipulation check, scenario and claim believability measures, and scenario
clarification measures. Second, we randomly assigned subjects to the post-
purchase scenario and asked them to complete these same measures related to the
second scenario. Finally, we asked subjects for their demographics as well as
their interest in and importance of shopping in general. We also assessed
subjects’ perceptions of the study’s purpose. The questionnaire took between 10-
15 minutes to complete.
We used existing scales for all measures. Customers’ satisfaction with
the shopping experience was measured by averaging four seven-point scales
(very dissatisfied/very satisfied, very pleased/very displeased,
frustrated/contented, delighted/terrible; α > .82 for both the U.S. and Japanese
pre-purchase and post-purchase measures), in line with Bendapudi and Leone
(2003) and Spreng, MacKenzie, and Olshavsky (1996). We measured customers’
perceived service quality by averaging three seven-point scales (extremely
poor/extremely good, awful/excellent, very low/very high; α > .94 for both the
Journal of Business and Behavioral Sciences
89
U.S. and Japanese pre-purchase and post-purchase measures), based on Spreng
and Mackroy (1996).
Subjects indicated the perceived level of participation during and after
the shopping experience on two seven-point scales (low work/high work, low
effort/high effort; α > .85, for both the U.S. and Japanese pre-purchase and post-
purchase measures), which were taken from Bendapudi and Leone (2003). This
index constituted the manipulation check for type of co-creation (firm-creation,
joint-creation, customer-creation). Subjects furthermore indicated on five seven-
point scales (not believable/believable, not credible/credible, not
relevant/relevant, realistic/not realistic, could happen/could not happen) how
believable, relevant, and credible the scenarios were (Bendapudi and Leone,
2003; Kent and Allen, 1994; Jain and Posavac, 2004). We averaged the five
scales to form one index of claim believability (α > .82, for both the U.S. and
Japanese pre-purchase and post-purchase measures). This measure ensured that
subjects perceived the scenarios as believable, relevant, and credible. Additional
measures assessed subjects’ understanding of the scenarios and their awareness
of the pre-purchase versus post-purchase situations, interest in and importance of
shopping in general, demographics, and demand characteristics (Yi, 1990).
RESULTS
Sample Information and Manipulation Checks: Of the completed and
submitted online questionnaires, we obtained 284 and 295 usable questionnaires
for data analysis for the U.S. and Japan, respectively. 46% of the U.S. sample and
69% of the Japanese sample were male. 84% of the U.S. sample and 96% of the
Japanese sample were single. The majority of the U.S. sample was Asian (48%),
White (22%), or Hispanic (10%), whereas the majority of the Japanese sample
was Asian (96%). The average age of the U.S. subjects was 24 and of the
Japanese subjects 19. Subjects in the U.S. and Japan were generally interested in
shopping (M= 5.5 in both countries) and indicated that shopping in general is
important to them (M= 5.5. and 5.6, respectively).
To ensure the effectiveness of the co-creation manipulations, we
submitted subjects’ responses to a 3 (co-creation type) x 2 (Country) between-
subjects ANOVA, separately for the pre-purchase and post-purchase scenarios.
The perceived level of co-creation was the dependent variable. The analysis
yielded a main effect for the co-creation factors (pre-purchase scenario: F(2, 553)
= 26.2, p < .05; post-purchase scenario: F(2, 554) = 125.3, p < .05). Pairwise
comparisons for the pre-purchase scenarios – using Tukey’s post-hoc test –
revealed that firm-creation was perceived as significantly less co-creative than
joint-creation (U.S.: M= 4.4 vs. 4.8, p<.056; Japan: M= 3.6 vs. 4.1, p< .05). In
addition, firm-creation was perceived as significantly less co-creative than
customer-creation (U.S.: M=4.4 vs. 5.5; Japan: M=3.6 vs. 4.6; all p< .05).
Furthermore, subjects perceived the joint-creation condition as significantly less
co-creative than the customer-creation condition (U.S.: M=4.8 vs. 5.5; Japan:
M=4.1 vs. 4.6; all p< .05).
Merz, Merz, Gehrt and Takahashi
90
Turkey’s post-hoc pairwise comparisons for the post-purchase scenarios
revealed that the firm-creation condition was perceived as significantly less co-
creative than joint-creation (U.S.: M= 3.6 vs. 5.6; Japan: M= 2.7 vs. 5.1; all p<
.05) and customer-creation (U.S.: M= 3.6 vs. 6.0; Japan: M= 2.7 vs. 5.2; all p<
.05). Furthermore, subjects perceived the joint-creation condition as less co-
creative than the customer-creation condition (U.S.: M= 5.6 vs. 6.0, p < .098;
Japan: M= 5.1 vs. 5.2, p>.05). While this was not significant for the Japanese
sample at the 0.1 significance level, it was directionally consistent with
expectations. As a result, the co-creation conditions varied as intended and
indicated that the co-creation types in our study were appropriate for hypothesis
testing.
In addition, subjects perceived the scenarios as believable, realistic, and
credible (U.S.: all M > 5.4; Japan: all M > 4.6). Finally, our scenarios were well
understood such that subjects remembered the content of the scenarios, the
general level of customer-sales person interaction, and whether the scenario
focused on the pre-purchase versus post-purchase phase thereby providing
further support for the reliability of our scenario co-creation manipulations.
Main Effect Results: H1 predicts for both the pre-purchase and post-
purchase phases that U.S. and Japanese customers will prefer a shopping
experience that is characterized by joint-creation rather than firm-creation or
customer-creation. To test H1, we first submitted U.S. subjects’ responses to
simple between-subjects MANOVAs, separately for the pre-purchase and post-
purchase scenarios. Customers’ perceived service quality and their satisfaction
with the shopping experience were the dependent variables. For the pre-purchase
scenarios, as expected, the analysis revealed a main effect for co-creation for the
service quality (F(2, 248)=129.3, p<.05) and the shopping experience satisfaction
(F(2, 248)=21.9, p<.05) dependent variables. To further examine these main
effects, we used independent-samples t-tests. Analyses revealed that the joint-
creation condition led to significantly more favorable service quality perceptions
(M=5.9 vs. 3.2, t(158)=12.9, p<.05) and shopping experience satisfaction (M=5.7
vs. 4.7, t(154)=5.1, p<.05) than the customer-creation condition. However, the
differences were not significant for the joint-creation versus the firm-creation
conditions. For the post-purchase scenarios, as expected, the analysis similarly
revealed a main effect for co-creation type for the service quality (F(2,
256)=54.6, p<.05) and shopping experience satisfaction (F(2,256)=42.9, p<.05)
dependent variables. Post hoc mean comparisons revealed that the joint-creation
condition led to significantly more favorable service quality perceptions (M=4.5
vs. 3.8, t(171)=2.6, p<.05) and shopping experience satisfaction (M=4.8 vs. 4.2,
t(171)=2.4, p<.05) than the customer-creation condition. However, opposite of
what was expected, joint-creation led to significantly less favorable service
quality perceptions (M=4.5 vs. 6.1, t(168)=-8.0, p<.05) and shopping experience
satisfaction (M=4.8 vs. 6.2, t(168)=-7.0, p<.05) than the firm-creation condition.
Overall, H1 was only partially supported for the U.S. sample.
Similarly, we submitted Japanese subjects’ responses to simple between-
subjects MANOVAs, separately for the pre-purchase and post-purchase
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91
scenarios. Customers’ perceived service quality and their satisfaction with the
service experience were the dependent variables. For the pre-purchase scenarios,
as expected, the analysis revealed a main effect for co-creation for the service
quality (F(2, 283)=38.3, p<.05) and the shopping experience satisfaction (F(2,
283)=3.9, p<.05) dependent variables. To further examine these main effects, we
used independent-samples t-tests. Analyses revealed that the co-creation
condition led to more favorable service quality perceptions (M=5.0 vs. 3.9,
t(192)=7.2, p<.05) and shopping experience satisfaction (M=4.9 vs. 4.7,
t(197)=1.1, p>.05) than the customer-creation condition. However, the
differences were only significant for the perceived service quality dependent
variable. Furthermore, there were no significant differences for the co-creation
versus the firm-creation conditions. For the post-purchase scenarios, as expected,
the analysis similarly revealed a main effect for co-creation for the service
quality (F(2, 281)=79.9, p<.05) and shopping experience satisfaction
(F(2,281)=54.5, p<.05) dependent variables. Post hoc mean comparisons
revealed that the co-creation condition led to significantly more favorable service
quality perceptions (M=4.0 vs. 3.4, t(194)=3.4, p<.05) and shopping experience
satisfaction (M=4.4 vs. 3.6, t(192)=4.2, p<.05) than the customer-creation
condition. However, opposite of what was expected, co-creation led to
significantly less favorable evaluations of the perceived service quality (M=4.0
vs. 5.5, t(187)=-9.1, p<.05) and the shopping experience (M=4.4 vs. 5.5, t(185)=-
6.3, p<.05) than the firm-creation condition. Overall, H1 was partially supported
for the Japanese sample.
Interaction Results: H2-H4 predict interaction effects between level of
co-creation and culture. Therefore, we submitted subjects’ responses to a 3 (level
of co-creation) x 2 (country) between-subjects MANOVAs with service quality
and customer satisfaction as the dependent variables. As expected, there was a
significant interaction effect for both the service quality (F(2, 531)=6.9, p<.05)
and customer satisfaction (F(2, 531)=26.2, p<.05) dependent variables. To
further examine these interaction effects and test H2-H4, we conducted
independent-samples t-tests.
Specifically, H2 predicts for the pre-purchase phase that Japanese versus
U.S. customers will be more favorable toward firm-creation. Independent-
samples t-tests revealed—opposite of what was expected—that U.S. customers
had higher service quality perceptions (M=5.8 vs. 5.1, t(195)=5.2, p<.05) and
were more satisfied with the shopping experience (M=5.8 vs. 5.1, t(190)=4.2,
p<.05) than Japanese customers when exposed to the firm-creation condition. As
a result, H2 was not supported and was opposite of what was expected.
H3 predicts for the pre-purchase phase that U.S. versus Japanese
customers will be more favorable toward joint creation. Independent-samples t-
tests revealed that U.S. customers showed significantly higher service quality
perceptions (M=5.9 vs. 5.0, t(162)=5.6, p<.05) and were significantly more
satisfied with their shopping experience (M=5.7 vs. 4.9, t(163)=5.3, p<.05) than
Japanese customers. Hence, H3 was supported.
Merz, Merz, Gehrt and Takahashi
92
H4 predicts for the pre-purchase phase that U.S. versus Japanese
customers will be more favorable toward customer creation. The results showed
that U.S. customers had less favorable service quality perceptions than Japanese
customers when the context was customer creation (M=3.2 vs. 3.9, t(188)=-3.6,
p<.05). This was opposite from what was expected. There was no significant
difference for the satisfaction measure. Overall, therefore, H4 was not supported.
H5 predicts that customers from both cultures value joint-creation more
in the pre-purchase phase versus post-purchase phase. To test this hypothesis, we
submitted subjects’ responses to the dependent variables to paired-samples t-
tests, separately for both cultures. For this analysis, we focused on subjects who
were exposed to the co-creation condition in both the pre-purchase and post-
purchase treatment conditions to avoid potential confounds. The results for the
U.S. sample revealed that subjects had significantly higher service quality
perceptions (M=6.3 vs. 5.3, t(17)=2.3, p<.05) and were significantly more
satisfied with their shopping experience (M=6.1 vs. 5.3, t(19)=3.2, p<.05) in the
pre-purchase versus the post-purchase phase when the scenario was joint-
creation. The results for the Japanese sample revealed that subjects had
significantly higher service quality perceptions (M=5.0 vs. 3.9, t(30)=4.4, p<.05)
and were significantly more satisfied with their shopping experience (M=5.0 vs.
4.3, t(32)=2.8, p<.05) in the pre-purchase versus post-purchase phase when the
scenario was joint-creation. Overall, H5 was supported.
DISCUSSION
This research investigated the effect of co-creation on U.S. and Japanese
customers’ service quality perceptions and their satisfaction with the shopping
experience. It did so in the context of retailing and for two purchase phases, the
pre-purchase phase and the post-purchase
phase.
We found for the pre-purchase phase that U.S. and Japanese customers
had higher service quality perceptions and were more satisfied with their
shopping experience when joint-creation took place than when they had to do the
majority of work (i.e., customer-creation). This finding is in line with the
premises of the service-dominant logic and the extant literature highlighting the
importance of co-creation.
In the post-purchase phase, however, customers from both cultures
preferred it when the firm created most of the value for them (i.e., firm-creation)
rather than when they participated in the order fulfillment creation process (i.e.,
joint-creation). This finding was unexpected. It might suggest that joint-creation
is more important in some of the parts of a multi-phase process that can
potentially include pre-purchase, purchase, consumption, and disposal phases. In
retailing, it might be that joint-creation particularly matters during the pre-
purchase/search phase but not so much during the consumption/service-provision
phase.
Our research also suggests that there exist significant cross-cultural
differences with regard to co-creation. Specifically, we found that U.S. (versus
Japanese) customers had higher service quality perceptions and were more
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93
satisfied with their shopping experience when joint-creation took place during the
pre-purchase and post-purchase phases. Furthermore, unexpectedly, we found for
the pre-purchase scenarios that Japanese (versus U.S.) customers were more
favorable toward the customer-creation condition, whereas U.S. (versus
Japanese) customers were more favorable toward the firm-creation condition.
Our findings suggest that retail managers across cultures might benefit
from implementing a servicescape that invites customers to participate in the
service provision co-creation process. This could for example be done by simply
involving customers in open conversations to guide them during their decision-
making process. Our findings also suggest that retail managers across cultures
might benefit less from involving customers in the co-creation process during the
consumption/service-provision phase. Customers had higher service quality
perceptions and were more satisfied with their shopping experience when the
firm took care of the service-provision phase than when they were part of it.
Consequently, retail managers might want to invest into creating physical store
space that invites customers to participate in the co-creation process, but create a
service-provision phase that is less focused on co-creation.
Our findings suggest further that co-creation has different meaning
across cultures. Consequently, global retail marketers that are cross-culturally
active might benefit from knowing that co-creation seems to play a bigger role in
more individualistic cultures than collectivistic cultures. Therefore, creating retail
space that invites customers to co-create value together with the retailer might be
more important in individualistic cultures (such as the U.S.) than collectivistic
cultures (such as Japan). This finding may also be the result of the fact that the
U.S. retail infrastructure has moved further along the self-service continuum than
has the Japanese retail infrastructure (Meuter and Bitner, 1998). Japanese
consumers, consequently, are less habituated to co-creation.
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