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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

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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).

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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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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.

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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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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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Hofstede, G. (2014). “National Culture – Countries.” Retrieved on September 15,

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