Value co-destruction: Exploring the role of actors’ opportunism in the B2B context
Introduction
Value is increasingly co-created by multiple participants including firms, customers, suppliers, partners and other stakeholders (Ashok, Narula, & Martinez-Noya, 2016; Ashok, Narula, & Martinez-Noya, 2014; Vargo & Lusch, 2004). Value co-creation (VCC) takes place within inter-organisational interactions, which may include dyadic relationships, value networks, and entire ecosystems. VCC is not limited to dyadic relationships, but extends to service ecosystems (Vargo & Lusch, 2016). The central point of a service ecosystem is to enhance VCC (Mele, Russo-Spena, & Colurcio, 2010). This type of systemic, networked and ecosystem level perspective seems valuable, yet is seldom applied in the B2B co-creation research (Kohtamaki & Rajala, 2016).
Several research gaps and business needs underpin this research. Although, VCC is intrinsic to the customer’s experience in a B2C context (Chuang & Lin, 2015), VCC is deemed as a value proposition in the B2B context (Kohtamaki & Rajala, 2016). Academic research of VCC in B2B context is a small fraction of the VCC research in the B2C context (Lilien, 2016). Further, the significance of value co-creation in the B2B context has grown due to globalisation, digitalisation, servitisation, technological advances, market turbulence, and innovative business models (Cortez & Johnston, 2017).
Dismantling VCC into its constituent parts highlights the differences of VCC in B2B versus B2C context: “kind of value and for whom, kind of resources, kind of mechanism of resource integration” (Saarijärvi, Kannan, & Kuusela, 2013:11). This paper, thus, responds to research gaps relating to the drivers of VCC and to the lack of understanding of VCC constituents in different contexts (McColl-Kennedy, Vargo, Dagger, Sweeney, & van Kasteren, 2012; Tommasetti, Troisi, & Vesci, 2017).
Value co-creation is a dynamic yet complex process of assimilating, applying and transforming resources between ecosystems actors (Chuang & Lin, 2015; Senyo, Liu, & Effah, 2019; Vargo & Lusch, 2011), where technological advances are not only facilitating VCC but also enabling innovative mechanism of resource integration (Saarijärvi et al., 2013; Tommasetti et al., 2017). Since technology enables knowledge transfer (Ashok et al., 2016) and helps ecosystem actors to develop capabilities, it results in bounded rational behaviour.
Thus, collaborations don’t always result in benefits for all the actors involved, in fact some alliances lead to destruction or diminishment of value for one or more actors – this concept is called value co-destruction (VCD) (Echeverri & Skalen, 2011; Farquhar & Robson, 2017; Ple, 2017). Despite the academic and business interest in VCC and VCD research, empirical investigation of factors influencing value co-destruction is lagging (Cabiddu, Moreno, & Sebastiano, 2019; Chowdhury, Gruber, & Zolkiewski, 2016). Further, limited studies examine the role of actors’ opportunistic behaviour (also called opportunism) in the B2B context, a gap addressed by this research.
According to transaction cost theory, contracts and transactions between ecosystem actors are affected by behavioural assumptions; and since firms seek to minimise economic transaction costs, they show bounded rationality and opportunistic behaviour. Unlike rationality, opportunistic behaviour is simple, self-centred, and a source of troublesome behaviour such as dishonesty and misinformation presented by actors in inter-firm relationships (Williamson, 1985, 2007). Such behaviour can generate challenges for ecosystems actors wishing to maximise gain in the turbulent B2B market (Cortez & Johnston, 2017; Martinez-Noya & Narula, 2018). This paper, thus explores alliances in the B2B context from the perspectives of both service ecosystems and transaction cost theory to explore the antecedents of value co-creation and co-destruction.
First, using the service ecosystems lens, this study explores the factors that enable B2B ecosystem actors to collectively create value. The VCC process helps organisations to screen partners for collaboration, reconfigure resources and technology, take advantage of partners’ capabilities, enhance learning through alliances, and re-evaluate strategic position in the market (Ashok, 2018; Maglio, 2017; Ramaswamy & Ozcan, 2018). However, past studies have mostly focused on value co-destruction in the context of a firm and its customers, thus ignoring other actors in the ecosystem (Leclercq, Hammedi, & Poncin, 2016; Ostrom, Parasuraman, Bowen, Patricio, & Voss, 2015; Prior & Marcos-Cuevas, 2016), a research gap addressed by this study.
Second, using the transaction cost theory lens, this research examines the impact of actors’ opportunistic behaviour on value co-creation/co-destruction in the B2B context. Transaction cost literature has long acknowledged that actors’ opportunistic behaviour leads to diminishing value (Noordhoff, Kyriakopoulos, Moorman, Pauwels, & Dellaert, 2011; Wathne & Heide, 2000; Williamson, 1985). Thus, it is not a surprise that many B2B alliances do not realise their full potential, fail to capture value and do not fully appreciate collaborative business practices (De Man & Luvison, 2019).
Thus, this study investigates the determinants of value co-creation and co-destruction, an approach that makes this research more encompassing, less biased and closer to real business life (Cabiddu et al., 2019; Ple, 2017). In their literature review of the theory and practices of value co-creation in a B2B context, Kohtamaki and Rajala (2016) identify the need for a single case study approach to develop an in-depth understanding of the phenomenon. Thus, a comprehensive exploratory case study is adopted, involving an ICT vendor and its channel ecosystem actors in the B2B context. The research setting is very relevant because technological advances and volatile socio-economic-political conditions make ICT ecosystems dynamic and fiercely competitive (Basole, Park, & Barnett, 2015). Further, research shows that main vendors in ICT ecosystems face challenges in enabling value co-creation and collaboration across their B2B network partners (Ritala, Agouridas, Assimakopoulos, & Gies, 2013).
Recent scholarly work in ICT (ICT-enabled) ecosystems have adopted in-depth case study methodology using data triangulation (multiple sources of data like qualitative interviews, company documents, workshop presentations) approach (Jha, Pinsonneault, & Dubé, 2016; Ritala et al., 2013); this study uses a similar methodology. Data triangulation enhances validity of the research process, improves reliability and credibility of the study results, and reduces bias (Bryman, 2016; Creswell, 2009; Eisenhardt & Graebner, 2007).
The paper is structured as follows: the next section discusses the theoretical background of value co-creation in the context of ecosystems and transaction cost theory. The following section presents a description of the case study and the research methodology. This is followed by the findings and discussion on value co-creation and value co-destruction in the B2B context. The final section concludes with the research contribution, limitations and future direction.
Section snippets
Service ecosystem
Value creation does not just take place through the activities of a single actor or between a firm and its customers but among a whole host of actors, where rules and regulations work as building blocks for the ongoing formation and reformation of increasingly complex assemblage (of ecosystem actors) (Vargo & Lusch, 2016: 9). These loosely coupled social economic actors are connected by shared institutional logic (Vargo & Lusch, 2011; Lusch & Nambisan, 2015). Such logic and arrangement may
Methodology and research context
This exploratory study investigates (using the ecosystem lens) the factors that enable an ICT organisation and its ecosystem to co-create value in the B2B context, and examines (using the transaction cost theory lens) the impact of actors’ opportunistic behaviour on value co-destruction. Given the limited understanding of the determinants of VCC and VCD in service ecosystems (Neghina, Caniels, Bloemer, & Van Birgelen, 2015; Ostrom et al., 2015), we use an in-depth case study method (Jha et al.,
Results
This study analysed channel policy documents, audio recordings and interview transcripts to identify the determinants of VCC and VCD in the B2B context in the ICT sector. A priori themes from literature review were amended to construct detailed factors leading to VCC and VCD amongst service ecosystem partners. The findings of this study show that B2B alliances are driven by the motivation to maximise value and minimise transaction costs. In response to RQ1, using the ecosystem lens, we find
Discussion and contributions
We explore how an ICT hardware enterprise vendor and its ecosystem partners co-create and co-destroy value in the B2B context. Using an in-depth case study, we find that vendor organisations invest in their channel ecosystem partners, who deliver products and services to customers. We find that value is co-created through actors’ capabilities, both resources and perceived value, vendor's approach to achieving strategic benefit, and a channel governance mechanism. However, the incentive-rewards
Conclusion, limitation and future research
To summarise, B2B alliances are driven by the motivations to maximise strategic value and minimise transaction costs. Thus, there is scope for both value co-creation and value co-destruction to coexist in an alliance. We contribute to the VCC literature on two fronts. First, through the ecosystem lens, we find that actors’ capabilities (resources and perceived value) and channel governance mechanism enable value co-creation. We highlight the benefits of the tiering approach, non-monetary
Author statement
Credit author statement Dr. Buddhi Pathak Dr Mona Ashok Dr Yin Leng Tan Conceptualization X X Data curation X X Formal analysis X X Funding acquisition Investigation X X X Methodology X X X Project administration X X Resources X X X Software X X Supervision X Validation X X Visualization X X Roles/Writing – original draft X Writing – review & editing X
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