Abstract

The ever-changing economic climate along with the ongoing globalization put pressure on

companies’ innovative capability. Firms are obliged to cope with a difficult and unprecedented

challenge: The world is changing much faster than them. In every industry, without exception,

it is observed the phenomenon of firms being overtaken by an accelerating pace of change

showing no signs of letting up any time soon. In the new business environment of increasing

uncertainty, there is only one thing certain: the pace of change is only going to get faster.

In this context, concepts such as Open Innovation and the extensions of this approach, such as

the Collaboration Platforms and the model of Prosumers (that is the combination of a person

being both producer and consumer) are increasingly gaining ground and attract the interest of

companies struggling to offer their customers products and services that meet their needs in the

best possible way.

Many large well-established firms in various industries, from P&G & Unilever in the FCMG,

to AUDI & BMW in the Automotive, have already adopted a practice based on which they

actively involve their customers in the process of creating new products using various means,

from traditional to more sophisticated ones (i.e. digital platforms).

The purpose of the study is to examine whether and to what extent the active participation of

final customers in the New Product or Service Development (NPD/NSD) Process can lead to

fostering the companies' innovation capability, and subsequently to providing superior firm’s

performance.

Finally, in order to assess the impact of prosumer model in developing innovative, customer-

centric products, there will be examined & analyzed different cases from the

Telecommunications Industry, in which such a technique played an important role for

particular Operators so as to transform from Traditional Communications Service Providers to

innovation leaders by exploiting collaboration with customers through implementing co-

creation approach.

Keywords

Open Innovation, Co-Creation, Digital Platforms, Prosumer, Crowdsourcing, Competitive

Advantage, Customer Experience

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1. Introduction

1.1 Background

Industries across all over the world are undergoing a major shift as the traditional firm-centric

and product/service-centric model is challenged by the personalised customer experience

standard (Prahalad & Ramaswamy, 2004).

In the past, firms tended to provide to their customers what they produced, or in the best case

what they reckoned their customers need. This practice was in a sense acceptable from the

customers’ side, as they lacked easy access to information regarding other available options.

Business in the current century is more diverse than they used to be during the previous one.

We live in the era of markets globalization and due to this fact, our knowledge is far more

advanced than before. This is important basically because firms are trying to predict the next

steps the world is to take. Many researchers try to answer this question so as to figure out what

will be the next type of ‘fuel’ that will lead the companies exploiting it to the road of the

success.

All these efforts always concluded to the same finding: Customer is -still- the King!

Taking that into consideration, it is observed a new trend paradigm implying that the previously

product-centric view of creating value is now considered to be obsolete and is gradually being

substituted by a new approach: the joint-effort between firms and customers.

Moreover, the role of the customer has been upgraded from just being a passive recipient of

value to a more active one, which enables them to be co-creators of their own personalized

experiences.

This way, customers nowadays sit on the driver’s seat and so they, along-with the firms, are

active participants in the process of joint-problem definition and afterwards problem-solving

development.

Co-creation seems to be an emerging new trend providing the answer to the contemporary

challenges firms are struggling to cope with. There are numerous researches denoting that co-

creation approach of value creation can be of significant importance as far as the achievement

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of sustainable competitive/comparative advantage is concerned, especially within the current

business environment (Chung, 2009; Zhang & Chen, 2008).

Based on another research, there are two critical determinants for product success: the deeper

and more frequent interaction between firms and their customers (Kristensson, Gustafsson, &

Witell, 2011). Both determinants are considered as main characteristics of co-creation.

In order for a product to be successful, its profitability level is a critical performance indicator.

Actively involving the customers into the value creation by including them into a firm’s cross-

functional teams is a prerequisite and of strategic importance in order to achieve greater levels

of profitability (Zhang & Chen, 2008).

In order to get the most from the co-creation process, customers’ contribution should not be

limited to the phase of commercialization but it has to continue all the way through the entire

innovation process stages.

Co-creation requires multiple points of firm-customer interaction. To get the most out of this

process, firms should pay great attention to the experience the customer will get through the

entire process. For this reason, the creation of a robust and solid experience environment from

the side of the firms is considered as non-negotiable (Durugbo, Hutabarat, Tiwari, & Alcock,

2011).

Though a great number of researches stress the importance of co-creation, there is still a debate

about what co-creation really is. In their 2008 paper Prahalad and Ramaswamy extend the co-

creation dimension so as to also include the suppliers into the process. This demonstrates that

Co-Creation is still in a development phase, until it is precisely defined and matured, where a

proposed categorization of Co-Creation theory will help towards updating the current state of

knowledge.

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1.2 Research Question

This study focuses on whether the use of co-creation in New Product/Service Development

(NPD/NSD) impact positively the firms’ innovative capability or not, especially in comparison

with competitive firms applying traditional approaches to conceive and create New

Products/Services.

The study will examine the impact (positive or negative) that co-creation may have on

promoting innovation in the High-Tech Industry, where service innovation is considered of

significant importance because it is a major source of competitive advantage for firms operating

in this industry in cultivating their ability to take advantage of the knowledge attained from

customers, competitors and their own organization capabilities so as to create usefull and

distinctive services.

The main research questions that is central for this study are the following:

▪ Do firms increase their innovation capacity by actively including their customers in the New

Product/Service Development Process?

▪ Does the adoption and implementation of co-creation approach provide sustainable

competitive advantage to companies applying it?

▪ How does and to what extent the prosumer model helps companies to provide superior

products/services to their customers, outperforming this way the competition?

To answer this question, there should be tested different dimensions of co-creation. The

involvement level in co-creation is an important factor in the NPD/NSD process and so it

should be tested to evaluate its effect on product/service innovation.

Additionally, another critical factor is the mean applied by the firms in order to actively include

their customers into the NPD/NSD process and collaborate with them. There are various means

that could be used, from traditional, such as work-groups requiring physical presence, to more

sophisticated one, such as digital collaboration platforms. The rapid expansion of internet usage

and the advancement in technology have favored the massive adoption of almost any kind of

digital collaboration tools.

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1.3 Previous Research

Eric von Hippel published a paper in 1986 proposing that high-technology firms, as well as

those producing novel products, have to collaborate closely with lead users, as their potential

users, especially those comprising the mass market customers’ segments, lack of the required

skills and knowledge to solve the problem.

Moreover, von Hippel explored in the same study the ways and the forms of collaboration

between firms and customers, in conjunction with the possible ways the results of such a

collaboration could be included into customer and industrial research analysis (von Hippel,

1986). The specific survey regarding ‘lead users’ examination was literally the predecessor of

the co-creation concept.

Collaborative Innovation was a field that studied extensively between 1986 to 2004 by

numerous researchers. Nonetheless, it wasn’t until 2004 when Ramaswamy and Prahalad came

up with the terminology of co-creation.

Co-creation challenges the old-style firm-centric approach of creating value by suggesting a

different model, that is the ability from the side of the customers to choose the method and the

depth of their active participation in the firm, according to their preferences (Prahalad &

Ramaswamy, 2004).

Another model is also introduced in the same paper: the DART Model. DART is the

abbreviation of Dialogue, Access, Risk and Benefit, Transparency. DART model

fundamentally expounds on the building blocks of the interaction between firms and customers.

This interaction is one of the main elements supporting the co-creation experience.

Co-creation is a two-way process, and because of this fact, it requires from the firms’ side to

create a robust experience platform in order to allow customers to co-create a personalised

experience (Prahalad & Ramaswamy, 2003).

Till the introduction of the co-creation term, there was a growing research interest on the

specific topic. This interest was mainly fed by the awareness about the role of key stakeholders’

collective knowledge (customers and employees) in creating and sustaining competitiveness

and information dispersion and sharing (Durugbo, Hutabarat, et al., 2011; Chung, 2009).

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Co-creation was gradually gaining significant importance, both in the context as learning

strategic initiative (Chung, 2009) and business strategic initiative (Sawhney, Verona, &

Prandelli, 2005; Ramaswamy & Gouillart, 2010).

In the past, the majority of the literatures regarding co-creation focused on the development of

a theoretical foundation and the testing of the conceptual framework in order to understand the

dimensions of the model.

During that period, dimensions such as the communication content, the frequency, the direction

and the modality (Kristensson et al., 2011) on one hand, and the types of the value derived

from the co-creation process (Tynan, McKechnie, & Chhuon, 2010) on the other were mainly

tested. Moreover, these foundations were extensively used in surveys and researches in fields

such as the telecommunication sector (Matthing, Sandén, & Edvardsson, 2004), the retail (Oh

& Teo, 2010), and the pharmaceutical and automotive sector (Sawhney et al., 2005).

Many researches aimed at exploring the value and the possible outcomes deriving from co-

creation process, as we can see in the paper of Durugbo (2011), in which the customers practice

and group formation methodology in co-creation was identified (Roberts, 2008; Vargo &

Lusch, 2008; Nuttavuthisit, 2010; Payne, Storbacka, & Frow, 2008).

1.4 Conceptual Model

Given the complexity of the object study, a conceptual model approach of the co-creation

process was first created in order to narrow-down the scope of the study and focus on the most

important issues of the particular model.

Thus, the following conceptual model was developed to examine the impact of the co-creation

process on fostering the firms’ innovative capability and thus on creating sustainable

competitive advantage over their competitors.

Figure 1: Conceptual Model

Co-Creation Model

Customer

participation in

NPD/NSD

Innovation

capability

improvement

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Based on this conceptual model, it is suggested that the implementation of co-creation

significantly affects the ability of companies to innovate, which in turn helps to create products

and services that are differentiated from competition.

At the same time, active customer engagement in the creation of new products and services is

a catalytic factor so that new products, which are essentially created by customers themselves,

have exactly those features that customers are looking for. These are products and / or services

that exactly meet the needs of the target audience.

It is also proposed to apply this practice so that companies that adopt it are able to create a

sustainable competitive advantage, create a separate customer experience, and finally establish

strong customer relationships, as client experience copies very hard competitors.

This study will focus on analyzing the model of co-creation as a factor of improving business

innovation capacity. In addition, the impact of actively including customer in the new product/

service development phase through the prosumer model will be examined. Last but not least,

there will be studied how and to what extent this process helps increasing the engagement of

customers with the firms that adopt such a model in order to come up with products/services

meeting the needs of their customers in the most effective way.

1.5 Focus Areas and Limitations

The study focuses mainly on the analysis of the impact of co-creation approach and the model

of prosumers in one of the most competitive sectors of the economy, that of high-tech

companies.

This industry is characterized as highly competitive, and therefore the diversification of

products/services provided by companies operating in this industry is more than vital.

In this effort of the perpetual drive for diversification, innovation is the only way for the firms

to standout of the crowd. As companies' ability to innovate is finite, they will have to

continually invent new sources of ideas to turn them into innovative products/services.

An additional characteristic of the high-tech sector is the fact that this is considered as capital-

intensive by its nature. This characteristic makes the need for successful products and services

even more essential, as their production costs are extremely high -mainly due to the high cost

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of R&D implemented - with the result that the only way to succeed is diversification through

innovation.

On the other hand, the prosumer concept gradually begins to gain more and more ground, as

customers are now more aware, know what they want, have easy and quick access to

information, and finally express their opinion and interact with business, primarily through the

social networks.

As far as the study constraints are concerned, the main obstacle regards the limited previous

literature on the prosumers model in the telecommunications industry, which will be analyzed

in depth. All previous studies on the subject have been conducted mainly in other sectors,

resulting in data collection and best practices gathering to be an extremely difficult task.

1.6 Structure of the thesis

The dissertation presented in the particular study is organized in 7 chapters, as follows:

Chapter 2 concerns the literature review. This chapter presents and analyzes the theories of

Open Innovation models, a concept that is the cornerstone of the rest models and approaches

that will be presented and analyzed throughout the study. Going one step further, the models

of co-generation and those of the prosumer, that is the combination of customer & producer

who essentially shapes the characteristics of the products and/or services they are to ‘consume’

through his active participation in the process of product creation and services (NPD / NSD),

are critically analyzed

Meanwhile, there is a thorough presentation and critical approach of big companies from

various sectors of the economy, which have successfully adopted and applied the above

models, having managed to create a competitive advantage over competitors, providing their

customers with holistic solutions that meet their needs in the highest possible way.

In Chapter 4 (Conceptual Framework - Research Modeling), the research model is essentially

formed and the research hypotheses are built on the theories presented in chapter 3, while

chapter 5 (Research Methodology) comprises an extensive reference to the methodology

behind the research of this study. It describes and motivates the research design, empirical data

collection and analyzing methods.

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In Chapter 6 (Data Analysis) we describe how the data will be collected (e.g. survey with the

use of the structured questionnaire), but also the population and the sampling method followed.

The analysis of the primary data is carried out employing statistical analysis aiming at drawing

meaningful conclusions.

Finally, chapter 7 presents the results of the data analysis, as it was made in the previous

chapter. In this context, we try to reach useful conclusions about the practical application of

the afore-mentioned theories, in order for the companies applying them to improve their ability

to innovate. In this context, a critical analysis of the conclusions reached is also made.

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2. Literature Review

2.1 Open Innovation Paradigm

According to Henry Chesbrough, “Open Innovation is the use of purposive inflows and

outflows of knowledge to accelerate internal Innovation, and expand the markets for external

use of Innovation, respectively”1.

Based on the aforesaid term, Open Innovation is considered as a model that should exploit

internal & external ideas, sources, routes to the markets, as companies seek to develop their

technology (Chesbrough Henry, 2003).

According to a most recent study, Open Innovation is defined as “a distributed innovation

process based on purposively managed knowledge flows across organizational boundaries,

using pecuniary and non-pecuniary mechanisms in line with the organization's business

model"2.

The most recent definition suggests that the particular approach (that is Open Innovation) is

not merely a firm-centric process, but rather a much broader process also including creative

customers, communities and user innovators (West, Joel; Lakhani, Karim R., 2008).

During the recent years, the particular approach has gained substantial importance, primarily

among researchers and business executives (Schroll & Mild 2011; Chesbrough & Brunswicker

2013) because of the huge potential it seems to have in firms innovation practices.

The following are the benefits arising from adopting an Open Innovation process:

Business Knowledge Base Expansion

Access to Knowledge outside the Business boarders

Maximization of Intellectual Property

Faster Time-to-Market for New Products and Services

1 Chesbrough, Henry William (1 March 2003). Open Innovation: The new imperative for creating and profiting from

technology. Boston: Harvard Business School Press. ISBN 978-1578518371.

2 Chesbrough, H., & Bogers, M. 2014. Explicating open innovation: Clarifying an emerging paradigm for understanding

innovation. In H. Chesbrough, W. Vanhaverbeke, & J. West (Eds.), New Frontiers in Open Innovation: 3-28. Oxford: Oxford

University Press. Page 17.

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The importance of Open Innovation has primarily to do with the direct benefits deriving from

the adoption of this process versus the traditional Closed Innovation model. Closed Innovation

forms rely solely on internal resources to innovate. The ideas screening process is considered

obsolete, as in the most of the cases the ideas are evaluated only internally, and those considered

to be the best and most promising among the rest are picked for their development and

commercialization, while those showing to have less potential are abandoned.

The main difference between the Open and Closed Innovation model is that based on the latter,

ideas and the whole process required for new products/services development takes place within

the company. Yet, by applying the Open Innovation approach, companies gain access to, and

can exploit, external resources, such as know-how and expertise of specific groups of people

that they would otherwise not have access to. In this way, they gain significant benefits, while

simultaneously listen to the needs of the market in a much better and more targeted way.

There are many established firms, in various sectors, such as IBM, Xerox, Intel (Chesbrough

2003), Lego (Antorini et al 2012), P&G, Philips, Siemens (Enkel et al 2009), and others having

successfully applied open innovation practices, gaining substantial benefits.

The successful paradigms of this dort of firms prove that open innovation can be a sustainable

trend providing a foundation for gaining competitive advantage. Though, the effective

implementation of open innovation can be really complex, as it incorporates several

management operational & functional fields, and additionally the term, the categorization, the

scope and the practice of this new trend have yet to totally be agreed.

This chapter introduces the concept and the nature of the Open Innovation model and its

original contributions. Then, a detailed description of the purpose of Open Innovation is made,

as well as a reference to the broadening of the concept having been made in recent years.

Finally, it concludes with a new approach regarding the purpose of Open Innovation, which

includes multiple perspectives and contributions within its scope.

2.1.1 Origin of Open Innovation Paradigm

Open Innovation term was developed by Henry Chesbrough, in his book: Open Innovation:

The New Imperative for Creating and Profiting from Technology. Initially, the author had

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described a new approach, that of Open Innovation, while making reference to the factors that

contribute to the change from traditional methods of innovation to this new model.

In the same book he analyzed the fundamental principles of Open Innovation and provided

examples of companies having applied this model successfully. Chesbrough’s study has had a

great impact on the Innovation Management Theory, and has also become prevalent to both

practitioners and academics.

Chesbrough describes Open Innovation as the model by which firms can and should exploit

ideas arising or existing both inside and outside the firms’ borders, in order to gain faster and

effective access to markets, as well as to develop their technology (2003, xxiv).

The basic concept of open innovation proposes that ideas could derive from either inside or

outside the organisation and could be shifted at within and outside.

In many of his studies, Chesbrough proposes to switch from a Closed to an Open Innovation

model, due to the fact that the first model characterized by and requires huge R&D Centers and

vertically integrated industries.

In these structures, the main disadvantage is that knowledge is formed and exploited within the

borders of the enterprise, which are finite.

The following figure presents the flow of ideas and innovation based on the Closed Innovation

model, where flow flows from within to the narrow limits of the enterprise (Figure 2).

Figure 2: Old Model of Managing R&D (Chesbrough 2003, xxii)

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On the other hand, the following figure illustrates the same process as this occurs when the

open innovation model is applied (see Figure 3)

Figure 3: Open Innovation Model (Chesbrough 2003, xxi)

Chesbrough attributes the modification from Closed to Open Innovation to various factors that

had a significant impact on the knowledge field, as follows:

The availability and agility of skilled labor

The development of the venture capital (VC) market

External options

The increase in the capabilities of external suppliers

Overall, these factors affected and, in a sense, formulated the way to create, distribute and

transform knowledge into processes for the development of new products/services and

ultimately changed the rules of the competition.

The below table describes the aforementioned factors.

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Factors Description

Availability & mobility of

skilled labor/workforce

Through increased and easier access to information and knowledge

sources, as well as improved communication quality, knowledge

diffuses into sources other than traditional media and R & D Units.

Also, due to globalization, worker mobility has increased

Growth of VC Market During the 1980s and 1990s, the Venture Capitals market grew

rapidly, resulting in the support and promotion of Ventures

External options Intellectual Property, which remains idle, can be used from outside

agencies to create spin-offs and start-up companies

Enhanced capabilities of

suppliers outside the

organizations

Over the past decade, both the number and availability of specialized

suppliers have increased dramatically

Table 1: Factors impacting the knowledge field (Chesbrough 2003)

In addition, the scholar makes a comparison of the basic foundations of Closed and Open

Innovation. These foundations are opposed to those of traditional Innovation model and the

way that could firms can take advantafe of them. Furthermore, these foundatons are still in

force despite having been mentioned over a decade ago. In addition, they appear to cover more

businesses and sectors as the factors that erode the previous model have increased in size.

The table presented below presents the contrasting principles of Closed and Open Innovation

Models.

Divergent Foundations of Closed and Open Innovation

Closed Innovation Foundations Open Innovation Foundations

The smartest and most talented people are

working for our business

There are smart and talented people who work in other

businesses as well. We must approach them and

convince them to work for our business or to work with

them.

The business that will succeed in launching

innovation in the market will win

It is more important for a business that can create a

sustainable business model than being the first in the

market

Businesses that invent the best and most

innovative ideas, they are the ones who finally

earn

The companies that make the best use of the innovative

ideas that come both inside and outside of them

eventually earn

In order to win a business from its R&D, it should

have brought it and has developed it in-house

R&D coming from outside sources can provide very

significant value to the business. Inside R&D is also

important to accomplish the goal of creating additional

value

Firms that invent an idea themselves are the ones

that launch it first in the market. Firms do not have to stop research to profit from it.

Firms should control and regulate Intellectual

Property in such a way as to prevent their

competitors from profiting from their ideas.

Firms should also benefit from the exploitation of

other's intellectual property. Additionally, companies

should buy other firms' intellectual property in the case

they advance their own Business Model Table 2: Contrasting Foundations of Closed and Open Innovation (Chesbrough 2003, xxvi)

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Chesbrough's study at its initial stage, presents and analyzes various case of companies

incorporating knowledge from the external environment and other cases of companies taking

advantage of unused knowledge in new forms.

An example of the first case is the Intel Corporation, which used the knowledge created by

research institutes, giving the company the opportunity to focus its resources (human resources,

investments, time, etc.) on other critical areas, such the improvement of its production

infrastructure. In this way, Inntel Corporation succeeded in gaining value by using the

knowledge produced by others, while at the same time managed to achieve operational

excellence.by targeting their resources to other areas.

However, when they were not able to gain the desired value from the basic research conducted

by third parties, such as research centers, then they invested some of their resources in R & D.

Intel Corporation has benefited from access to early technological developments through

intelligent and targeted investment in specific research centers.

On the other hand, Xerox managed to exploit unused business knowledge and find new

untapped opportunities -beyond those provided by the Parent Company- through the Xerox

Palo Alto Research Center (PARC) spin-off.

Xerox gave the allowance and enabled many of its employees to use idle technology in spin-

offs. These spin-offs managed to find their way into the market by creating a new

organizational structure, testing and advancing technology, thus creating a new business model.

According to Chesbrough, the collective value produced by 11 of the spin-off companies

created in this way was twofold the market value compared to the respective of the parent

company.

The above examples convincingly convey that open innovation can be implemented and bring

great success and spectacular results.

In recent years, some new forms of knowledge exchange have emerged, such as open-source

software, crowdsourcing, and co-creation, with the result that open innovation has expanded

considerably.

In the next sub-chapter there will be a description the concept of evolution throughout the last

decade.

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2.1.2 Evolution of Open Innovation Term

At this point, we have to mention that Open Innovation as a term, has been used for many

decades before Chesbrough invented it and dealt with it (Duarte & Sarkar, 2011; Lazzarotti &

Manzini, 2009).

For example, there are strong signs of formal business activities that have taken place over the

past few decades, including procedures such as licensing, partnerships, divestments and

mergers & acquisitions.

However, when the concept of Open Innovation was introduced as a new method, it directly

impacted the mindset and the way companies collaborated with external stakeholders.

Nowadays, Open Innovation covers a very wide field compared to what it used to be the case

in the past (Muller, Hutchins, & Cardoso Pinto 2012) and one could say that the concept has

evolved over the years.

In this respect, there should be a separation on the term Open Innovation and what it ultimately

stands for in relation to the original approach of the concept several years ago.

In this section we will look at the evolution of the concept of Open Innovation over time. The

concept and subject of the term in the past, as well as its content today, including some current

trends, will be analyzed.

The definition of Open Innovation has not yet been clearly and precisely defined. Given the

complexity and the evolution of the term, several researchers have different approaches and

view on it (Table 3). The original version of Open Innovation proposes that ideas can derive

from either inside or outside the company, and can be promoted within or outside the firm.

According to this definition, the value of access and use of an idea over its ownership is

highlighted.

A later definition by Chesbrough, West & Vanhaverbeke (2006) goes one step further and

develops the concept of ideas into knowledge, which can be incorporated into ideas, products,

technology, etc.

A study by Gallagher & West (2006) provides a new perspective, including the systematic

process of exploring, incorporating and exploiting internal & external sources of new ideas.

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In another study by Lichtenthaler (2008), Open Innovation is committed to exploiting internal

and external technology through company capabilities. The same scholar in a newer study

(2011) adapts the concept of Open Innovation by replacing the element of technology with that

of knowledge, while at the same time enhancing new concepts such as exploring and exploiting

this knowledge, in line with the West study and Gallagher.

Taking into account the previous definitions from the best-known Open Innovation scholars,

there is a tendency to broaden the Open Innovation scope to include notions, like the following:

Identifying opportunities

Integrating them into the innovation process

Investigating knowledge

At the same time, the capabilities of companies are referred as a significant factor in the firms’

innovation process, while on the contrary knowledge is gradually considered as a significant

component of Open Innovation, as it incorporates concepts such as ideas, intellectual property,

know-how etc., while it can be integrated into people, products, services, processes etc.

Author Definition

Chesbrough (2003)

Open Innovation is the model by which companies

are able to and should exploit ideas that come from

within the company as well as from abroad, with

the aim of studying their technology. This

combination of ideas has the effect of creating the

requirements of Business Model

Chesbrough, Vanhaverbeke, West (2006)

Businesses exploit the input and output of

information and ideas to enhance their internal

innovation but also to expand markets of

innovation of a

Lichtenthaler (2008)

The management and use of technology in the

process of innovation is included in the concept of

Open Innovation. In this way, Open Innovation

includes a plethora of internal and external sources

of innovation, as well as commericialization

channels

Lichtenthaler (2011)

Open Innovation is the methodical search,

exploration, preservation and exploitation of

knowledge coming both inside and outside the

enterprise .

Table 3: Open Innovation definition by the most prominent scholars.

At the same time, if the factors that affect the field of knowledge, we will see that they have

grown in size (Table 4) mainly due to continuous improvements in the IT and

telecommunications sectors. for example, the availability of skilled workers has been greatly

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enhanced mainly by access to new sources of knowledge, dominated by MOOCs platforms,

and secondly to advances such as distance work, on-line specialized communities etc.

At the same time, venture capital markets have been extended and new forms of fund raising

have been invented, such as crowdfunding. Additionally, access to new external sources of

ideas has been facilitated, giving access to private and public resources.

Factors Status a decade ago (2003) Current status (2014)

Skilled labor

availability & mobility

Information widespread to other

sources outside R&D Units.

Institutions and other

contemporary networks (i.e. the

internet) are spreading

knowledge. Likewise, labor

mobility along-with other trends,

i.e. outsourcing, has transformed

the knowledge field.

Developments of MOOCs,

formulation of communities,

development of open

software/hardware, and open

office.

VC Market Growth A settled VC market since

1990's

Extended to peer-funding,

crowdfunding, crowd-equity

and others

Exterior Options

Idle IP can be occupied to

external paths in form of spin-

offs and startups.

Not just through startups and

VC funding. New options

aroused (i.e. innovation

markets & innovation

intermediaries)

Enhanced capabilities

of suppliers outside the

organizations

Increase in the number of

specialized suppliers during the

last decade

Emergence of new smaller

and highly specialized

suppliers. Because of the

limited internal market size,

they tend to function

internationally so as to reach

a significanr market segment

portion. Table 4: Factors impacting the knowledge field (updated)

Since the commencement of Open Innovation term, the scope of this new paradigm has

expanded to cover also other areas. Researchers have been discussing the term and what it

could also include (Elmquist et al 2009; Gasman et al), without concluding to a common

outcome.

On the other hand, the advancement of Information and Communication Technologies, also

known as ICT, brought about the expansion of the term’s scope so as to incorporate concepts

such as crowdsourcing, crowdfunding, prosumers, co-creation, platform ecosystems, online

communities etc.

Page | 18

These new concepts aren’t explicitly highlighted in the previous researches and definitions, but

they need to be considered in the current status of Open Innovation approaches.

Additionally, the number and the nature of activities related to Open Innovation concept have

also expanded, as the factors impacted the change of this concept have increased in terms of

number and intensity.

Furthermore, there were some authors that diagnosed that Open Innovation is subject to the

organizations applying it, as well as their environment (Dittrich & Duysters 2007, Curley &

Samelin 2013; Campbell Smith 2008; Laursen & Salter 2006).

According to another research (Gassman, 2010), there are some trends related to Open

Innovation suggesting the concept has matured (see table 5 below).

Class Initial status Current status Analysis

Market share Innovators Mainstream

Upward trend towards adopting of Open

Innovation. Shift from the few leading

companies to many small ones with market

fragmentation

R&D

strength High tech Low tech

Shift φrom low-tech companies to high tech

companies. Incorporation of users, consumers

and institutions at different stages of the

innovation proces

Size Large SMEs From large multinational firms to smaller ones.

Innovation

process Stage-gate

Review and

Learn From step-wise procedures to lean/agile ones.

Structure Standalone Alliances Formulation of value creation associations (i.e.

innovation networks)

Universities Ivory towers Knowledge

brokers

Greater collaboration between industry and

academic circles

Interior

procedures Amateurs Professionals

Shift from amateurs to experts regarding the

internal process of Open Innovation

Management. New positions have arisen, like

Open Innovation Executives, Consultants, and

Open Innovation intermediaries.

Content Products Services Shift to servuction and servitisation of P&S

Intellectual

Property Protection

Tradable

Products/Services

Shift to an IP trade market. Frequent phenomena

such as patent wars

Table 5: Current trends in Open Innovation (Gassman et al 2010).

Page | 19

2.2 Co-Creation Model

2.2.1 Definitions of Customers Co-Creation

The use of the term has been very large and this is reasonable and expected as it coincided with

developments in areas such as the rapid expansion of the Internet, the change of attitudes of

companies from product-oriented to customer-oriented, and the new dynamics was given the

term Open Innovation (Chesbrough, 2006).

Given the great appeal and interest shown for the term of Co-Creation, a commonly accepted

definition of the term has not yet been found, resulting in many different approaches to what

Co-Creation is ultimately thought to be.

Brown &

Hagel 2005

Co-Creation is a very strong tool for innovation. Instead of restricitng someone to

what businesses can create within their boundaries, it is preferable and more

effective to make it available to many different participants whose contribution can

lead to the production of products and services that will cover a wide range of needs.

Vargo, 2008

Co-creation is a combination of readily available resources and those available

through a variety of service structures and are capable of contributing effectively to

the welfare of the system as defined by the system’s environmental framework.

(Payne, 2008)

Co-creation refers to the relationship between producer and consumer, a proactive,

energetic and cooperating set of experiences taking place within a specific context,

using tools that are deliberately and in part unwitting

Kristensson

et al., 2008

Co-Creation is generally the process of active participation of consumers in the

production and customization of products and services and which requires teamwork

to achieve innovation (Kirah, 2009)

Co-Creation is the perpetual interaction circle and collaboration between all

participants taking place within network -creating value- through any specified

procedure of designing, developing and executing useful products / services

Ramaswamy

& Gouillart,

2010

Co-Creation is the process of setting people’s experience at the heart of the firm’s

design (Reay & Seddighi, 2012)

This approach has set a new way of innovation, according to which value is co-

created jointly by the companies and the customers, and exchanged with the

customers.

Ind &

Coates,

2013

Co-Creation is the process providing the opportunity for an enduring collaboration,

where firms are willing to share their information with external stakeholders, so as to

produce in return the insight deriving from their engagement (Roser, DeFillippi &

Samson, 2013)

It is considered a vehicle to extend the innovation and companies’ capability to

create value, while fostering customer affairs and curtailing the costs for marketing

and R&D (von Stamm, 2004) Table 6: Definitions of Co-Creation

Page | 20

From the above table with the different definitions of Co-Creation it follows that there are

different approaches to the concept as some scholars approach the term as a process while

others as a result.

In essence, co-creation is essentially both the medium and the outcome of a particular

cooperative process (Prahalad & Ramaswamy, 2004). By making a thorough review of the

term co-creation, we find that there are two faculties: the first to consider the process of

innovation as a sequence of co-creation, suggesting the categorization of the overall innovation

process into five (5) core activities, co-idea, co-evaluation, co-design, co-test, and co-launch

(Russo-Spena & Mele, 2012). On contrary, the second faculty sees co-creation as the means of

developing enhanced innovation and value, which are implemented within the innovation

course.

At this point, it is useful to elucidate that co-creation is a method by which customers have a

strengthened and upgraded role in the innovation process. This entails the differentiation of co-

creation in relation to the other methods of co-operation that companies apply. Based on the

co-creation model, the client is treated as an active participant in the value creation process,

resulting in an upgraded role from the one he had in the past. Essentially, the client is

considered a problem-owner and responsible for finding a solution to this problem (Prahalad

& Ramaswamy, 2004).

2.2.2 Conceptualizing Customer Co-Creation: Existing Models

In order to better and more accurately define the term co-creation, scholars develop some

models so as to determine the essence of the term. At this point, the most prominent and

important models are presented.

Co-Creation as a Continuum

In contrast to the view that co-creation is a concept differing from co-production, there are

many researches proposing that co-creation should be considered as a continuum.

Gaurav Bhalla (2010) tried to categorize the co-creation approach based on the level and focus

on customer collaboration and the implementation interaction.

The below figure derives from Bhalla’s book entitled “Collaboration and Co-creation: New

Platforms for Marketing and Innovation” and presents the aforesaid relationship between

customer collaboration and focus with co-creation focus.

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Figure 4: customer collaboration and focus with co-creation focus (Bhalla, 2010)

Bhalla suggested that there are three different levels of co-creation implementation: the light,

the moderate and the high.

In line with Bhalla’s notion that co-creation is a continuum, Chathoth published his survey in

which he proposed that co-creation is the natural expansion of co-production. Based on this theory, co-

creation stands on the extreme right side of the continuum, while co-production stands on the opposite

side, the extreme left. Additionally, Clathoth proposed a matrix to explain the relationship between the

value creation stage and the level of interaction among customers and firms.

Involv

emen

t T

yp

e

Cu

sto

mer

-Fri

m:

Customer-Driven Customisation Co-Creation Approach

Cu

sto

mer

-Fri

m:

Co-Production Approach Firm-Driven Service Innovation

Production Process Consumption Process

Primary Value Creation

Figure 5: Co-Creation to Co-Production Matrix (Chathoth, 2013)

Page | 22

DART Model

Prahalad & Ramaswamy in their survey tried to define the building blocks regarding the firm-

customer interaction so as to analyze the way this relationship facilitates the co-creation

experience. They proposed the DART Model, the abbreviation of the following terms: Dialog,

Access, Risks/Benefits, Transparency. They considered this model as the basis for firm-

customer interaction. The figure below illustrates this model:

Figure 6: The DART Model (Kahle, 2012)

The term dialogue requires the interaction between the two sides (firm and customer) in such

a way as to allow for an honest and uninterrupted exchange of views and ideas.

Dialogue is problematic, if not impossible, in cases where customers lack of access to

information in exactly the same way as the firm. In the vast majority of cases, companies have

more and better access to information, thus exploiting this asymmetry.

Given the state of the art, individuals now have the ability to access information, something

which in the past was not feasible. Therefore, access and transparency are two crucial and

necessary factors for dialogue between companies and customers.

The DART model presents the challenges posed by the factors hampering the success of co-

creation, such as disclosure, transparency in data such as financial statements, open access to

information and others (Prahalad & Ramaswamy, 2004). At the same time, an attempt is made

to imprint and distinguish co-creation in what it is and what it is not.

Page | 23

The Reference Model

Another version of Value Co-Creation is the benchmark model in which co-creation is seized

and synchronized throughout the value chain of enterprise development, while being integrated

into a vigorous co-creation landscape (DeFillippi, T. Roser & Samson, 2013).

In this version we encounter 6 parameters regarding the issues of support for the required

decisions in the context of co-creation.

These parameters are as follows:

Type of co-creator

Purpose

Place

Integrity

Time

Incentives

Figure 7: The Reference Model of Co-Creation (Rosser; Defillippi; Samson, 2013)

The above dimensions reflect both the theoretical and managerial aspects of co-creation

strategy. Correspondingly, a recent work conducted by Swink (2006), Gloor and Cooper

(2007), as well as a respective work by Owen (2008) proposes a diversity of dimensions that

are valuable in order to govern co-creation endeavors and intensify co-creator engagement.

Page | 24

2.2.3 Forms of Co-Creation

The analysis made in the previous sub-chapter highlights the nature of co-creation as a complex

and multidimensional phenomenon. This sub-chapter attempts to further analyze each different

aspect of co-creation in order to present a comprehensive and comprehensive view.

Below is presented a brief report of the forms of co-creation as a process which ends up to

creating value for both the customers and the firms adopting and implementing this model.

The below figure presents the eight forms of Co-Creation:

Figure 8: The Eight Forms of Co-Creation (Donaldson, 2014)

Crowd-Sourcing: The practice of finding the required services, ideas, and content by

imploring contributions from a large group of people.

Mass Customization: The process combining the prerogatives of large-scale production with

those of customisation.

Peer-to-Peer Networks: They are decentralized networks where all participants act as

suppliers and consumers to share resources and information

Open Innovation: The practice of innovating with partners inside and outside the organization

and sharing risk and rewards with them.

Shared Resources: The practice of suppliers and customers sharing resources in order to co-

create value.

Page | 25

Joint Ideation: The practice of suppliers and customers gathering to brainstorm new ideas.

Experience Centers: They allow customers and suppliers to interact with products/services in

a sensory way.

Product-as-a-Service: The practice based on which customers pay for the use of products or

services.

2.2.4 Benefits and Costs of Customer Co-Creation

The adoption and implementation of Value Co-Creation not only benefits the firms, but also

the customers as by its nature co-creation requires interactivity. Below, some of the benefits of

this model are presented:

Co-Created Products/Services better fit the customers’ needs

Co-Creation is an effective method in terms of ascribing value to the proposition

relative to use context

Co-Creation enables firms to more accurately target customer groups

Co-Creation is a source of more valuable ideas, as they are more original

Co-Creation creates barriers to imitation

Co-Creation can lead to creating sustainable competitive advantage

On the other hand, the implementation of Co-Creation involves several risks and costs. These

costs are not limited simply to the direct costs of resources for the application/execution of

Value Co-Creation but also include the costs arising from the need to create the appropriate

environment that will support and promote the practical implementation of Value Co- Creation.

The afore-mentioned costs relate to resources consumed to cultivate and create a transparency

environment on money, time and human resources (RF Lusch & SL Vargo, 2006).

Finally, customers are also burdened with the cost of co-creation due to the opportunity cost,

time and effort needed to co-create (Robert F. Lusch & Stephen L. Vargo, 2006).

Page | 26

2.2.5 Risks of applying Customer Co-Creation: Co-Destruction

If the costs related to co-creation can be considered as significant and so each and every firms

adopting and implementing such a model should take them into serious account, the risks

associated with this approach (co-creation) can be classified as critical for the firms.

Though co-creation proclaims a better future for customers and businesses, the application

creates a number of risks. When businesses co-organize with customers, they open their

borders, allowing others to participate in the decision-making process. The interaction between

businesses and customers have two possible effects: either they will have beneficial

repercussions or harmful ones.

In several cases of co-creation, rather than generating value-creation, such a process could lead

to a co-destruction of value (Plé & Cáceres, 2010). There are many aspects and correspondingly

different reasons that lead to these different results.

A common cause of this phenomenon, which can lead to co-destruction rather than co-creation,

is the abuse of resources by at least one of the members involved in the process, i.e. the business

or customers. The definition of this kind of abuse is the integration or application of resources

by a member, in a way different from this that the other member thought it would be (Plé &

Cáceres, 2010).

This abuse can occur mainly for two reasons: either due to either unintentional or intentional

misuse. If the abuse reduces the prosperity of customers, it will create customer dissatisfaction

or even a disappointed member of the community. In this case, there is a great risk that other

enthusiastic customers will change their attitude to a resistance against the business, which

would cause a large generalized wave of resistance that is easy to spread due to the seamless

digital communication that exists today (Gebauer, Füller, & Pezza, 2013).

Accidental abuse can be caused by several factors / causes. First and foremost, it may occur

due to the fact that customers have limited knowledge of new technologies and therefore have

difficulty predicting future use of innovations that can be created through the co-creation

process (Ulwick, 2002). For this reason, customers may not be able to use either their resources

or those provided by the business, efficiently and effectively. A second factor is the level of

commitment by all parties involved in the co-creation process, as misalignment at the level of

Page | 27

commitment on the part of clients and businesses can cause random resource abuse (Day,

Fawcett, Fawcett, & Magnan, 2013, Plé & Cáceres, 2010).

Additionally, unintentional abuse may occur due to a conflict of roles created by competing /

contradictory expectations of the business and customers (Wetzels et al., 1999, Eddleston et

al., 2002). In this case, customer ignorance, or even innocence about the company's policy,

may lead to unintended misuse of company resources on the part of customers. All of the above

clearly show the importance of continuous communication and transparency among all

members related to the process of co-creation.

On the other hand, deliberate abuse occurs when one of the parties plans to use the available

resources not only for its own prosperity but also against the corresponding prosperity of the

other parties. An extreme example could be the case of an employee of a company that creates

"sabotage", which is behavior that is intended to reduce the level of service / product provided

by the company (Harris & Ogbonna, 2002). This may bring about a lower quality of services /

products, which in turn will have a ‘harmful’ impact on the performance of the company (Harris

& Ogbonna, 2002). Another example is the case of companies operating cooperatively with

"jay customers". The latter operate in a malicious way, which causes problems for both

businesses and other customers (Gebauer et al., 2013).

Finally, deliberate abuse may also arise from the imposition of a new dogma or technology on

all customers on the part of the business, irrespective of customer preference to that particular

policy or technology. Although such actions have a specific objective (e.g. cost reduction,

productivity improvement etc.), the unexpected use of resources in this direction may have a

negative impact on them (Plé & Cáceres, 2010).

2.3 The Prosumer Model

2.3.1 Definitions and origins

The term was initially introduced on Tofler’s book “The Third Wave” In 1980. Prosumer is a

combination of the terms Producer and Consumer. Essentially, it is the consumer of the

products/services created by them. Tofler has foreseen that the role of consumer and producers

would begin to blur and blend. He also predicted that in the future, the marketplaces would

become highly saturated and the mass production of products/services would come up to a

Page | 28

standardization plateau, and as a consequence, they will only satisfy basic consumer demands.

The companies, in order to continue to be profitable, would initiate a process of customizing

massively their products/services to as to better satisfy their customers’ additional needs.

Still, in order to attain a high degree of customisation, consumers should take part actively in

the production process, especially as far as the specification of design requirements is

concerned. Apparently, this is solely the broadening, or even the extension of the affiliation

many wealthy clients have with professionals (i.e. architects).

Toffler extended this concept during the 21st-century, along with many other ideas. In his work

“Revolutionary Wealth” (2006), there is great reference to the notion of the prosumer, as it is

seen on a global scale. Tofler suggests that the concept has worldwide impact and range,

however, can be measured in part.

Prahalad and Ramaswamy (2004) had discussed the concept in the context of ‘value co-

creation’. Williams and Tapscott (2006) consider prosumption as the application of innovation

through a new generation of consumers-producers, while simultaneously they regard the

concept as a principal element of new business models. In the meanwhile, Tapscott had re-

introduced the term in his book “The Digital Economy” (1995).

Beer and Barrows (2007) had made a projection regarding the new relationships to be set

between producers and consumers, primarily thanks to the rapid adoption of the internet and

the Web 2.0 technologies. According to Troye and Xie (2007), consumers’ participation in the

production process provides the opportunity customization, differentiation and development of

competitive advantage, as firms have the ability to absorb consumers’ competences.

Another approach by Grayson and Humphreys (2008), based on which prosumption has a very

close relationship with the principles of the Marxist Theory. Darmody, Bonsu and Zwick

(2008) argues that prosumption makes customers feel discrete, satisfied and also free.

Frow, Storbaca and Payne (2011) developed a prosumption typology comprising 12 distinct

types:

Co-Conception of Ideas

Co-Consumption

Co-Design

Co-Production

Page | 29

Co-Pricing

Co-Disposal

Co-Promotion

Co-Meaning Creation

Co-Maintenance

Co-Outsourcing

Co-Distribution

Co-Experience

Based on the study of the above-presented approaches, we can make a statement that since the

times of Tofler, the concept has evolved tremendously. This evolution has occurred due to the

different approach that various firms took towards to consumers on one hand, and on the other

because of the development of Information Technology.

A factor that played significant role toward the evolution of the concept was the development

and adoption of new management concepts and models by the firms, particularly knowledge

management, including consumers knowledge management (Baker, 2000; Klar, Davenport,

1998, Leibild, Gibbert, Probst, 2002).

Nowadays, Prosumers aren’t solely individuals, delegated by firms to accomplish specific tasks

in the product lifecycle frame, but also external firms employees actively participating in

designing, producing and finally distributing new version of products/services.

In spite of the several decades of the term usage, it was only recently the ‘Prosumer’ concept

began obtaining full theoretical elaboration. Nathan Jurgenson & George Ritzer, in their article

being extensively cited, claimed that prosumption has become a prominent aspect of the so-

called Web 2.0. Prosumers generate value for companies, and also themselves, without seizing

any kind of compensation.

Mass customization is a practice not having taken place in most areas of contemporary

economy. It is a practice ruling industries, such as the food & beverages, for many years.

Besides the gradual widespread of the Prosumer model, still most consumption continues being

passive. Indeed, the majority of people are generally unconcerned about participating in an

attempt to customise the numerous products comprising contemporary consumer culture. Barry

Schwartz argues in his book entitled “The Paradox of Choice: Why More is Less” that

diminishing returns deriving from the confusing abundance of the choices that consumers have

Page | 30

in their disposal nowadays, ultimately produce dissatisfaction and stress. Though, there is a

key area of high-customisation still in place, that is highly involved hobbyists.

In the modern online digitalized world, Prosumers are used to characterize today's online

buying behavior, as they not only are the consumers of products/services, but they are also able

to produce their own products.

2.3.2 The prosumer as value co-creator

The Prosumption an integral part of the production process, the boundaries between customer

and supplier have -at least- partially deleted (Gummesson, 2008a). It's not new, as Gummesson

(2008a) reports that "do-it-yourself" is a huge and ever-increasing market in size. A typical

example of this market is IKEA, "Which has built 60 years of uninterrupted success for

customers who make transport and assemble work." (Pp. 461)

Despite the great importance of prosumption in the production process as presented by

Gummesson (2008a), he himself the marketing sector is self-defined as "marketing attributes

value to customers and manages customer relationships."

Gummesson believes that marketing remains locked in the following serial relationship culture

"supplier ➔ customer ➔ active/passive trap" (p. This approach is completely opposed to the

marketing concept of Service Dominant Logic (SDL), which describes the idea that the client

may be prosumer and co-creator of value. This situation is manifested by progressive

(Gummesson, 2008a)

In the field of marketing research, there are two theories on this subject: Prahalad and

Ramaswamy's co-creation theory of value and Vargo's dominant marketing logic and Lusch

(Prahalad & Ramaswamy, 2000; 2004; Prahalad & Venkat, 2004a , 2004c, Vargo & Lusch,

2006a, 2006b; Vargo et al., 2008; Xie et al., 2008).

There are various views from Marketing Scholars about the benefits of these two approaches.

There is evidence that with the rise of prosumers, especially if the distinction between the roles

of the consumer and the producer is blurred, the existing theories are politically and

conceptually challenged, and that they are at stake with this upsetting disorder.

According to Cova et al. (2011): "The economic theory of value, property, consumption and

production need to be reconsidered, and political ideas about the relation between social and

Page | 31

economic require the treatment of the age of cognition or, as we call it, collaborative

capitalism." (P. 231).

2.3.3 Evolution of logic of value creation in marketing

For many years, the marketing study has been established in the "exchange", mainly focusing

on the marketing of products / services, and this concept has lead the marketing research (Sheth

& Uslay, 2007).

The practice has been adopted and applied worldwide is the market segmentation and consumer

segmentation based on their specific needs (Beckett & Nayak, 2008). According to Vargo &

Lusch (2004 ), the predominant marketing theory is the Goods Dominant Logic (GDL)

approach. In this sense, the concept of value refers to the price of the exchange so that

marketing is characterized as the "exchange of units output" and "embedded value exchange"

(Vargo & Lu sch, 2006a, p. 48).

Based on this approach, the consumer is simply a passive factor in consuming the value

propositions offered by businesses. According to De Marez, Lieven & Verleye (2004), these

practices, guided primarily by GDL theory, fail in complex and competitive markets that are

characteristic of modern economies.

Sheth & Uslay (2007) and Vargo & Lusch (2004) suggest that businesses should move towards

the concept of creative value creation. They argue that businesses that seek to create value for

their customers should consider consumers as users rather than buyers who choose their

products.

This approach extends traditionally views of value-in-exchange. Sheth & Uslay (2007) has

expanded the notion of value creation a bit further, suggesting that marketers should consider

more thoroughly value co-creation towards their customers.

Prahalad & Ramaswamy (2004) proposed that value is co-created with consumers rather than

created for consumers. The theory of value co-creation defines that the creation of value taking

place through the interaction between firms and consumers is the result of collaboration in

producing products and services (Cova et al., 2011).

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2.3.4 Value Co-Creation theory alignment with the Prosumption Context

The theory of Value Co-Creation argues that the prosumer is essentially the producer-consumer

who ends up actively involved in the process of creating and producing new products and

services that ultimately consumes and becomes part of their consumer experienceThis approach

is in line with the concept of “value co-creation” presented by Vargo & Lusch (2006b, p. 284).

This notion has two main constituents:

Value-in-use: Value can be produced by the user during the consumption process and/or

through use.

Co-Production: It consists of the participation in the creation of core proposition. It can

occur via shared imagination, shared production of interrelated goods or co-design, and

can take place with customers and partners in the value chain.

Ritzer (2009) points out that value co-creation is not historically new. Rather, he recognizes

that production and consumption are the two sides of the same coin, and so he considers Co-

Creation as inherent to all forms of global economies, irrespective of their economic structure

(capitalist or non-capitalist).

Thanks to the dawn of Web 2.0, the appropriate conditions for the rapid growth of the

prosumers were created, and so, the value co-creation activities have been brought to the center

of the firms economic value creation (Cova, 2011).

There is evidence in the literature that value co-creation has brought about considerable impact

on the way firms design and implement their customer management strategies, while there are

cases denoting that many firms have even re-design their traditional approaches.

Cova (2011) identifies the limitations of the value co-creation theory implementation to

prosumers, as it requires the strategic regulation over consumers and markets. In the prosumers

context, this control is extremely difficult to be achieved. Cova (2011) describes Web 2.0 as

the “ground zero” in order to make processes of production and consumption identical.

Web 2.0 signifies the new vehicles of co-production, and in essence has created new patterns

of labor. Terranova (2000) refers to this as the ‘free labor’ of prosumers, which is characterized

by its voluntary and unwaged nature (Ritzer & Jurgenson, 2010).

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2.3.5 The rise of the Digital Prosumer

During the last decades, the developments in the field of ICT (Information and

Communication) Technologies played an important role in the re-definement of the

relationship of the users with the new technologies, as well as in the role of the users in the area

of the digital environments (Dijck, 2009). The increased activity of users brought about

progressive changes regarding the productive models in the digital worlds (Tapscott &

Williams, 2008). These changes led to the emergence of new production models, calling into

question the established (till then) distinction among production and consumption.

The diffusion of the Internet technologies on a global scale, along with the progression of the

Web 2.0 stimulated the rise of user-generated content and the expansion of its online sharing

(Kaplan and Haenlein, 2010). Nowadays, these practices have been expanded significantly.

The particular development has changed the way individuals obtain and exchange information,

while in the meanwhile has fostered the rise of alternative processes for the information to be

generated (Lang, 2008).

Digital worlds are characterized by diversity in terms of users involved in various Internet

activities. In addition to the users generating, revising and sharing content online, there are

others taking advantage of the high digital skills of the former, in order to transform ICT

features in an effort to make the available digital tools suitable for their purposes (Hartmann,

Doorley, and Klemmer, 2006). These purposes relate to either the satisfaction of personal needs

or to the desire to act socially. Additionally to this kind of users, there are also individuals

willing to commit themselves to the development of new digital tools, so as to satisfy their

needs. A characteristic example of the particular practice is the Do-it-Yourself category of

online communities. Other examples the online Hacktivism and the Open Source Software

movement (e.g. OpenOffice).

The above-described initiatives promote the transformation of enterprises from strictly

hierarchical and the adoption of a more team-driven structure. They promote decentralization

of the production processes, as the activities are distributed among several proactive actors.

Several concepts and theories were employed to understand the users’ agency and explain their

stance regarding productive patterns. The most prominent concept is this of the prosumer, and

the associated theory of prosumption. Prosumers is a figure finding a broadened popularity in

digital environments. Definitely, digital worlds are considered as a fruitful environment as far

Page | 34

as the emergence of such practices in which users produce the content, the features and the

tools they subsequently consume, as well as in activities entailing concurrent activities of

producing and consuming.

The newest version of the particular concept, developed by Ritzer, considers prosumption as a

process interrelated to production and consumption, characterizing almost all of the human

activities. This concept derives from an earlier work of Ritzer, concerning the so-called

“McDonaldization of society”.

Ritzer’s work resulted into the finding the in the current society, people are involved in a variety

of production-related activities (e.g. garbage disposal at fast food restaurants, IKEA’s furniture

assembly etc.).

Ritzer and Tofler had different approaches regarding Prosumption. Toffler stated that

individuals are prosumers only on certain activities, and the humanity is categorized by three

different sectors (production, consumption, prosumption). Based on Tofler, individuals move

within these three sectors. Contrary to Tofler’s view of prosumers, Ritzer claims that

individuals are always prosumers, as they are always moving toward the prosumption sector.

The prosumption theory extends the range of online activities being relevant to the productive

models, and expands the user base typically taken into consideration by experts as participating

in online production. Generally, there is the tendency to only refer to those users engaging in

the generation of content or the development of software. Other times, we merely refer to the

users collaborating with ICT firms in order to develop new services and digital products.

Instead, based on the latest development of the prosumer’s theory, the main focus on the ‘active

users’ stops existing. Literally every user is a prosumer, in the sense that they are involved in

production and consumption activities. Accordingly, every online activity can be considered

as a prosumption activity.

Therefore, all the users, without exception, are taken into account and considered relevant for

digital production activities. For example, even a passive user only ‘consuming’ online content

and/or services, without producing content or even without collaborating with a firm in the

production of any kind of product/service, is considered to participate in the production

process. This sort of user could contribute to the production of data to be used by third parties

for business purposes (e.g. market researches, commercials etc.).

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The revised notion of prosumption, especially as far as the digital environment is concerned,

led the scholars to consider every kind of Internet use, every production process taking place

online, and every digital user, as relevant to digital environment productive models.

While some researchers celebrate this new empowered role of user, others worry about a

possible abuse of those users work and data, and their overall position in the digital

environments. As a result, a debate regarding the pros and cons of the condition of the users

always being prosumers, is rising. Numerous approaches attempt to figure out the probable

fortune of the digital prosumers, while simultaneously they study the potentiality associated

with their use of ICT, as well as the ways ICT firms exploit or treat this use (Knott, 2013).

2.3.6 Benefits and Costs of implementing Prosumer Approach

The internet has been associated with great expectations, as it enables users to engage in a very

wide range of activities. These expectations have led in a sense to consider current ICT as well

as other emerging online practices as a means of dealing with the difficulties and failures that

have been confronted with previous ICT generations. Specifically, Prosumers and the effects

of digital prosumption on social, political, economic and technological systems seem to attract

the interest of researchers in various fields.

The Pros of Digital Prosumers

The ever-increasing importance regarding users and the advent of new productive models in

the digital world are considered by many researchers as the core activity of the new innovative

ecosystem. The advancements of ICT sector offer opportunities primarily for individuals so as

to engage in practices giving them the ability to be creative, connected and proactive (Raine &

Wellman, 2012). Additionally, the individuals are given the opportunity to develop alternative

production means (Benkler and Nissenbaum, 2006).

Actually, individuals not only are able to generate and share content and information, but also

to become even more active and committed citizens, to enlarge their social life and to

participate further in political activities. Consequently, a positive narration of the new role the

prosumers have in the contemporary digital ecosystems was developed in order to emphasize

the prospects of the brand-new socio-technological activities in promoting social progress

through active participation (Schäfer, 2011).

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Various theories and approaches have been used to promote and highlight the benefits of digital

prosumption. For some researchers in this field, the approach to online production helps to

reduce the gap between production and consumption. At the same time, active customer

engagement in the process of co-creation or even improving existing products and services

through the use of digital platforms can work favorably in the direction of eliminating the

distraction effect felt by consumers on products / services offered by businesses.

According to prosumption analysts, groups and consumers who are prosumers are far less

isolated from products than other consumers. This is because prosumer is re-connected to their

creative essence, as well as with other individuals (Comor, 2010).

In recent years, the increasing access of citizens to ICT and the consequent involvement of

citizens in the process of creating new products/services has led to the 'democratization of

innovation' (Hippel, 2005). This approach considers user-centered innovation as a very

important element, which has led to increased engagement of customers with the process of

producing new products and services. This has resulted in more and more prosumers being

actively participating in the process of producing new products/services.

As mentioned earlier, digital prosumers are considered to be very important for the socio-

economic system. However, their contribution is not limited to the economic activity of a

sector, but extends to the whole of society. Some researchers have studied the impact of digital

prosumers on politics and democracy (Levy, 2005 & Noveck, 2009). Their studies highlight

the importance of digital prosumers in the creation and diffusion of information within the

framework of democracy and open government.

On the other hand, businesses using digital prosumers themselves are favored by this process,

as prosumers are essentially the final consumers of the products/services they have created in

such a way and with those features that perfectly meet their needs.

At the same time, businesses save money from this process, as instead of spending money on

market surveys and consumer studies to diagnose the needs of their future customers and turn

them into solutions to those who meet these needs , they use prosumers as a source of

inspiration, the production of new ideas and finally as a representative audience for the

products/services they will create and launch in the market.

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Finally, given the above, products / services that end up in post-launch failures are dramatically

minimized as businesses know in advance exactly what features a product / service should have

in order to fully satisfy the target audience, as well as and the dynamics of the relevant market.

The Cons of Digital Prosumers

Despite what has been said before about the benefits of digital prosumers, there are several

questions about their usefulness as well as about the possible side effects that may arise. The

first concern is the use of digital prosumers in terms of whether and to what extent it is morally

business to use them in the form of free (unpaid) labor (Terranova, 2004). The same scholars

regard this relationship as an "extraction of unpaid, coerced, and alienated labor" (Andrejevic,

2001).

This approach by several ICT companies has led many researchers to talk about prosumer-

management (Johnson, Mozaffar, Campagnolo, Hyysalo, Pollock, Williams, 2014). The use of

the term prosumer-management refers to the process and strategy of companies to categorize

users based on their purchasing behavior and ultimately to adapt the activities of consumers in

such a way as to match their business models. In other words, this activity can be seen as an

effort on the part of businesses to maximize users' insights for their benefit in the process of

developing and producing new products (Zwick, Bonsu, Darmody, 2008). On this issue, even

Ritzer, the most well-known scholar of the theory of prosumption, seems to be pessimistic

about the fate of prosumers. Actually, Ritzer criticizes Toffler's theory of citizens as prosumers,

arguing that this model fails to anticipate the co-optation that takes place in the prosumption,

and more particularly that it fails to anticipate how owners and businesses co-opt with

prosumers (Ritzer, 2014).

In addition, the researchers questioned the privacy of commodification on the Internet, and in

particular the commodification of personal data and structures that favor control and regulation

(Zimmer, 2008).

They also argue that the online business models that dominate contradict users' privacy needs

(Sevignani, 2013). For some other researchers, prosumers are considered by enterprises to be

"operant resources" (Vargo & Lusch, 2004). Others again have doubts about the relationship

between prosumers and their alienation from products and services.

For example, according to the Comor, despite implications on prosumers and the view of some

researchers / analysts that prosumption reduces customer alienation, the majority of digital

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prosumers will be removed from the products anyway. He argues that most digital prosumers

will be involved in the process of producing new products and services as mere weak tools of

capital, while on the other hand the minority will participate in this process in such a way as to

prevent alienation (Comor, 2010).

2.4 Empirical Findings of Co-Creation

There are many companies that have challenged the traditional thinking and the obsolete ways

to innovations. Co-Creation is a source to create sustainable competitive advantage that

companies tap into. Some examples of organizations around the world using and taking

advantage of co-creation to stay ahead of the competition are the following:

2.4.1 The Starbucks Case

Figure 9: My Starbucks Idea” Infographic (HBS, 2019)

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Starbucks launched ‘My Starbucks Idea’ in 2008 in order to increase company’s focus on their

customer and more specifically to pay even more attention to what their customers want.

One of the main challenges the coffee firm had to cope with was the engagement with its

customers and more specifically the building of stronger relationships with them by emulating

the experience of an online coffee shop barista.

Launching the ‘My Starbucks Idea’ helped the firm give customers insights about what the

firm was doing and this way the coffee company managed to make its customers feel like an

active part, or even an insider, of the firm.

Starbucks created a simple and transparent website, on which the customers have the ability to

choose between three different options. The steps the customers have to follow are plain and

straightforward:

1. Customers submit their ideas

2. Customers view the already submitted ideas from others

3. Customers sees the ‘Ideas in Action’, that is the ideas having been recommended to the

decision makers for implementation

Starbucks has formed a team of Idea Partners with the responsibility of reading all the ideas

that were submitted. The members of this team pick the most popular, in terms of public votes

collected on the website, and most innovative ideas and present them to the decision makers of

the firm so as to decide which ones to implement.

The specific initiative has had great acceptance and proved to be extremely successful, as many

customers supported the initiative and many ideas were derived from this process, such as the

Hazelnut Macchiato, Cake Pops and free Wi-Fi on the stores.

It was so massive the support and the participation of the customers in this process, hat after

the first 5 years of the platform operation, the ideas submitted exceeded 150.000, while 277

ideas were selected and implemented by the coffee firm.

Incentivizing Participation:

Starbucks provides incentives to customers to participate in this process by submitting their

ideas and engaging with the online platform, no matter how big or small an idea would be.

Another aspect the company paid great attention to was the transparency of the entire process.

Starbucks created a section dedicated to those ideas having been recommended to the decision

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makers, in order to make participants aware of the ideas having been qualified. This way, the

firm adds a sense of trust on the process, which is a very important aspect for both the firm and

the customers participating into the ideation process.

Value creation:

Starbucks has managed to create value for its customers by giving them the opportunity to

express their opinion, preferences and needs & wants. They make the firm aware of their ideas

and in turn Starbucks collects all of them, evaluates them and finally implements the most

innovative and promising achieving this way to provide a better coffee experience to the crowd.

Many times customers think that large organizations are not interested in listening to them and

paying attention to their needs and wants. My Starbucks Idea provides the opportunity to

customers to express their opinion and consequently they feel that the firm listens to them, as

the product development isn’t any more a one-way process. Instead, it is a two-way interactive

process requiring the active participation of the customers so as to cooperatively decide what

the new products should be, what kind of in-store customer experience should better fit to the

them, and in general which the future of the organization could be.

Value capture:

In terms of the value capture, there are two forms:

Starbucks can stay in line with the customers real needs and in this way can create

loyalty and engagement with them

The firm can create and diffuse innovation within a large organization

One of the biggest challenges large organizations have to deal with is the ability to continually

produce new innovative ideas. Many times, they are obliged to incentivize entrepreneurship in

order to create new innovative products and services, and stay relevant with the new market

conditions. Large organizations often feel the pressure of the rapidly increasing number of

start-ups competing with them, as the latter regularly have the ability to disrupt the established

industries.

Nowadays, ‘My Starbucks Idea’ continues having tremendous potential for the firm, especially

in what has to do with the company’s future evolution and in maintaining its focus on its

customers.

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The online crowdsourcing platforms has helped the firm stay ‘open’ and ‘accessible’ to its

customers by identifying their needs and co-creating products and services satisfying them,

while simultaneously drives company’s innovative capability.

2.4.2 The LEGO Case

LEGO Ideas is considered to be one of the most successful examples of crowdsourcing in the

toy industry. LEGO Ideas platform launched in 2011 to give the ability to LEGO funs to

become supporters and most importantly creators of new LEGO sets.

As a member of LEGO Ideas platform, anyone can discover proposals uploaded by other

members, give their feedback regarding these proposals, vote in favor or against them and share

their ideas with the rest members of the platform.

Everyone having a new LEGO set idea has the ability to create a model, take photos of this and

submit it along with a project description in the LEGO Ideas platform. in case a proposal

collects more than 10.000 positive votes, having simultaneously followed the Project

Guidelines set during the creation phase, then this idea is promoted to the next stage in which

it is evaluated by the Review Board. The members of the Board decide which Projects will be

launched commercially and which not.

Figure 10: Lego Ideas Website (legoideas.com)

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LEGO incentivizes participants to submit their ideas

LEGO Ideas consists of a very alluring incentive program to encourage potential participants

to submit their ideas, and on the other hand a strict regulation applies regarding the management

of the submitted ideas.

LEGO provides both fame and financial rewards to those proposals standing out and having

been approved by the Review Board. The Ideators receive not only the financial reward of 1%

of the net sales of their proposal, but also the possibility to work for the company as a

professional LEGO Designer who will create the final sets deriving from the ideas submitted

on LEGO Ideas platform.

Furthermore, LEGO rewards other participants with ideas having been qualified to the final

step of the process, that is the pre-production phase, by giving them badges presented on the

LEGO Ideas platform so as to be visible to the rest members of the community.

On the other hand, the entire process is governed by a strict but straight-forward regulation

framework in order to filter the funnel with the submitted ideas.

LEGO Ideas platform operates in a way trying to eliminate the conflicts that may arise between

the platform and its members, by applying various terms and conditions defining the scope of

the project and also protecting copyrights and avoiding plagiarism.

In case a conflict occurs, LEGO assigns to a moderator, a person working for LEGO, to solve

the issue in an objective and discrete manner.

LEGO Ideas’ Pros and Cons

LEGO Ideas platform, as well as all other co-creation platforms used by technology companies,

paves the way on how firms can create and capture value in co-operation with their customers.

the easiness of use of the platform along with the strong and transparent incentives program

adopted by the firm has turned the platform into an innovative and sustainable source of

collecting new creative ideas.

Moreover, as users have the ability to vote their favorite prototype, LEGO takes advantage of

the users’ expression to quickly and precisely identify and understand their preferences. In

other words, the firm gains customer insights without the necessity of conducting expensive

customer surveys, sometimes being of questionable quality.

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These insights are used to make better informed product decisions characterized by reduced

risk

Last but not least, as the firm announce the winning ideas through the use of various

communication media, the platform also plays the role of a digital marketing platform.

Besides the many advantages of the entire initiative, there is still room for improvement. For

instance, due to the fact that the platform is completely controlled by the firm while the user-

base continues to grow, it is of utmost important the whole mechanism to be transparent and

fair. The fact that the vast majority of the projects passing the 10.000 votes threshold don’t

become a real LEGO set, and that the firm doesn’t inform about the reason why such a project

was rejected by the Review Board may bring about doubts regarding the process integrity.

Additionally, this process is a rather time-consuming process, since from the time of the final

selection to the moment a product is available for purchase, it takes a time interval of 1 to 1.5

years, with the result that many times the insights are not easy utilizable.

2.4.3 The Local Motors Case

Local Motors, a company founded in 2007 by a HBS graduate Jay Rogers, aims at bringing

innovators, tech enthusiasts, professionals and creatives closer to the method of automotive

design via the combination of the co-creation and the micro-manufacturing processes.

Through this process, Local Motors has managed to exploit both the internal and the external

talent and skills, in order to disrupt the industry’s lengthy and most importantly expensive new

product development process.

The firm uses crowdsourcing to design its cars and leverages the 3D printing technology to

proceed to miniature car models production. As a result, the firm has achieved to get

unprecedented access to vehicle and components design talent, at no cost.

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Figure 11: Local Motors homepage

The first attempt of the company to product a vehicle was the Strati Model, a vehicle being

devised entirely via the crowdsourcing process and made in a 3D printer, which ended to be a

huge success.

Nowadays, the company continues to disrupt the traditional way the automotive industry uses

to design the vehicles. Furthermore, Local Motors is constantly expanding its micro-factories,

in order to create the necessary conditions for better engagement with both online users and

offline communities.

Below it is presented the first prototype of Strati Model, made entirely on a 3D printer. It takes

44 hours to print, 24 hours to mill and 48 hours to assemble the car, that is 5 days or

approximately 120 hours in total for the completion of the entire car production process.

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Figure 12: Pro Ject Accessible Olli

Incentivize participation and manage the crowd

The firm has created an innovative online platform in which designers, professionals and

companies have the ability to interact with each other. The vast majority of the users use this

platform for personal purposes, such as individual ideas and projects, while they leverage the

online communities for feedback.

There are many ideas and design projects having been uploaded to Local Motors co-creation

platform, ranging from buses, to taxis, to supercars, to motorcycles, to autonomous vehicles.

At this point we have to notice that many companies have run design online competitions on

the platform. for instance, ‘LITECAR’ to name one, was an online competition run by the

department of Energy’s Advanced Research Projects Agency in collaboration with Local

Motors, and offered $140K. to the winner.

The competition’s goal was to create a lightweight but safe vehicle, focusing on the use of

innovative materials and structure.

The company also runs competitions as well. Local Motors uses the online platform to get open

source ideas from design to manufacture to sales for its own vehicles. An example of such a

contest was the Rally Fighter Model, designed by a platform community member in 2009. The

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company also gets ideas not only for vehicles, but also for components for them, in order to

minimize the required development costs. It is estimated that for the development of a vehicle,

Local Motors spends on average about $3 million, that is an amount significantly lower than

the traditional cost an automotive manufacturer requires.

In 2014, Local Motors organized a competition named “Sports Car Platform Design Challenge”

to crowdsource ideas for a sports car. The purpose of the competition was to gather online co-

creators together to design roadworthy, street-legal sports car that could be produced and

launched to the market within two years. The contest was successfully run, as thousand

designers from around the world took part and submitted on the online platform about 200

prototypes proposals.

The criteria set were strict and this way the firm limited the efforts to only those being

experienced enough on the topic in order to produce a viable car. There were several aspects

to be taken into consideration, ranging from vehicle weight to engine location and

specifications to total cost (it should be less than $30K).

2.4.4 The GiffGaff Case

GiffGaff is an MVNO Mobile Virtual Network Operator) operating in the UK, having adopted

a very customer-centric business model based on which customers do (in a sense) most of the

work. The company has managed to achieve much lower operating cost compared to the rest

MNOs Mobile Network Operators), and to deliver value to its customers. GiffGaff has put their

customers in the heart of almost everything the company does. The firms Motto ‘Run by You’,

explicitly denotes that customers are not only important, but the greatest asset and their voice

are heard. By exploiting the power of crowdsourcing, the Mobile Operator has managed to

truly differentiate itself operating in an ever-increasing competitive market.

The Giffgaff story

Giffgaff is a MVNO wholly owned by O2 that uses co-creation as its key innovation driver.

Unlike the typical MNO provider, the firm is run by its members for its members. Giffgaff has

managed to engage the members of its community to co-create with the firm. In order to

increase the chances of this attempt to be successful, the community members rely on the help

of GiffGaff product strategists and vendors. This way the firm is able to unveil novel

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opportunities by creating and subsequently delivering differentiated products/services to its

customers.

Founded in early 2009, the Uxbridge-based firm is popular primarily for its PAYG (Pay-as-

you-Go) plan. GiffGaff keeps a simple, low-cost approach combined with an innovative model

of the so-called goody-bags to allure its customers.

One of the favorite brands in the UK

In Scottish, GiffGgaff means “for mutual benefit.”. the business model of the firm is based on

and exploits the power of the communities. GiffGaff has managed to disrupt the old-style

business models prevailing in the telecommunications industry, by adopting an entire digital

native rationale. The firm just provides their customers a SIM Card and they have to simply

choose the deal they want.

The firm provides the ability to its customers to easily switch plans or even opt-out whenever

they want.

As far as the operators’ network performance is concerned, during the previous years, GiffGaff

has managed to achieve great improvement in areas such as network coverage, connection

speed and reliability.

The business model of GiffGaff

In recent years, the company has been widely used as a case study with regard to its operating

model. The telecommunication provider applies a model of active participation of its customers

in the configuration of the products and services offered to them. This is a co-creation model

between the company and customers. It is no accident that the motto of the company: 'The

Mobile Network Run by You'.

In this way, it has managed to provide great customer experience and satisfaction and, on the

other, to drastically reduce its operating costs.

Here are some points of differentiation in relation to competition:

GiffGaff has no call centers. Community members respond to all customer queries

(with an average response time of approximately 3 minutes). At the same time, they

urge members to become more active users ('Gaffers') and support the whole project

through proposing new innovative ideas for creating better products and services.

Community members also create tutorial videos and other useful support material.

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The provider applies a payback policy that allows community members to make

money by simply responding to questions posted to the company forum or by

suggesting ideas which will add value to the business.

Figure 13: GiffGaff Prepaid Plans (giffgaff.com)

The company asks customers about their opinion in order to decide on its tariffs.

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Figure 14: GiffGaff Co-Creation Process (giffgaff.com)

• With regard to the co-creation process, the company keeps the community members

constantly informed about the evolution of the process of submitting their ideas, so

that the whole process of evaluation and selection of the ideas that will stand out is as

meritorious and transparent as possible.

Figure 15: GiffGaff Most Voted Ideas (giffgaff.com)

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• Each year the company organizes the annual awards awarded to the most active

members of the community.

• The operator has no ongoing customer support costs. The firm gets feedback on

everything from pricing, product features, to tariffs, to internal process improvement

and gets promoted through WoM (word-of-mouth) marketing, and crowdsourcing.

• Solving customer pain points is another important aspect for the operator. It is not

easy to continually persuade members of the community how important this concept

is to the telecom operator.

• Last but not least, the operator does all of its business online. This way, the company

achieves increased sales, improved customer service, product differentiation and

brand advocacy.

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3. Conceptual Framework - Research Modeling

3.1 Introduction

In the preceding chapter, we presented the literature review. This chapter covers the conceptual

framework the specific research is based on, the proposed research model, as well as and the

hypotheses made.

Additionally, the goals and the purpose of the research method are set and the examination of

research hypothesis is framed.

3.2 Research Framework

Through this study we will try to discover those factors playing a significant role in the success

of businesses in relation to their ability to innovate and their subsequent performance in the

context of the adoption and implementation of value co-creation model.

We will try to highlight and study which factors play a key role in the practice of co-creation,

as well as how this practice ultimately helps businesses grow.

Dozens of scholars have dealt with this subject, particularly in the context of Open Innovation,

having come up with several findings about its impact on businesses in various sectors of

economic activity.

This study will try to examine the impact of this practice on one of the most competitive sectors

of the economy, that of telecommunications. This industry has many peculiarities and is one

of the sectors of economic activity where innovation is key to the survival of companies

operating in the particular sector.

Having also looked at the results of the value-co-creation model in other disciplines, it is useful

and advisable to consider whether these are also confirmed in this industry or whether the

factors that play a role in this case are different.

Finally, we will try to come to a conclusion on the impact of the active involvement of the

telecom providers' customers in the New Product Development process on the ability of these

organizations to innovate, and how this practice affects their performance in relation to other

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companies in the industry that don’t integrate their customers so actively in the process of

creating products/services with the cooperation of their customers.

3.3 Research Model and Hypotheses

In the specific sub-chapter, there will be presented the factors to be analyzed in this study, in

order to identify their impact on value co-creation process.

1. Customer’s Online Experience

Nowadays, digital platforms provide firms and consumers with new sophisticated capabilities.

In addition, more and more consumers are using the internet to carry out basic daily life

processes, from looking for information about anything they care about or paying their bills, to

participating in various crowd-based collaboration platforms for exchanging views and

expressing their creativity (Tauscher, K. Leveraging, 2007).

In this context, consumers who are more active than the others in collaboration platforms tend

to have a more positive attitude towards the value co-creation process, as well as themselves

by somehow participating actively in forums or other similar online communities, contribute

voluntarily or inadvertently in this direction.

By this assumption, we can formulate the hypothesis that:

Hypothesis 1: Customer online experience positively influence customer online co-creation

activities.

2. Customer’s Digital Skills

Digital skills are connected with technological capabilities required for the process via which

information is presented and services are delivered to customers. According to Ba and

Johansson (2008), the technological capabilities that are essential for the digital service

processes appear to be the key factors determining the service quality and thus, customer

satisfaction.

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The aforementioned capabilities’ value demonstrates the firms’ ability to rtansform resources

to value (Eisenhardt and Martin, 2000). Chuang and Lin (2015) recognise digital skills as a key

internal driving force enabling firms to better understand their customers, improve their

product/service quality and respond more effectively to their customer needs.

On the other hand, consumers are a resource for a firm in case they can contribute to enabling

the firm produce effectively and efficiently a proposition providing value to the target market.

For this reason, digital skills and knowledge are important for individuals, employees and

customers, and they basically form the building blocks governing the ability and the availability

of these individuals in the process of value co-creation.

Based on the above, we conclude that:

Hypothesis 2: Customer digital skills (ability) positively influence his/her online co-creation

activities.

3. Willingness and Technology

A firm’s adoption of co-creation model to enforce collaborative value creation may face

difficulties in case of inadequate resources (e.g. technology or co-creation willingness) from

consumers’ side. Facilitating internet access for the marginalized in society could have a

positive impact on consumers attitude toward theur participation in value co-creation

processes.

Hypothesis 3: Willingness to co-create positively moderates online co-creation.

4. Technology

Likewise, co-creation success strongly depends on the capability and the willingness of

potential co-creators, as well on the firm’s motivation, enthusiasm and technological

infrastructure and readiness to establish and successfully manage digital engagement platforms

(Frempong, J.; Chai, J., 2017).

Therefore, the following hypothesis is suggested:

Hypothesis 4 Technology (digital platform) positively moderates online co-creation.

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5. Consumers Motivators

Consumers frequently vary highly regarding their interest and their capacity to participate in

value co-creation processes. Even among organizations with loads of consumers, only few are

willing to fully engage with the new product development & product launch procedures.

(O’Hern and Rindfleisch 2009; Etgar 2008). Scholars have identified particular segments of

consumers having specific characteristics, being especially willing and also having those

abilities/skills required so as to participate in value co-creation processes. These include the

innovators (or pioneers), the lead users, the emergent consumers, and last but not least the

market enthusiasts.

Innovators are the consumers that adopt new products and services earliest than all the others

(Moore 1991). Lead users are the individuals having specific needs that will sooner or later be

‘universal’ in the market. The difference regards the time, as lead users face these needs prior

to the others, and therefore they are well positioned in order to satisfy these needs on

themselves (von Hippel 1986). The third category, that is emergent consumers, are those people

being especially capable of exploiting their intuition and their common sense so as to improve

product/service concepts. Later, as a result of this process, mainstream consumers will find

these improvements appealing and useful (Hoffman, Kopalle, and Novak 2010). Market

enthusiasts segment consists of individuals having the required amount of information for

many kinds of products, stores, and other market aspects, and they are typified by a high degree

of propensity to commence and participate in discussions with other consumers interested in

specific areas. (Feick and Price 1987).

All the afore-described consumer segments may be especially willing to engage in value co-

creation activities. Though, there are specific motivators playing significant role in the

willingness of individuals to participate in such processes. (van Doorn et al. 2010). These

motivators are categorized in financial, social, technical, and psychological factors (Fuller

2008).

Some individuals are motivated by financial rewards. These rewards can be direct, such as

monetary prizes and profit sharing from the firm they collaborate with, or indirect, such as the

intellectual property (IP) they might receive, or through the visibility they receive from co-

creation competitions that they participate.

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On the other hand, there are many others deciding to “free reveal” their ideas and sharing their

effort in the post-ideation phases of cocreation (von Hippel and von Krogh 2006).

Some may be interested in some forms of recognition the firms grant on valuable contributors,

such as receiving social benefits from titles. Titles such as “Top 100 Reviewer” that Amazon

grants to valuable contributors, as well as other sorts of formal recognition is considered as a

source of pride and self-esteem for many people.

Others seems to be driven by their passion to gain knowledge, or even expand their knowledge,

in areas such as the technology, by actively participating in forums orchestrated by technology

firms (Nambisan and Baron 2009).

Last but not least, there are other consumers willing to participate in value co-creation

processes for psychological reasons, such as the enhancement of their pride or the cultivation

of the sense of self-expression (Csikszentmihalyi 1996; Etgar 2008). Additionally, there is a

particular portion of consumers eager to participate just to satisfy their altruism feeling. Finally,

there are consumers deciding to get involved in the value co-creation process due to their

dissatisfaction of a product or service (Ernst, Hoyer, Krafft, and Soll 2010).

Hypothesis 5: Learning benefits have a positive effect on customer’s attitude to participate in

value co-creation

Hypothesis 6: Social integrative benefits have a positive effect on customer’s attitude to

participate in value co-creation

Hypothesis 7: Personal integrative benefits have a positive effect on customer’s attitude to

participate in value co-creation

Hypothesis 8: Hedonic integrative benefits have a positive effect on customer’s attitude to

participate in value co-creation.

Hypothesis 9: Financial rewards have a positive effect on customer’s attitude to participate in

value co-creation

6. Knowing

As stated by Ballantyne and Varey (2006), knowing is considered to be one of the most

significant features of value co-creation. The scholars distinguished knowing into tacit and

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explicit knowledge. The former sub-element is the operant resource that resides into individuals

and can be used to directly create value, while the latter performs as a knowledge archive that

can be assessed so as to indirectly create knowledge.

The specific factor (knowing) provides the co-creators with the appropriate knowledge required

to start collaborating with others (Ballantyne and Varey, 2006).

Information seeking, information sharing, and feedback as defined as the three significant

facets for value co-creation by Yi and Gong (2013). These three aspects will be examined

thoroughly below, as they correlate with knowing.

a. Information Seeking

Information seeking is a mean that facilitates the interaction between two -or even more-

parties. In this context, it can be used so as for a party to learn about the other party’s goals, or

communicate information (i.e. preferences) to ultimately align the expectations of the two

parties.

This way, co-creators can achieve better coordination and thus improve their colaborative

activities (Clark, 1996). The particular factor helps cosnumers and firms fill-in the ‘breaches’

deriving from the knowledge discrepancy being existent in the two parties, and so it promotes

the set-up of a common ground for value co-creation.

Hypothesis 10: Information seeking positively influences value cocreation.

b. Information Sharing

If information seeking is considered as the first step toeard value co-creation process,

information sharing is even most important. As firms seek for input from the consumers’ side

in the form of knowledge (Gwinner et al., 2005), it is their responsibility to actively share

information regarding various aspects that concern the consumers, i.e. customization offers,

alternative courses of action or possible risks that may occur.

On the other hand, information sharing can be initiated from the consumers’ side, especially in

case this piece of information can help toward the interaction success. Inofmration sharing

reassures that both participant parties (firms and consumers) figure out the other party’s

problems and so both participating parties can actively take part to a discussion to find

solutions.

Hypothesis 11: Information sharing positively influences value cocreation.

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c. Feedback

Feedback is the third element in the row, right after information seeking and sharing. Feedback

‘focuses’ primarily on refining knowledge base so as to promote value co-creation (Sebanz et

al., 2006). Feedback is the mean allowing consumers to inform the firms regarding critical

apsects of the interaction process, such as potential mistakes.

Feedback play a significant role in setting up a steady ground for collaboration between

consumers and firms, as it improves both synchronization and timing during the interaction

process (Sebanz et al., 2006).

Hypothesis 12: Feedback positively influences value cocreation.

7. Relating

Ballantyne and Varey (2006) emphasize the significant role that relating has on value co-

creation. With the term relating we mean the state of having or establish social bonds. The role

of relationship is indeed critical, as it helps in knowledge generation regarding a wide variety

of information, such as the previous interactions between the involved parties, personal details

of the participants in the co-creation process etc.

Another important role of relating is the cultivation of the sense of security the involved parties

feel during their interaction, and due to this fact, there appear to be an increase in the amount

of communication that customers have with firms. This feeling of security and connection

between the two parties promotes the prosocial behaviour during the of interaction (Mochon et

al., 2012).

Additionally, relating also enables the accountability from both participating sides, that is

customers and firms. As they are aware of the things the other party has to accomplish so as to

achieve their goals, the other party has to place themselves in the participant role, taking their

perception into consideration.

There are three main factors regarding relating we take into consideration: commitment, trust

and connection. These factors have previously been studies by Randall et al. (2011).

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a. Commitment

Commitment is one other vital factor in value co-creation process. Randall et al. (2011)

describes the term as “a lasting desire and willingness to work towards preserving the

relationship”. Indeed, it is required at least a minimum commitment level from all sides in order

for any joint-activity to be promoted. Alike trust, commitment plays a critical role in increasing

the engagement levels by promoting devotion to the goals set, and motivating to accomplish a

mutually satisfactory goal (Morgan and Hunt, 1994).

Hypothesis 13: Commitment between customers and firms positively influences value

cocreation.

b. Trust

Trust is the confidence in a partner’s reliability and integrity (Morgan and Hunt, 1994). Trust

is of utmost significance in building relationship engagement (Morgan and Hunt, 1994; Bitner

et al., 1990). Additionally, it promotes the generation of value for customers, as it increases the

benefits deriving from the interaction and diminishes the pressure and ambiguity, it helps

shaping customers’ expectations in different stages of interaction, and it fosters collaboration

(Morgan and Hunt, 1994).

Hypothesis 14: Interpersonal trust between customers and firms positively influences value

cocreation.

c. Connection

According to Randall (2011), Connection is the degree of emotional connection customers and

firms have toward one another. This connection can be of great importance in the value co-

creation process. This sense of connection constructs familiarity, friedliness and volunteerism,

and enables intimacy (Westbrook, 1981). All these aspects contribute to a better quality of

relationship between customers and firms.

Randal (2011) claim that connection, unlike the other two factors, that is trust and commitment,

is built on affect, while the other two are built in cognition. All the involved parties are

interested in the other party’s wellbeing and so, all the participants treat the others with fairly

and with respect.

Hypothesis 15: A connection between customers and firms positively influences value

cocreation.

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8. Inovation capability

Innovation endevor within a firm consists of three business operations aspects: a. firm’s

internal resources, i.e. knowledge, processes and products/services, b. the firm’s connections

with market alternations, and c. the creative contribution of people in a firm (Balan, Lindsay

and O’Connor, 2009).

Innovation is one of the most prominent features dictating the economic and organisational

performance (Balan et al., 2009). According to Balan and Lindsay, firms should focus on

innovating in order to survive and progress in the current economic environment, which is

characterized by increasing complexity and turbulence (Khajeheian, 2016).

Although innovation is one of the key factors for firms to survive, it should be continuous and

uninterrupted to give enterprises an opportunity to increase their competitiveness (Menguc et

al., 2014). According to Szeto (2000), innovation capacity is the ability of firms to constantly

convert the knowledge and ideas into new P&S, procedures and structures for the sake of their

businesses and their stakeholders. Chen and Xu (2009) define innovation capacity as the

process through which companies gather knowledge from various sources to produce new

creative ideas that will be transformed into new products and services to meet the needs of their

customers.

Co-Creation and Innovation

Individuals' capability to innovate is growing immediately as a result of the development of

information systems, more massive and easier access to the internet, and a huge increase in the

number of social network users. As a result, users have easier and faster access to information,

as well as tools and platforms that promote innovation (Magnusson, Matthing and Kristensson,

2003).

This has the consequence that innovation by individuals is growing exponentially, although the

number of users wishing to participate in the process of producing new knowledge and

innovation remains almost unchanged (Maklan, Knox, and Ryals, 2008).

According to Von Hippel (2005), both individuals and businesses are now capable of

innovatimg on their own, without the need for interdependence and interaction between them.

Somehow, innovation has been democratized.

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On the other hand, firms' access to user-generated innovation has become easier and almost

inexpensive through the various collaboration platforms. As a result, businesses have easy, fast

and cheap access to a huge pool of new ideas that can be used to turn them into new products

and services that will meet their customers' needs, as these ideas come from potential business

customers themselves and therefore more accurately represent the real needs of consumers.

Hypothesis 16: Value co-creation has a direct, positive effect on innovation capability

9. Firm’s Performance

According to Samson, DeFillippi and Roser(2013), value co-creation models have two

characteristics in common: the organizations’ borders broadening on one hand and the active

inclusion of co-creators on the other. They argued that firms’ performance uses a group of

strategies and ideas, similarly to the co-creation model, in order to increase the firm’s

productivity.

Additionally, other scholars (Russo-Spena et al., 2011; Nicolajsen and Scupola, 2011; Piller,

Ihl and Vossen, 2010) claim that co-creation is the iteractive discussion between a group of

consumers and the firm’s performance, varying in the depth of this kind of interaction, having

as ultimate goal the enhancement of the propositions value to both companies and consumers

(Magnusson et al., 2003).

Prahalad and Ramaswamy refer to another parameter to the stage in which firms get involved

in the process of value co-creation and connection set this parameter to improve the

performance and profitability of the companies implementing this model.

Firm performance is the means by which companies can achieve a competitive advantage by

leverage of the available resources in their possession, which are important, rare and can hardly

be duplicated by competitors.

All the above scholars suggest that there is some degree of relationship or dependence between

value co-creation and firm performance. Despite the many references to this relationship

between the two factors, they have not proceeded to ful conceptualization of this correlation

(Tijmes, 2010).

Based on all of the above, we come to the following hypothesis:

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Hypothesis 17: Value co-creation has a direct, positive effect on firm performance

All the aforementioned hypotheses are summarized on the following conceptual framework

model:

Figure 16: Research Model

3.4 Conclusion

Having studied the work of various scholars on the model of value co-creation and what can

be the impact of this approach on two key factors in running a business, it's innovation

capability and firm performance, we have identified and highlighted 17 different hypotheses

that will be thoroughly studied to come to a conclusion as to whether, and to what extent each

of these assumptions is valid.

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4. Research Methodology

4.1 Introduction

In order to answer the questions deriving from the survey, a questionnaire was designed to

gather all the necessary data. In this chapter, there is a description of the methodology followed.

More specifically, this chapter demonstrates the design of the survey, the form of the

questionnaire, the sample used and the technique applied to perform the analysis of the

information collected.

4.2 General Methodology

The methodology used was based on the distribution of a structured questionnaire in order to

collect primary data using a convenience sampling approach. The participants were all

employees of OTE Group of Companies, representing a wide range of company hierarchies,

from staff employees to the level of Directors.

The distribution of the questionnaire was made by exploiting an internal company tool -used

for conducting anonymous voting campaigns, the so-called Conferience. The particular tool is

an online platform collecting data and providing a plain distribution analysis output.

The survey was conducted in April 2019 and 94 respondents responded to this action. Layering

in terms of hierarchy is judged to be satisfactory, as all hierarchical levels were represented in

harmonic proportions.

4.3 Design of the Questionnaire

The questionnaire was constructed using the statements figured out in the literature revierw, as

well as with other statements produced specifically for the particular survey, based on relevant

studies, researches and other observations.

The length of the questionnaire could be characterized as quite extensive, as it consisted of 17

questions about participants’ demographics and 78 qustions regarding the factors in question.

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In the particular questionnaire, it was used the five point scale method, as the specific method

is widely used and has proven its reliability in terms of measuring the level of agreement or

disagreement toward the statemetns being studied.

The participants had to express their agreement/disagreement by selecting on the scale from 1

to 5, where the point 1 indicated their complete disagreement while the point 5 indicated their

complete agreement toward each and every statement.

4.4 Structure of the Questionnaire

The questionnaire contained an preliminary page concisely describing the purpose of the study

and gave some piece of useful information about the process of supplementing. The results

were anonymous, which contributed to its impartial completion.

The first section concerned questions about the demographics of the participants. The next

section concerned the main part of the study, the questions about the factors to be examined.

The questions were divided into eight major categories, as follows:

- Customer’s Online Experience

- Customer’s Digital Skills

- Technology

- Willingness to Co-Create

- Consumer’s Motivators

- Co-Creation

- Innovation Capability

- Telecom Provider’s Performance

Essentially, the nine categories above were the subject of this study.

Totally, we used 81 questions in order to the measurement the 17 factors.

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Constructs Definitions Selected References

Customers’ Online

Experience

6 Questions

Impact of Customers' Online Experience

toward their intention to participate in value

co-creation activities initiated by telecom

operators

Joseph Frempong (2018)

Junwu Chai (2018)

Enock Mintah Ampaw (2018)

Customers’ Digital

Skills

3 Questions

Impact of Customers' Digital Skills toward

their intention to participate in value co-

creation activities initiated by telecom

operators

Joseph Frempong (2018)

Junwu Chai (2018)

Enock Mintah Ampaw (2018)

Technology (Digital

Platforms)

7 Questions

Impact of the available technology toward

their intention to participate in value co-

creation activities initiated by telecom

operators

Joseph Frempong (2018)

Junwu Chai (2018)

Enock Mintah Ampaw (2018)

Willingness to co-

create

5 Questions

Impact of Customers' willingness to co-create

toward their intention to participate in value

co-creation activities initiated by telecom

operators

Joseph Frempong (2018)

Junwu Chai (2018)

Enock Mintah Ampaw (2018)

Learning

3 Questions

Impact of the potential learning benefits the

customers could gain toward their intention to

participate in value co-creation activities

initiated by telecom operators

Wayne D. Hoyer (2010)

Rajesh Chandy (2010)

Matilda Dorotic (2010)

Manfred Krafft (2010)

Social Integrative

3Questions

Impact of the potential social benefits the

customers could gain toward their intention to

participate in value co-creation activities

initiated by telecom operators

Wayne D. Hoyer (2010)

Rajesh Chandy (2010)

Matilda Dorotic (2010)

Manfred Krafft (2010)

Personal Integrative

4 Questions

Impact of the potential personal benefits the

customers could gain toward their intention to

participate in value co-creation activities

initiated by telecom operators

Wayne D. Hoyer (2010)

Rajesh Chandy (2010)

Matilda Dorotic (2010)

Manfred Krafft (2010)

Hedonic Integrative

4 Questions

Impact of the potential hedonic benefits the

customers could gain toward their intention to

participate in value co-creation activities

initiated by telecom operators

Wayne D. Hoyer (2010)

Rajesh Chandy (2010)

Matilda Dorotic (2010)

Manfred Krafft (2010)

Financial/Material

Integrative

3 Questions

Impact of the potential financial/material

benefits the customers could gain toward their

intention to participate in value co-creation

activities initiated by telecom operators

Wayne D. Hoyer (2010)

Rajesh Chandy (2010)

Matilda Dorotic (2010)

Manfred Krafft (2010)

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Information Seeking

4 Questions

Impact of information seeking from the

customers' side toward their intention to

participate in value co-creation activities

initiated by telecom operators

Carmen Neghina (2014)

Marjolein CJ Canie (2014)

Jose MM Bloemer & Marcel JH

van Birgelen (2014)

Information Sharing

4 Questions

Impact of information sharing from the side

of both firms and customers toward their

intention to participate in value co-creation

activities initiated by telecom operators

Carmen Neghina (2014)

Marjolein CJ Canie (2014)

Jose MM Bloemer & Marcel JH

van Birgelen (2014)

Feedback

3 Questions

Impact of feedback provided by both firms

and customers toward their intention to

participate in value co-creation activities

initiated by telecom operators

Carmen Neghina (2014)

Marjolein CJ Canie (2014)

Jose MM Bloemer & Marcel JH

van Birgelen (2014)

Commitment

5 Questions

Impact of commitment of customers in the

entire process toward their intention to

participate in value co-creation activities

initiated by telecom operators

Carmen Neghina (2014)

Marjolein CJ Canie (2014)

Jose MM Bloemer & Marcel JH

van Birgelen (2014)

Trust

5 Questions

Impact of trust of both customers and firms in

the entire process toward their intention to

participate in value co-creation activities

initiated by telecom operators

Carmen Neghina (2014)

Marjolein CJ Canie (2014)

Jose MM Bloemer & Marcel JH

van Birgelen (2014)

Connection

3 Questions

Impact of connection between firms and

customers toward their intention to participate

in value co-creation activities initiated by

telecom operators

Carmen Neghina (2014)

Marjolein CJ Canie (2014)

Jose MM Bloemer & Marcel JH

van Birgelen (2014)

Co-Creation

4 Questions

Impact of Co-Creation in various aspects of

customer experience

Fatemeh Hamidi (2016)

Naser Shams Gharneh (2016)

Innovation

Capability

8 Questions

Impact of value co-creation model toward the

ability of the firms adopting this pactice to

innovate

Fatemeh Hamidi (2016)

Naser Shams Gharneh (2016)

Telecom Provider's

Performance

5 Questions

Impact of value co-creation model toward the

performance enhancement of the firms

adopting this pactice

Fatemeh Hamidi (2016)

Naser Shams Gharneh (2016)

Table 7: Questionnaire Questions and their Sources

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4.1 Collection of the Data

The questionnaire was available to the participants during the period from April 15th to April

30th. The distribution was done through a tool used by the OTE Group to conduct anonymous

surveys, both internally (towards employees) and externally (to customers) the Conferience.

143 people were invited to participate in the questionnaire. The selection of the participants

was based on the subject of their work, as they were all employees of OTE Group's commercial

department (Product Marketing, Retail Marketing, CRM, Digital).

In all, 94 of the 143 invited were involved in the process, which was anonymous. The

participation rate stood at 65.7%.

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5. Data Analysis / Hypotheses Results

# Hypothesis Path Coefficient Result

H1 Customer's Online Experience --> Value Co-Creation 0,16 Accepted

H2 Customer's Digital Skills --> Value Co-Creation 0,39 Accepted

H3 Technology --> Value Co-Creation - Rejected

H4 Willingness to Co-Create --> Value Co-Creation - Rejected

H5 Learning --> Value Co-Creation - Rejected

H6 Social Integrative --> Value Co-Creation - Rejected

H7 Personal Integrative --> Value Co-Creation - Rejected

H8 Hedonic Integrative --> Value Co-Creation - Rejected

H9 Financial Integrative --> Value Co-Creation - Rejected

H10 Info Seeking --> Value Co-Creation - Rejected

H11 Info Sharing --> Value Co-Creation - Rejected

H12 Feedback --> Value Co-Creation - Rejected

H13 Commitment --> Value Co-Creation - Rejected

H14 Trust --> Value Co-Creation - Rejected

H15 Connection --> Value Co-Creation - Rejected

H16 Value Co-Creation --> Innovation Capability 0,17 Accepted

H17 Value Co-Creation --> Telcom Provider's Performance - Rejected Table 32: Hypotheses Results Results

The results of the SEM analysis reveal that there are only 3 htpotheses that are confirmed, out

of the 17 initially set.

Based on the model, indeed customer’s online experience and digital skills really influence

value co-creation, while on the other hand all the customer’s motivators do not have any kind

of impact on value co-creation.

Furthermore, value co-creation impacts innovation capability, but doesn’t impact telecom

provider’s performance.

Many other relations were revealed, with the most noteable to be the following:

- Telecom Provider's Performance is influenced by learning, info-seeking and hedonic

integrative variables.

- Innovation Capability is the variable receiving most of the effects from the other

variables of the model. More specifically, it is influenced by co-creation, customer's

digital skills, hedonic integration, financial / integrative material, info search,

commitment and connection variables.

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6. Discussion & Interpretation of the Results

6.1 Brief Presentation

This study aimed to shed light on a very important process, which is at the heart of the

fundamental practice of the 4th digital revolution, namely the active involvement of customers

in the process of creating new products and services.

Businesses have always used different methods and techniques to better understand their

customers' needs and consequently provide them with products and services that best meet their

needs.

The practice of Co-Creation was adopted and implemented by several companies in various

industries to resolve the mismatch that existed between what customers really want and what

businesses feel they want.

Many studies have dealt with this practice. Others have shown that there is a relationship

between value co-creation and customer satisfaction, but that value co-creation helps

businesses produce more targeted products and services and that value co-creation is directly

related to improving production processes of businesses.

In this study, the aim was to examine whether and to what extent value co-creation can help

businesses in innovation and their effectiveness as organizations.

In essence, an attempt was made to investigate whether there is a link between the ability of

companies to innovate through the process of active involvement of their customers in the new

product/service development process, and how this capacity translates into firms' performance.

Similar studies in the past have shown that there is indeed a relationship between value co-

creation and innovation capability, as well as between value co-creation and firms'

performance.

In the context of this study, all these similar studies have been thoroughly analyzed and

researched, so that irrefutable conclusions can be drawn for the above relationships.

Following this in-depth study, a number of hypotheses have been put forward to examine

whether and how these cases, which at other times have been confirmed in other

industries/sectors, are valid in the telecommunications and High-Tech Industries.

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In order to investigate these cases, a questionnaire was prepared with questions from similar

studies of the same subject in other disciplines.

The questionnaire was distributed to OTE Group of Companies employees, and was

anonymously answered by 94 participants.

The results were analyzed using the SPSS statistical tool. descriptive statistical analysis was

applied to investigate the demographic characteristics of the sample.

Factor Analysis was then applied to determine the reliability, validity and adequacy of the

factors.

In further analysis of the results, Correlation Analysis was also applied, so that the relationships

between the factors of the model.

Finally, the consistency of the model and assumptions used were tested using the Structural

Equation Model analysis.

The next subsection includes the analysis of the results of the study, the managerial

implications deriving from them, and the limitations of this research. Last but not least, there

is a sub-chapter presenting the recommendations for similar future research.

6.2 Discussion

Several statistical models have been used to analyze the results of the primary survey to arrive

at the result presented in the previous chapter.

Factor Analysis was performed to create the factors before the correlation analysis and

structural equation analysis.

Through this process, it has been demonstrated that the factors selected and used are valid and

reliable.

Regarding Correlation Analysis, there have been relationships between several of the factors

studied in the model.

Finally, the Structural Equation Modeling Analysis showed that out of the 17 hypotheses made,

only three were confirmed and the remaining 14 were rejected.

This conclusion is extremely interesting as all the assumptions made have been based on other

studies that have proven their existence in different disciplines and at different times.

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Below is a thorough analysis of accepting or rejecting each of these hypotheses.

According to the first hypothesis, Customer's Online Experience has a positive impact on Value

Co-Creation. This case proved to be true. This result supports the study of Frempong, Chai &

Ampaw (2018), who argue that the same relationship applies to the Waste Management

industry. As can be seen, the particular hypothesis also applies to the High Technology and

Telecommunications Sector. It seems that familiarizing consumers with online platforms and

technologies on a wider scale helps to be actively involved in the process of value co-creation.

The second (2nd) hypothesis, which reported that Customer's Digital Skills had a positive

impact on Value Co-Creation, proved to be true. Again, this result confirms the study by

Frempong, Chai & Ampaw (2018), who had shown that this case is valid. We also see that

although we are studying two different sectors (waste management & telecommunications

sectors), these two factors have a positive impact on Value Co-Creation. In a more general

analysis, one might say that Digital Skills is a prerequisite of Online Experience and versa. It

turns out that skills and experience in new technologies have a positive effect on Value Co-

Creation.

Finally, hypothesis 16, which deals with the impact of Value Co-Creation on Innovation

Capability, is proven to be valid. This hypothesis was ascertained and proven by the study by

Hamdi & Gharneh (2016) and seems to be valid even today. Practically, this hypothesis was

one of the two main hypotheses with which this study was concerned. Demonstration of the

hypothesis demonstrates the role of active consumer engagement in the ability of companies to

innovate and deliver products and services that meet the needs of their customers.

Beyond the hypotheses for which the study proved their validity, there were others that did not

prove to be valid.

More specifically:

Hypothesis 3 - Technology has a positive impact on Value Co-Creation: This

hypothesis, which was proven by Frempong, Chai & Ampaw (2018), seems to be out

of the question today for the telecommunications industry. It is likely that industry-

specific technology will be taken for granted and will not have the impact on other

industries within Value Co-Creation

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Hypothesis 4 - Willingness to Co-Create has a positive impact on Value Co-Creation:

Another hypothesis that applies to Frempong, Chai & Ampaw (2018), but it turns out

that telecoms do not really play a role in Value Co-Creation.

Hypothesis 5 - 15 - Consumers' Motivators Hyper-Factor: This Hyper-Factor consists

of 11 sub-factors. The study has shown that none of these sub-factors have an impact

on Value Co-Creation. Although different studies from time to time and in various

business sectors have shown that these sub-factors have a significant (in some cases)

effect on Value Co-Creation, however, this study did not find any relationship of these

factors with Value Co -Creation, at least with regard to the telecommunications

industry, nowadays.

Learning, Social Integration, Personal Integration, Hedonic Integrative, Financial

Integration, Info Seeking, Info Sharing, Feedback, Commitment, Trust, and Connection

are the 11 sub-factors for which no impact on Value Co-Creation .

Although other significant and in some cases strong relationships of sub-factors with

other factors have been shown, with regard to the key issue of their relationship with

Value Co-Creation, all hypotheses have been rejected.

This may have to do with the nature of the industry being studied, as it has particular

peculiarities with respect to other industries studied and relationships with Value Co-

Creation have been demonstrated.

The High Technology and Telecommunications industries have always been in the

areas of productive activity where innovation was a key element of their activity.

Without it they could not survive, as the industry is so competitive and the

developments are so fast and rapid, with those who do not innovate risk becoming

disrupted. On the other hand, the customers of these companies have almost always

been taken into account in relation to the new products and services launched by

Telecom Operators, since focus groups were often organized with customer

involvement and their views were taken into account. Perhaps this is why Consumer's

Motivators' Hyper-Factor has no impact on the telecommunications industry.

The predictive power of the model can be considered as satisfactory, as it explains 49% of

Innovation Capability, 21% of Business Performance, 18% of Co-Creation, and 9% of

Consumers' Motivators.

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The above results, as shown in Tables 9, 10 & 11, demonstrate the important relationship

between Customer's Digital Skills and Innovation Capability.

This shows us that the existence of digital skills is a very important factor affecting the

Innovation Capability.

But the most important finding has to do with Hyper-Factor Consumers' Motivators. It is

proven by the study that it is the most important factor affecting the Innovation Capability. Of

course, this factor consists of 11 different sub-factors, each of which plays its own role and has

its own contribution to the overall impact on Innovation Capability.

One of the most important points of the analysis is that Hyper-Factor as a whole has a very

significant positive impact on Innovation Capability.

On the other hand, it seems that Innovation Capability has, in turn, made a very positive

contribution to Firm's Performance, which was one of the preconceived questions. The study

of Hamidi & Gharneh (2016), which suggested and demonstrated a triangular relationship

between Value Co-Creation, Innovation Capability and Firm's Performance, appears to be

confirmed.

Finally, there was a negative relationship between Hyper-Factor Consumers' Motivators and

Telecom Provider's Performance.

6.3 Managerial Implications

Τhe results of this research may have significant implications for managers and executives,

primarily in the Telecommunications Industry, but also in various other sectors where

companies are willing to adopt and implement the Value Co-Creation in practice.

To date, many companies have implemented this practice worldwide, in other cases

successfully and in others with failure.

This study is an updated version of the results of Value Co-Creation in a field where this

practice has not been applied, or has been implemented on a very small scale and with

unambiguous results.

In this context, this study may work as a guide on the basis of which many of the assumptions

made in the past have been rejected, so they are outdated nowadays.

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As companies struggle to innovate internally, there will be a growing need to do so with the

use of external resources.

This study has shown that Value Co-Creation can be an important source of innovation for

business as long as appropriate techniques are used and best practices are applied by using

those variables whose relationship with Innovation Capability and Firm's Performance

demonstrated by the relevant analysis.

6.4 Limitation

This study had important limitations, which should be mentioned. First and foremost, the

population who participated in the study by completing the relevant questionnaire is limited

(94 participants).

At the same time, the participants come from the same company (OTE Group of Companies)

and from the same Directorate (Commercial Division). As a result, pluralism of opinions and

diversity in approaching the subject of study are limited.

Also, although the survey was conducted in a multinational company, the participants were all

Greeks, with the result that differences in the culture of workers living in other countries were

not taken into account.

Finally, the participants' experience with Value Co-Creation was theoretical rather than

practical, as the company did not apply this practice, limiting the potential results that would

result from the practical application of such an approach.

6.5 Further Research

The further and deeper investigation of the practice of Value Co-Creation deemed essential.

Businesses in the future will increasingly face the challenge of sustained innovation and their

customers will become more informed and demanding.

At the same time, in the 4th Industrial Revolution, the active involvement of customers in the

creation of products that will provide them with the solutions they want in the problems they

face will be the new reality.

In this context, this study proposes to broaden and include even more high-tech industry

participants to provide more accurate data on Co-Creation's contribution to companies' ability

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to innovate but also to other aspects of businesses, which this study was not designed to

examine.