Developing collaborative customer-supplier relationships through value co-creation

Abstract: The purpose of this study is to create understanding of the value co-creating process in business relationships, where the dyadic relationship is in focus and both the customer’s and the supplier’s view of the value co-creating process is of interest. In the introductory chapter, it is assumed that the ultimate goal of business logic is to create value, and value co-creation can be regarded as the essential reason why a customer and a supplier engage in a business relationship. Value is created for both the customer and the supplier, but co-created value does not necessarily have to be shared between the interacting parties. In this thesis, the customer’s and the supplier’s intentions for engaging in a value co-creating process are investigated as well as how the value co-created is perceived by the interacting parties. Theories about exchanges and interactions create the theoretical foundation of the interpretation of relationships and the interplay between organisations in this thesis. By gathering input from the value literature, the conceptual framework is further elaborated and a conceptual model of the value co-creating process is presented.  A case study has been carried out to obtain an in-depth picture of the value co-creating process in customer-supplier relationships. During the autumn of 2000, the customer, the Technical Office in Zeta Municipality, invited subcontractors to a public purchasing process regarding maintenance of the water and sewage system. “Subcontracting” of municipal activities was relatively uncommon at the time. The supplier, Alpha, had experience of maintaining hydropower plants but the firm had no practical knowledge of maintenance of water and sewage systems. Thus, the situation was new for both parties when they engaged in a value co-creating process in January 2001. The investigated relationship between the Technical Office and Alpha shows that both parties’ intentions for engaging in a value co-creating process can be interpreted as expected value and desired value, where the expected value can be understood as the counterparty’s minimal expectations and the desired value as the features adding value to the counterparty. The Technical Office and Alpha had different intentions for engaging in a value co-creating process. Furthermore, the investigated relationship illustrates that the Technical Office and Alpha perceived the value co-created as expected value, desired value, unanticipated value and received value. Both partners had expectations and desires regarding the relationship, both parties provided unanticipated value to the relationship and both partners received value from the relationship. In this study, expected value, desired value, unanticipated value and received value are given empirical content. The investigated case also shows that most of the value co-created was not shared between the interacting partners and that perceived value changes depending on situation, but also over time. Moreover, the relationship between the Technical Office and Alpha shows that value co-creation can be viewed as a process through which collaboration is achieved.