Co-creating effective and profitable customer solutions in business markets

Abstract

In this thesis, I identify the drivers of customer solutions that are both effective for customer firms and profitable for supplier firms in business-to-business (B2B) markets. In a value aggregation framework, I investigate how value is created for each firm in a supplier-customer dyad when providing solutions. I introduce the co-creation orientation construct that reflects a supplier or customer firm's attitude and perceived behavioural control for working on a solution with another firm to achieve mutually beneficial outcomes. I propose that a firm's high degree of co-creation orientation leads to high level of dyadic investments into a customer solution. These dyadic investments combine with the dyad's interaction efficacy to improve solution effectiveness. Solution effectiveness has a positive effect on customer-based relational performance. Importantly, I propose that, to maximise profits from a customer firm, supplier firms need to avoid making investments that are misaligned with each firm's co-creation orientation. Misaligned investments have a negative effect on solution effectiveness and customer-based profit performance. Finally, customer-based profit performance has a positive effect on a supplier firm's overall profits. This study involved: (1) a qualitative stage to conceptualise and develop measurement scales for the focal constructs under investigation, (2) a pilot study to purify and refine measurement models, (3) a study to test the theoretical framework in a generalisable manner, and (4) a study to verify and extend the structural model using a new data set. Results across these studies broadly support my research hypotheses. This thesis makes three contributions to marketing theory and practice. First, co-creation orientation's elements give supplier firms actionable measures to develop the attitude and competencies required to survive in the customer solutions business. Second, by recognising their customer firms' co-creation orientation and aligning their investments accordingly, supplier firms are more likely to maximise their profits. Third, recognising the co-creation orientation of both firms in a supplier-customer dyad allows the supplier firms to select the right customer firms to develop mutually beneficial relationships.