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Tourism Management 33 (2012) 1483e1492

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Tourism Management

journal homepage: www.elsevier .com/locate/ tourman

Customer co-creation of travel services: The role of company support andcustomer satisfaction with the co-creation performance

Ursula S. Grissemann*, Nicola E. Stokburger-Sauer 1

Department of Strategic Management, Marketing and Tourism, University of Innsbruck, Universitaetsstr. 15, 6020 Innsbruck, Austria

a r t i c l e i n f o

Article history:Received 25 July 2011Accepted 1 February 2012

Keywords:Co-creationCompany supportCustomer service expendituresCustomer satisfactionCustomer loyalty

* Corresponding author. Tel.: þ43 512 5077081; faxE-mail addresses: ursula.grissemann@uibk.a

nicola.stokburger-sauer@uibk.ac.at (N.E. Stokburger-S1 Tel.: þ43 512 5077081; fax: þ43 512 507 2845.

0261-5177/$ e see front matter � 2012 Elsevier Ltd.doi:10.1016/j.tourman.2012.02.002

a b s t r a c t

The tourism industry is characterized by high-contact services in which co-creation of customers playsa major role. This paper develops a conceptual model of customer co-creation of tourism services andempirically tests this model in a travel agency context. Applying a SEM-approach, company support forcustomers is found to significantly affect the degree of customer co-creation. The degree of co-creationfurther positively affects customer satisfaction with the service company, customer loyalty, and serviceexpenditures. A test of the moderating effect of the customers’ satisfaction with their own co-creationperformance on satisfaction with the service company and on service expenditures suggests thatthose customers who are satisfied with their co-creation activities spend more on their travelarrangements, but that they are less satisfied with the company. Important implications for co-creationtheory and practice in high-contact service industries can be derived.

� 2012 Elsevier Ltd. All rights reserved.

1. Introduction

Research on customer engagement behavior such as co-creationactivities has recently been one of the top research priorities inmarketing and tourism research (Marketing Science Institute, 2010;Shaw, Bailey, & Williams, 2011; Verhoef, Reinartz, & Krafft, 2010).Basically, companies can reach two significant sources of competi-tive advantage when successfully implementing co-creation activ-ities (Hoyer, Chandy, Dorotic, Krafft, & Singh, 2010): First, they canrealize productivity gains through efficiency, such as speed to themarket (Carbonell, Rodríguez-Escudero, & Pujari, 2009), lower costsand reduced risk (Bendapudi & Berry, 1997; Bendapudi & Leone,2003; Prahalad & Ramaswamy, 2004). Second, they can reachgains in the effectiveness of the co-created offering such as increasedwillingness to pay (Chung, Kyle, Petric, & Absher, 2011; Franke,Keinz, & Steger, 2009), increased revenues and profits (Ostromet al., 2010), or innovativeness (Füller, Matzler, & Hoppe, 2008).

In the tourism context, the concept of co-creation is particu-larly relevant. First, offering unique and memorable customerexperiences are of paramount importance for tourism serviceproviders in order to remain competitive. Creating a uniqueexperience involves both customer participation and a connection

: þ43 512 507 2845.c.at (U.S. Grissemann),auer).

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which links the customer to the experience (Pine & Gilmore, 1998;Shaw et al., 2011).

Service-Dominant (S-D) logic elaborates on this perspective andgives priority to the interaction between the company and thecustomer. This logic implies that value occurs in the interactionprocess itself rather than exclusively in the provision of the service(Etgar, 2008; Grönroos,1997). Therefore, involving customers in thecreation of a travel arrangement helps tailoring the service to thecustomers’ particular needs and hence assists in creating a uniqueexperience.

Second, the Internet has significantly changed the waycustomers allocate knowledge about hotels, flights or even desti-nations. New information and communication technologies, such asonline booking engines, have transformed the structure of thetourism distribution system into a multi-channel network that rai-ses newchallenges for both customers and tourism companies (e.g.,travel agencies). Customers now facemore technologically complexpurchasing processes and time-consuming price-comparisons dueto the partly absence of human interaction. Travel agencies, on theother side, have to face a “re-intermediation process,”whichmeansthat they have to reassert their intermediary role by enhancinghuman interaction and consumer trust (Kracht & Wang, 2010).Increased co-creation activities are thus believed to encourage re-intermediation as they enable travel agencies to provide travelarrangements tailored to each customer’s individual needs.

Third, customers create value not only for themselves and thecompany, but also for other customers which is due to the fact that

U.S. Grissemann, N.E. Stokburger-Sauer / Tourism Management 33 (2012) 1483e14921484

they often share their travel experiences in online social networks.This development has shifted considerable power to customers.Online communities operate as permanent agents of quality controland instantly report the shortcomings of service companies inonline platforms. Online booking engines and websites that allowcustomers to post their opinions and reviews about tourism servicecompanies are not only a helpful co-creation tool for customers, butalso an important source of marketing information about customerexperiences for companies (Shaw et al., 2011; Wang & Fesenmaier,2004). Thus, the travel experience of a single customer is accessibleto multitudinous community members and, subsequently, shapestheir future purchase behavior.

Nevertheless, empirical evidence of co-creation research intourism is scarce and a number of research questions are stillunanswered. Shaw et al. (2011) were among the first to empiricallyassess the concept of S-D logic and its implications for tourismmanagement in a hospitality setting. Li and Petrick (2008) concep-tually looked into the importance of S-D logic for tourismmarketing.Both studies emphasize that S-D logic and co-creation activitiesdeserve further examination in tourism marketing and manage-ment. Research is called for that, for instance, investigates the effectsof co-creation on company success outcomes such as increasedrevenues and profitability (Hoyer et al., 2010). Additionally, moreresearch should be devoted to the drivers of co-creation activities interms of firm actions and processes (vanDoorn et al., 2010).

In this research, we follow up on calls for further research oncustomer co-creation and investigate both theoreticallyand empirically a model of antecedents and consequences ofcustomer co-creation in tourism services. We examine companysupport as one selected driver of co-creation, and customer loyaltyand customer expenditures as selected outcomes of co-creation.Specifically, the present paper has three main objectives. First, itdevelops a deeper understanding of company support in the co-creation process, that is, we study whether increased companysupport enhances the degree of co-creation. Second, it examinesthe effect of customer co-creation on customer satisfaction,customer loyalty, and company performance. In particular, wewant to find out if a higher degree of co-creation actually increasessatisfaction with and customer loyalty toward the service companyand customer expenditures. Third, it investigates if customers’satisfaction with their own co-creation performance playsa moderating role in the relationship between co-creation andsatisfaction with the service company and service expenditures,respectively.

2. Theoretical background and development of hypotheses

2.1. Overview

While marketing science strongly relies on S-D logic to under-stand and explain customer integration in the value creationprocess, Unified Services Theory (UST) (Sampson & Froehle, 2006)deals with the understanding of the customer’s role in productionand operations management. The foundational core of UST is that“within service processes, the customer provides significant inputsinto the production process” (Sampson & Froehle, 2006, p. 331).UST thus understands a service process as a production processwhere the presence of customer inputs is a necessary and sufficientcondition. As in S-D logic, customer input is thus central to defineservices. Sampson and Froehle (2006) highlight two basic types ofcustomer input: The customer-self inputs (i.e., the employment ofcustomer labor in the service development process) and customer-provided information (i.e., the provision of information by thecustomer that is indispensable for the service delivery).

Integrating themarketing and operations perspective on tourismservice creation and production, we understand customer co-creation of tourism services as the customer’s provision of input inthe development of their travel arrangement. This input can take theformof customer-self input (e.g., by spending a considerable amountof time developing the service) and customer-provided information(e.g., telling the travel agency their wants and needs). Given the factthat the customer always has to provide input in the serviceproductionprocess, ourmajorpremise is that the extent towhich thisinput is provided significantly affects company outcome variables.

Customers could be considered as partial employees of thecompany who are partially responsible for the outcome of the co-created service (Bowers, Martin, & Luker, 1990; Xie, Bagozzi, &Troye, 2008). In this sense, the concepts of producers andcustomers are much more encompassing than in traditionalthinking, and customers take the role of prosumerswho “undertakevalue creating activities that result in the production of productsthey eventually consume and that become their consumptionexperiences” (Xie et al., 2008, p. 110).

Prior research on co-creation has predominantly been under-taken in virtual environments (e.g., Füller & Matzler, 2007;Nambisan & Baron, 2009) or in the context of mass-customizationtoolkits helping to co-create products (e.g., Fuchs & Schreier,2011; Kohler, Matzler, & Füller, 2009). While these studiesprovide evidence of the advantages of integrating the customer intothe co-creation process and of the importance for companies, thereare only a few empirical studies on customer co-creation activitiesand their consequences for firms in a service and travel servicescontext (e.g., Auh, Bell, McLeod, & Shih, 2007; Carbonell et al., 2009;Li & Petrick, 2008; Shaw et al., 2011). This is a major research voidsince there are notable differences between products and servicesand the approaches used in its creation (Sampson & Froehle, 2006)and marketing (Song, Di Benedetto, & Song, 2000).

Additionally, there is still a research gap concerning the relation-ship of company support and customers’ actual service co-creationactivities and the effects of these activities on firm outcomes. Inparticular, the company’s role in the co-creation process still remainsunclear, although theapproachesafirmtakes to stimulate co-creationactivities are of great value for firms (Hoyer et al., 2010). Research oncustomer empowerment (e.g., Fuchs & Schreier, 2011; Füller,Mühlbacher, Matzler, & Jawecki, 2009; O’Hern & Rindfleisch, 2009),forexample, revealed that companies empowering theircustomers inNPD enhance customer orientation and foster corporate firm associ-ations. Elaborating on these findings we focus on thecompanyecustomer interactions in a services context, which we callcompany support, and analyze its effects on co-creation activities.

Since co-creation activities require customer investments interms of skills, time, money, and psychological efforts (Hoyer et al.,2010), customers compare the potential benefits and costs of co-creation activities (Etgar, 2008). Franke and Schreier (2010), forinstance, find that self-designed products provide a higher prefer-ence fit than standardized products and thus drive customers’willingness to pay. They further argue that the co-creation processinduces affective reactionsand thus increases thevalue the customerattaches to the product. Following this reasoning and Ostrom et al.’s(2010) proposition that increased revenues are a consequence of co-creation, it can be expected that the value customers attach to theservice, as reflected in their service expenditures, is dependent ontheir actual degree of participation. This value increment is alsoconsidered to reflect on customers’ overall satisfaction with theservice company. We thus include customer service expenditures,customer satisfaction, andone additional variable, customer loyalty, asconsequences of co-creation into our model.

Taking one step further, it can be anticipated that the valuecustomers derive from co-creation activities is driven by their

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assessment of howmuch of the process’s success can be ascribed tothemselves. Thus, the value customers attach to a product isexpected to be higher for customers who are more satisfied withtheir own co-creation performance than those who are less satis-fied. A final construct that we integrate into our model is thereforecustomer satisfaction with the co-creation performance, which servesthe role as a moderating variable.

2.2. Company support for customers to co-create

Service and new service offerings (i.e., innovation) have beendemocratized by empowering customers to get actively involved inco-creation activities (Fuchs & Schreier, 2011), and customerempowerment strategies incorporate active communication withcustomers. Customers’ direct involvement into ongoing operationsthrough their provision of input to the service creation processleads to more variability in the service provision. This variabilitycan take the form of arrival variability (i.e., differing times at whichthe service is requested by customers), request variability (i.e.,differing customer needs), subjective preference variability (i.e.,differing customer opinions about what it means to be treatedwell), capability variability (i.e., differing customers skills andknowledge on how to co-create a service), and effort variability(i.e., differing customer effort in the co-creation task) (Frei,2006). Customerecompany support accounts for this variabilitysince it helps to overcome such variability due to enhancedcommunication.

Service-Dominant (S-D) logic (Lusch, Vargo, & Wessels, 2008;Vargo & Lusch, 2004) has changed the view of companyecustomercommunication (Payne, Storbacka, & Frow, 2008).While in a goods-dominant logic communication is predominantly one-way, forinstance, through direct mailings or advertisements, in S-D logic,a focus has been put on the dialog between the company and thecustomer in order to jointly create a service. Following thisperspective, the company’s motivation should be to support thecustomer in his or her co-creation activities by providing him or herrelevant information and necessary resources (Payne et al., 2008).

Effective communication between the company and thecustomer involves regular contact and follow-ups between bothparties. Thus, regular interactions enhance the creation of a socialbond that helps, on the one hand, in making thecustomerecompany relationship more resistant against servicefailures and, on the other hand, improves perceived service quality(Sharma & Patterson, 1999). Additionally, Tynan, McKechnie, andChhuon (2010) argue for a social construction of the market placeas this view offers deeper insights into the nature of value both inexchange and use. They find that co-creating experiences for luxurybrands involve an active dialog between owners, employees andcustomers. Managers should therefore use different channels ofcommunication and networks to stay at the cutting edge of inter-actions in a highly competitive market place and to be able toinnovate continuously (Tynan et al., 2010). In an IT-innovationcontext, the concept of perceived empowerment to engage innew product development (NPD) has been empirically investigatedby Franke and Schreier (2010) and Füller et al. (2009). Both studiesfind that tools which support co-creation make customers moreinnovative and enjoy the co-creation experience. Likewise, Auhet al. (2007) find companyecustomer communication beinga significant driver of co-creation in a financial services context.

From a theoretical perspective, social exchange theory (Homans,1958; Thibaut & Kelley, 1986) helps to understand the importanceof customerecompany interactions in the light of value co-creation.Social exchange refers to “voluntary actions of an unspecifiednature that extend beyond basic role obligations and suggesta personal commitment to the partner” (Bettencourt, 1997, p. 387).

Bettencourt (1997) identifies the concept of perceived support forcustomers as an important antecedent to social exchanges inconsumption contexts. More specifically, a higher perceivedsupport for customers leads to a higher willingness of customers tomaintain a social exchange relationship with the company and,thus, to more cooperation of customers in the service developmentprocess (Bagozzi, 1995; Bettencourt, 1997). We therefore hypothe-size a positive relationship between company support, that weunderstand in terms of companyecustomer interactions, and thedegree of co-creation:

H1. Company support has a positive effect on the degree of co-creation.

2.3. Co-creation and firm performance

Generally, company success measures are divided into attitu-dinal measures, such as image or customer satisfaction, andbehavioral measures, which lead to financial gains such as reve-nues, profit, or stock prices (Gupta & Zeithaml, 2006). In this study,we concentrate on customer satisfaction with and customer loyaltytoward the service company, representing the company’s attitudinalperformance, and customers’ service expenditures, representing thecompany’s financial performance.

Themajor theoretical grounding of customer satisfaction researchis the confirmationedisconfirmation paradigm, proposing thatsatisfaction results from the customer’s comparison of expectationswith performance (Oliver,1977). In general, the construct of customersatisfaction is recognized as an important link between the com-pany’s activities and subsequent customer behavior. Homburg,Wieseke, and Hoyer (2009) find that a strong company identity canhelp in developing customer relationships which again lead topositive market and financial performances of a company. This isconsistent with social identity theory, which posits that beinga member of a social group (e.g., being an employee, a citizen, or anathlete) contributes to how people define themselves as individuals(Tajfel, 1982; Tajfel & Turner, 1979) and determines future behavior(Hogg & Reid, 2006). Bhattacharya and Sen (2003) applied this theoryin a customerecompany context and propose that being a customerof a company can also contribute to how customers define them-selves. Van Doorn et al. (2010) suggest that the social identity ofa customer can be shaped and reinforced by co-creation activities.

If a company manages to constitute an in-group identity thatenforces customers’ feelings of being part of a community, positiveperceptions and actions can be expected. Thus, we propose thatwhen customers engage in the service development process, theirperceptions of belonging to the company reflect on their satisfac-tion and their loyalty with the service company. We understandsatisfaction with the service company as the customers’ overallsatisfaction with the service company. Customer loyalty is definedas “a deeply held commitment to re-buy or re-patronize a preferredproduct or service consistently in the future” (Michels & Bowen,2005, p.6). In this study, customer loyalty refers to the customers’re-visit and recommendation intentions. It is reasonable to assumethat when customers have the opportunity to co-create a travelpackage, they are more likely to re-purchase from the samecompany again and to recommend the company to others. Like-wise, customer satisfaction with the company should be positivelyrelated to customer loyalty (e.g., Homburg & Giering, 2001).

The fact that co-creation enables customers to tailor a productthat fits their individual needs also leads to the assumption thatcustomers are willing to pay more for the co-created product.Franke and Piller (2004) and Schreier (2006) provide empiricalevidence of a higher willingness to pay for products that are self-designed than for standardized products. A possible reason for

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a higher willingness to pay is that co-created products providea higher preference fit than their standardized counterparts (Franke& Schreier, 2010). The major weakness of taking willingness to payas dependent variable is that it tends to exceed actual payments ofup to 80% (Franke & Hippel, 2003). Therefore, the dependent vari-able in this research is actual customer service expenditures, whichrefers to the total amount of money a customer had actually spentfor his or her travel package. To sum up, we propose that the degreeof customer participation positively affects satisfaction with theservice company, customer loyalty, and service expenditures.

H2. The degree of co-creation has a positive effect on thecustomers’ satisfaction with the service company.

H3. The degree of co-creation has a positive effect on thecustomers’ loyalty with the service company.

H4. The degree of co-creation has a positive effect on thecustomers’ service expenditures.

2.4. Customer satisfaction with the co-creation process

The co-creation process offers various social benefits forcustomers. Customers can, for instance, enhance their social statusthrough being recognized as a valuable information source by otherstakeholders. Additionally, active participation in communitieswith persons sharing the same interests enhances communicationskills and creates social contacts and enjoyment (Etgar, 2008). Thisis accompanied by feelings of pride because of the co-createdaccomplishment (i.e., having it done it oneself; Franke & Schreier,2010; Moreau & Herd, 2010). Franke, Schreier, and Kaiser (2010, p.125) define this concept as the “I designed itmyself effect,” referringto the “value increment a subject ascribes to a self-designed objectarising purely from the fact that he/she feels like the originator ofthat object.” Franke et al. (2010) further argue that this effect isbased on the fact that subjective attributions often matter morethan objective facts. However, they argue that “we do not know theextent to which the feeling of having made a contribution is desir-able” (Franke et al., 2010, p.137) and that co-creation outcomesdepend on customers’ evaluation of their own contribution. Weelaborate on this concept and analyze whether an increased satis-faction with the own co-creation performance always benefits thecompany. Literature has proposed that when the self-efficiency ofcustomers increases, the amount of engagement in the service taskis not seen as a cost any longer, but rather contributes to customervalue (van Beuningen, Ruyter, & Wetzels, 2011).

Taking the case of an unskilled customer, Etgar (2008), however,emphasizes the risk of misperformance and the subsequent effectsfor the customer and the company. From a theoretical perspective,the judgment of particular incidents depends on the customer’scausal explanations of success and failure. This reasoning can beexplained by attribution theory (e.g., Heider, 1958; Kelley &Michela, 1980; Weiner, 1972) according to which individuals tryto locate the causes of their successes or failures in social situations.In doing so, individuals are viewed as naïve scientists that try toattribute the outcomes of interactions (success or failure) tothemselves or external forces taking specific conditions intoconsideration (e.g., stability and control of the outcome). Finally,future behavior is determined by the individuals’ explanations forthe outcomes of their own behaviors, that is, their perception ofcausality (Martinko & Thomson, 1998). Applying this reasoning tothe context of co-creation, it can be anticipated that the valuecustomers derive from the co-creation process and, consequently,their future behavior is determined by their assessment of howmuch of the process’s success can be ascribed to themselves.

This is consistent with the concept of decision satisfaction (e.g.,Heitmann, Lehmann, & Herrmann, 2007) which posits thatcustomers experience satisfaction or dissatisfaction not only withthe purchased product but also with the purchase decision processper se. Decision satisfaction is associated with the service develop-ment process and thus goes beyond satisfaction with the outcome.

When the resulting co-created product fits the needs ofcustomers, the process effort is also perceived positive andcomplements to the subjective value attached to the product. Thisis because the efforts made in the co-creation process areperceived as a rewarding and enjoyable experience that carriesover to the assessment of product value (Franke & Schreier, 2010).Elaborating on these findings we propose that customers assessthe co-creation process with respect to the degree to which theyare satisfied with their own co-creation performance. Satisfactionwith the co-creation performance is understood as the satisfactionwith the customers’ participation in the creation of the serviceoffering (e.g., with the recommendations the customer has made).It can be argued that when customers are satisfied with their ownco-creation performance, they are willing to spend more moneyfor the service.

H5. The higher the customer’s satisfaction with his or her co-creation performance, the stronger the effect of degree of co-creation on service expenditures.

In general, customers’ assessment of their own input influencestheir assessment of overall satisfaction with the service company(Bendapudi & Leone, 2003). If customers feel that the contributionof the value creation partners is not fairly distributed, customersatisfaction with the company decreases. Equity theory (Adams,1963) can be helpful in explaining this process. Generally, equitytheory, as one form of justice theory, helps in explaining satisfac-tion of the relationship partners based on their perceptions of thepartner’s resource distribution (i.e., fair or unfair input). Thus, onemight expect that when customers provide sufficient input in theservice development and when customers are satisfied with thecontribution they made to co-create the service, they perceivea decreasing customer commitment of the company and, conse-quently, an unfair distribution of resources. Customers then feelthat they should earn the credit for the positive service outcomeand not the company. Consequently, their willingness to re-visit orrecommend the company decreases. A negative effect for thedegree of co-creation on satisfaction with the company and oncustomer loyalty is thus expected for customers who are moresatisfied with their own co-creation performance than those whoare less satisfied with themselves. In line with the theoreticalgrounding and empirical findings based on equity theory (e.g.,Oliver & Swan, 1989), we suggest the following hypotheses:

H6. The higher the customer’s satisfaction with his or her co-creation performance, the less strong is the effect of degree of co-creation on customer satisfaction with the company.

H7. The higher the customer’s satisfaction with his or her co-creation performance, the less strong is the effect of degree of co-creation on customer loyalty. Fig. 1

3. Empirical study

3.1. Research design and sample

The hypotheses were empirically tested and validated in a travelagency context. Homburg, Wieseke, and Bornemann (2009)emphasize the adequacy of studying travel agencies in a customerbehavior context due to close customerecompany interactions.

Fig. 1. Illustrates the theoretical framework of the study and hypotheses.

U.S. Grissemann, N.E. Stokburger-Sauer / Tourism Management 33 (2012) 1483e1492 1487

Our study was therefore conducted in a family-run Austriantravel agency that is in close contact with its customers. The travelagency was specialized in organizing travel arrangements for Aus-trian students and young consumers which were traveling to Italyand Spain. The relatively short travel distance between Austria andItaly or Spain, respectively, made these destinations particularlyinteresting for young travelers. In this context, a high degree of co-creation would mean, for example, that the customers already hada pretty good idea on how to spend their holidays (e.g., attendinga language course). Notably, customers vary to the extent they bookevery component of their travel arrangement in advance. The focusof this research, however, was not on the co-created product itself(i.e., the travel arrangement) but on the degree the customer wasinvolved in the arrangement process. More specifically, we focusedon the co-creation process rather than on the outcome of thisprocess. In order to avoid biases caused by the travel experienceitself, 200 customers were asked to immediately complete a paperand pencil-questionnaire after they had booked the travelarrangement but before they were actually going on the trip.

Since the basic population was very homogeneous in its char-acteristics (i.e., young Austrian travelers which were traveling toItaly and Spain) we had not to account for sample variance withrespect to socio-demographic variables when collecting the dataand, therefore, accepted a convenience sampling method. We,however, structured the data collection process by advisingemployees to only hand out the questionnaire to customers whoentered the travel agency alone. This made sure that the degree ofco-creation was only measured with regard to the single customerand the specific employee. Otherwise, customerecustomer inter-actions might have biased the results. Research suggests outlierelimination in order to rule out the effects of non-normality ofobserved data by calculating their Mahalanobis distances (e.g.,Bagley&Mokhtarian, 2002;Gao,Mokhtarian,& Johnston, 2008).Wefollowed this suggestion, however, since our sample size was rela-tively small, only observations with a Mahalanobis distance higherthan 3.8 were deleted from the data set to reduce outliers and tocombat effects of non-normality (Gao et al., 2008). After applyingthis procedure and removing incomplete questionnaires our sampleresulted in 185 observations. The sample consisted of 43% womenand 57% men. The majority of the customers (73%) were students.The average expenditures for the booked travel arrangement were892 Euros. Thus, our sample represents the basic population well.

3.2. Measures

A frequently mentioned weakness of cross-sectional data is theoccurrence of common method bias that can be understood as “thevariance that is attributable to measurement method rather than tothe constructs themeasurement represents” (Podsakoff,MacKenzie,

Lee, & Podsakoff, 2003, p.879). Podsakoff et al. (2003) stronglysupport thenotion to collect data of predictor andoutcomevariablesfromdifferent sources.We, therefore, took a dyadic approach to datacollection. Inspired by the work of Homburg, Wieseke, andBornemann (2009) and Homburg, Wieseke, and Hoyer (2009) whoderived data from customers, managers, and employees in a travelagency setting, we collected data from two sources, customers andthe travel agency. Objective data were directly derived from thecustomer data base of the cooperating company. In this sense,employees were asked to retrieve additional information about thelevel of company support and the customer’s actual expenditures ofthe booked travel arrangement for each completed questionnairefrom the company’s customer data base. Company supportcomprised three categories of companyecustomer communication(A¼high support, B¼moderate support, C¼ low support). CategoryA represented a high level of customerecompany communication,a high level of assistance, and personal customereemployee inter-actions. Category B included moderate customerecompany inter-actions, no standardized emails, and occasional personal telephonecalls. CategoryC comprised lowcustomer contact between the travelagency and the customer, standardized booking processes via email,and no personal contact with the customer. Overall, 54.9% of therespondents were Category C customers, 30.4% were in Category Band 14.7% were Category A customers. Since company support isa measure that captures the quantity of customerecompanycommunication, we additionally assessed the customer’sperceived company support and perceived communication tocapture the quality of communication. We thus measuredcustomers’ perceived company support using three items derivedfrom Bettencourt (1997) and perceived communication with thecompany using three items derived from Auh et al. (2007). Perceivedcompany support referred to the customers’ feeling that the companyreally cared about them (e.g., “This travel agency strongly consideredmy needs and wants.”), whereas perceived communication with thecompany referred to the sharing ofmeaningful information betweenthe companyand the customer (e.g., “The travel agencyalways offeredme as much information as I needed to arrange my trip.”). Table 2provides evidence that there is a significant correlation betweencompany support and perceived company support and perceivedcommunication, respectively (r¼ 0.45 and r¼ 0.97, p< 0.001)whichpoints to a high convergent validity of our measure.

One request of the cooperating travel agency was to keep thequestionnaire as short as possible to not overburden its customers.The constructs were thus measured with a minimum number ofitems. The degree of co-creation was measured as a multi-itemconstruct using four items derived from conceptual papers ofBettencourt (1997) and Lengnick-Hall, Claycomb, and Inks (2000).Interviews with marketing experts about the conceptualization ofthe degree of co-creation supported the use of these items.

Table 1Measurement of the study constructs.

Latent constructs and measures M SD CFA a CR AVE

Degree of co-creation 0.88 0.87 0.70I have been actively involved in the

packaging of my trip.5.25 1.37 0.80

I have used my experience from previoustrips in order to arrange this trip.

5.11 1.55 0.84

The ideas of how to arrange this tripwere predominantly suggestedby myself.

4.92 1.60 0.75

I have spent a considerable amountof time arranging this trip.

4.82 1.75 0.77

Customer satisfaction with the servicecompany

0.82 0.81 0.70

I am satisfied with the customer serviceof the travel agency.

5.84 1.25 0.81

All in all, I am very satisfied with thevisit in this travel agency.

5.68 1.31 0.81

The purchase in this travel agency hasmet my expectations.

5.57 1.32 0.72

Customer satisfaction with the co-creationperformance

0.76 0.70 0.50

I am satisfied with the recommendationsI have made to the travel agency inorder to improve my trip.

5.36 1.98 0.70

I am satisfied with the contributionI have made to arrange my trip.

5.70 1.15 0.70

Customer loyalty 0.90 0.92 0.72I am likely to do most of my future

travel with this travel agency.5.32 1.48 0.84

I am likely to purchase trips from thistravel agency the next time I needto travel.

5.23 1.58 0.86

I will recommend this travel agency tomy friends and relatives.

5.58 1.33 0.86

I enjoy discussing about this travelagency with others.

5.1 1.49 0.76

Note. All variables were measured on a seven-point rating scale (1 ¼ stronglydisagree, 7 ¼ strongly agree).

U.S. Grissemann, N.E. Stokburger-Sauer / Tourism Management 33 (2012) 1483e14921488

Satisfaction with the service company was measured using threeitems derived from the study by Homburg, Wieseke, andBornemann (2009) and Homburg, Wieseke, and Hoyer (2009).Customer satisfaction with their co-creation performance wasmeasured on a two-item scale, namely “I am satisfied with therecommendations I have made to the travel agency in order toimprove my trip.” and “I am satisfied with the contribution I havemade to arrange my trip.” Customer loyalty captured four itemsderived fromstudies of Bansal, Irving, and Taylor (2004), and Brodie,Whittome, and Brush (2009).

With the exception of the expenditure variable and companysupport, all variables were measured on a seven-point rating scale(1 ¼ strongly disagree, 7 ¼ strongly agree). The specific itemformulations are provided in Table 1. In a second approach to avoidcommon method bias, items were randomized within the ques-tionnaire. Finally, the sequence of the items was intentionallydesigned to be opposite to the causal direction of the hypotheses inorder to minimize any possible demand effects. Specifically,

Table 2Means, standard deviations, and correlations of the constructs.

M SD

1. Degree of co-creation 5.60 1.202. Customer loyalty 5.29 2.783. Customer satisfaction with the service company 5.70 1.024. Perceived company support 5.40 1.605. Perceived communication 5.20 1.806. Customer service expenditures 891.50 325.307. Customer satisfaction with the co-creation performance 5.80 1.308. Company support n.a. n.a.

Note. Company support comprises the three categories of companyecustomer commun

respondents first had to answer questions on customer satisfactionwith the company, satisfaction with co-creation, and customerexpenditures. Next, the survey included items to assess the degreeof co-creation, and then the hypothesized antecedent variable. Thesurvey closed with a few demographic questions.

4. Results

4.1. Internal consistency and validity

In order to test our measurement model and the proposedrelationships, we applied structural equation modeling using thestatistical software package Mplus. Several goodness-of-fitmeasures were used to evaluate the model’s global fit whichincluded Comparative Fit Index (CFI), TuckereLewis Index (TLI), andRoot Mean Squared Error of Approximation (RMSEA); those thatwere used to evaluate local fit were Composite Reliability (CR),Average Variance Extracted (AVE), and factor loadings fromConfirmatory Factor Analysis (CFA). Next, internal consistency andvalidity of the four proposed multi-item constructs were evalu-ated by calculating CR and AVE. Composite reliability was assessedfor the latent constructs degree of co-creation, customer satisfactionwith the company, customer satisfaction with the co-creation perfor-mance and customer loyalty and was at 0.87, 0.81, 0.70 and 0.92,indicating a good reliability (Hair, Anderson, Tatham, & Black, 1998).As shown in Table 1, the average variance extractedmet or exceededthe recommended minimum value of 0.50 (Bagozzi & Yi, 1988). Allfactor loadings of the latent constructs were significant (p < 0.01)and ranged from 0.70 to 0.86 exceeding the cut-off value of 0.70(Fornell & Larcker, 1981) and thus suggesting convergent validity.Discriminant validity was assessed by calculating theFornelleLarcker criterion (Fornell & Larcker, 1981): Since thesquared multiple correlations of the constructs did not exceed AVE,discriminant validity was achieved. We also used the Hoelter indexto determine the adequacy of sample size. This criticalN index (Ncrit)states the sample size at which c2would no longer be significant.Hoelter (1983) recommends values of at least 200, whereas valuesless than 75 indicate very poor model fit. The Hoelter index shouldonly be computed if the c2-value was significant. Ncrit for this studywas 127, thus our sample size of 185 observations was above thenecessary sample size. Table 2 shows means, standard deviations,and correlations of the latent constructs. To sum up, the proposedmodel constructs show validity and reliability for further analysis.

4.2. Main effects

In a first attempt to empirically test the conceptual model, weassessed the main effects of our model and included correlationsbetween the exogenous variables (customer loyalty, satisfaction withthe company, and customer service expenditures). The overall model fitof the SEM provided satisfying results (c2 ¼ 146.1, df ¼ 60, p ¼ 0.00,CFI ¼ 0.94, TFI ¼ 0.92, RMSEA ¼ 0.09, SRMR ¼ 0.05). Companysupport was found to significantly affect the customer’s degree of co-

1. 2. 3. 4. 5. 6. 7. 8.

10.50 10.49 0.84 10.33 0.16 0.17 10.41 0.20 0.20 0.97 10.81 0.34 0.41 0.27 0.33 10.84 0.40 0.25 0.19 0.26 0.26 10.74 0.37 0.36 0.45 0.55 0.60 0.30 1

ication. All correlations are significant at p < 0.01.

Table 4Results of the tests for moderating effects.

Relationships g t-value

H5 (Satisfaction with the Co-creation performance� Degree of co-creation) / Customer serviceexpenditures

�0.04n.s. �1.15

H6 (Satisfaction with the Co-creation performance� Degree of co-creation) / Satisfaction withthe company

�0.07** �2.21

H7 (Satisfaction with the Co-creation performance� Degree of co-creation) / Customer loyalty

�0.09** �2.13

Company support to co-create / Degree ofco-creation

0.56** 10.84

Degree of co-creation / Satisfaction withthe company

0.15* 2.19

Degree of co-creation / Customer loyalty 0.21* 2.55Degree of co-creation / Customer service

expenditures0.74** 11.25

Satisfaction with the company / Customer loyalty 0.81** 5.53Satisfaction with the Co-creation

performance / Satisfaction with the company0.68** 6.00

Satisfaction with the Co-creationperformance / Customer loyalty

0.74** 5.50

Satisfaction with the Co-creationperformance / Customer service expenditures

0.12n.s. �0.12

Note. *Significant at p < 0.01, **Significant at p < 0.001.

Table 3Results of the tests for main effects.

Relationships g t-value

H1 Company support to co-create / Degreeof co-creation

0.74** 19.39

H2 Degree of co-creation / Satisfaction withthe company

0.49** 70.21

H3 Degree of co-creation / Customer loyalty 0.50** 70.68H4 Degree of co-creation / Customer service

expenditures0.81** 26.68

Satisfaction with the company / Customer loyalty 0.85** 21.51CorrelationsCustomer loyalty 4 Customer service expenditures �0.12n.s. �10.33Customer service expenditures 4 Satisfaction with

the company0.34n.s. 0.36

Global fit: c2/df ¼ 146.1/60, SRMR ¼ 0.05,RMSEA ¼ 0.09, TLI ¼ 0.92, CFI ¼ 0.94, Ncrit ¼ 127

Note. g ¼ path coefficients; CFI ¼ Comparative Fit Index; df ¼ degrees of freedom;RMSEA ¼ Root Mean Squared Error of Approximation; TLI ¼ TuckereLewis Index;SRMR ¼ Standardized Root Mean Square Residual; Ncrit ¼ Critical N, Hoelter Index.*Significant at p < 0.01, **significant at p < 0.001.

U.S. Grissemann, N.E. Stokburger-Sauer / Tourism Management 33 (2012) 1483e1492 1489

creation, (g¼ 0.74, p< 0.01, H1). The degree of co-creationwas foundto significantly affect the customers’ satisfaction with the servicecompany (g¼ 0.49, p< 0.01, H2), customer loyalty (g¼ 0.50, p< 0.01,H2), and customers’ expenditures (g ¼ 0.81, p < 0.01, H3). Customersatisfaction with the company further significantly affects customerloyalty (g¼ 0.85, p< 0.01). Table 3 reports the proposed relationships.

4.3. Moderated effects

Customer satisfaction with the company was hypothesized toalter the relationship between degree of co-creation and customerexpenditures (H5), customer satisfaction with the company (H6),and customer loyalty (H7). To model these effects we introduceda latent interaction term of degree of co-creation and customersatisfaction with the company to the structural equation. “If theinteraction term is significant then the effect of the predictorvariable (X) on the outcome variable (Y) is dependent upon thelevels of the moderator variable (M). The product term providesempirical evidence that the nonlinear combination of two variablesX andM accounts for a unique amount of variability in the outcomevariable Y above and beyond the linear main effects of the twovariables (X and M)” (Little, Card, Bovaird, Preacher, & Crandall,2007, p. 217). Prior to creating the interaction term, we mean-centered the predictor variable (i.e., degree of co-creation) andthe moderating variable (i.e., customer satisfaction with the co-creation performance), to reduce multicollinearity (Aiken, West, &Reno, 1991). As illustrated in Table 4, no significant moderatingeffect was found for the relationship between degree of co-creationand expenditures (g ¼ 0.04, n.s.), rejecting H5. In support of H6 andH7, respectively, customer satisfaction with the co-creationperformance significantly changed the relationship betweendegree of co-creation and satisfaction with the company(g ¼ �0.07, p < 0.01) and customer loyalty (g ¼ �0.09, p < 0.01).The negative sign indicates that as customer satisfaction with theco-creation performance increases, customer satisfaction with thecompany and customer loyalty decrease.

4.4. Mediated effects

In a third step, we ran an alternative model in order to test ifthe degree of co-creation totally mediates the relationshipbetween company support to co-create and the outcome vari-ables. To do so, we applied Baron and Kenny’s (1986) approach ofmediation analysis and followed the suggested four steps (Frazier,

Tix, & Barron, 2004, pp.125e128). The first step is to show thatthere is a significant relationship between the predictor variableand the outcome variable. The outcome variable is regressed onthe predictor to show that in fact, there is an effect to mediate. Thesecond step is to show that the predictor is related to the medi-ator. Here, the mediator is regressed on the predictor variable toestablish a direct path in the mediational chain. The third step isto show that the mediator is related to the outcome variable. Theoutcome variable is regressed on both the predictor and themediator. The final step is to show that the strength of the rela-tionship between the predictor and the outcome is significantlyreduced when the mediator is added to the model. Followingthese steps, we found that there was a significant direct rela-tionship between company support and satisfaction with theservice company (b ¼ 0.45, p < 0.01) as well as between companysupport and customer loyalty (b ¼ 0.35, p < 0.01), and companysupport and expenditures (b ¼ 0.60, p < 0.01). These relationshipsbecame non-significant, however, when degree of co-creationwasintroduced into the model (b ¼ 0.22, n.s., b ¼ �0.03, n.s, andb ¼ �0.01, n.s., respectively). This means that degree of co-creation fully mediates the relationship between companysupport and satisfaction with the company as well as companysupport and customer loyalty, and company support andexpenditures.

5. Discussion and implications

5.1. Summary

The aim of this study was, first, to assess the effect of companysupport on the degree of co-creation. Second, we investigatedwhether co-creation actually enhances customer satisfaction withand loyalty toward the service company, and customer serviceexpenditures. Third, we assessed whether the effects of co-creation on satisfaction, customer loyalty, and expenditures aremoderated by the customer’s satisfaction with their co-creationperformance.

The results of the study show a significant relationshipbetween company support for the customer to co-create and thedegree of co-creation. Consequently, the degree of co-creation

U.S. Grissemann, N.E. Stokburger-Sauer / Tourism Management 33 (2012) 1483e14921490

affects customer satisfaction with the service company, customerloyalty, and service expenditures. We found that the effects ofcompany support on the customer’s satisfaction with the servicecompany, customer loyalty, and service expenditures were allfully mediated by the degree of co-creation. We further estab-lished that the effects of degree of co-creation on satisfactionwiththe service company and customer loyalty were both moderatedby the customer’s satisfaction with his or her own co-creationperformance. We found that these more satisfied customers(with their own co-creation performance) do not exhibit moresatisfactionwith the service company than the customers who areless satisfied with their own co-creation performance. Followingequity theory (Adams, 1963), this might be the case because theyperceive an unfair distribution of resources and thus considerthemselves (rather than the company) as being mainly respon-sible for the outcome of the co-created product.

5.2. Research contributions

This paper contributes to the field of co-creation in marketingand tourism research as it effectively measured customers’ actualdegree of co-creation. This was achieved by handing out thequestionnaire to customers right after they had booked their travelarrangement. In doing so, the travel experience could per se notinfluence respondents’ responses to the questionnaire. Thisprocedure distinguishes our study from previous studies thatfrequently solely measured the customer’s intention to co-create,or that were subject to a time lag between the co-creationactivity and the survey. We also strongly recommend the use ofmultiple sources in survey design studies. Since we integratedobjective data into our model, we could interrelate data from thecustomer data base to data from customer perceptions whichresulted in interesting managerial insights.

Second, we contribute to research on attribution theory anddecision satisfaction in a co-creation context. We found that forcustomers who are very satisfied with their own co-creationperformance, the effect of degree of co-creation on satisfactionwith the service company is not significant. It can be argued thatcustomers perceive lower engagement of the company the morethey get involved in the co-creation process of their travelarrangement. Thus, they perceive an unfair distribution ofresources and, subsequently, might become dissatisfied with thecompany’s performance. Future research should validate thesehighly-relevant findings in both the service and classical goodsindustry. We suspect that this outcome can be ascribed to the factthat co-creating a travel arrangement differs substantially from co-creating manufactured goods. The more customers get involved inthe arrangement of their travel packages, the less work is left forthe company. Different results, however, could be expected intraditional manufacturing processes and should be a topic of futureresearch.

Notably, the more the customers were satisfied with their ownco-creation performance the more money they spent for theirtravel arrangement. Following attribution theory, this means thatthey ascribe the success of their co-creation performance tothemselves rather than to the service company. Since the causalattributions of customers are likely to affect their future behavior,we thus emphasize the need for increasing decision satisfaction.Decision satisfaction concerns the co-creation process rather thanthe actual outcome of the service. Therefore, besides focusing onvalue in terms of service expenditures, the hedonic and utilitarianvalue a customer achieves while co-creating has to be at the heartof co-creation strategies. Enhancing co-creation activities meansto design a supporting and motivating co-creation environment.When customers perceive fun and feel right while they are co-

creating, they are more likely to co-create a service that fits theirindividual needs well and thus are willing to spend more moneyfor it. These findings are in line with a study by Füller et al. (2009)who argued that, considering the fact that the co-creation processis a voluntary action of the customer, companies have to make thecustomers enjoy their participation.

5.3. Managerial implications

The study model and findings have a number of importantimplications for marketing and tourism management. First, wecan draw from these findings that integrating the customer intothe service development process must not mean to shift workfrom the company to the customer and, thus, saving financialand temporal resources. Giving the customer the opportunity toco-create requires intense customerecompany interactions,highly trained employees as well as close listening and promptreactions to customer needs. In this sense, our study supportsthe findings of Homburg, Wieseke, and Bornemann (2009) andHomburg, Wieseke, and Hoyer (2009), emphasizing thatemployees have to generate knowledge about customer needswhen the company aims to create customer satisfaction andvalue in the interaction with the individual customer. Compa-nies are well advised to keep these findings in mindwhen thinking about customer empowerment strategies (Fülleret al., 2009).

Second, as a quid pro quo, the company’s financial perfor-mance (in terms of customers’ service expenditures) and non-financial performance (in terms of customer satisfaction withand loyalty toward the service company) increases the higher thedegree of co-creation. We found that customers are willing to paymore for their travel arrangement when they closely collaboratewith the travel agency and thus create a unique travel experience.This indicates that customers attach more value to a servicewhich is self-designed. In our case, this means that customer co-creation activities directly lead to increased revenues. Moreover,the results of our study show that the more the customers getinvolved into the creation of their travel arrangement, the morevalue they attach to the company’s support which, again reflectson their satisfaction with the company. The opportunity to co-create also enhanced customers’ intentions to re-purchasetravel arrangements from the same agency and to recommendthe travel agency to their friends. This supports the findings ofZhang and Chen (2008), arguing that firms with better servicecapabilities have a higher customization potential to meetcustomers’ individual demands and, consequently, gain compet-itive advantage.

Third, we draw from our study that the social exchange rela-tionship between the customer and the company is of significantimportance and must not be underestimated. Thus, companiesshould address intrinsic and extrinsic motivations since theyaccount fundamentally for the customer’s willingness to co-create. To create a winewin situation, companies have to designco-creation options that customers will welcome. It has to beconsidered, however, that motivation is not a one-dimensionalconstruct. It varies both in terms of level and orientation (i.e.,what type) of motivation (Ryan & Deci, 2000). In line withBettencourt (1997), we argue that company support to co-createacts as a noteworthy motivator for customers to co-create.When the customer is considered as operant resource (Vargo &Lusch, 2004) or partial employee (Kelley, Donnelley, & Skinner,1990; Mills & Morris, 1986), similar methods of employee moti-vation systems (i.e., reward systems, incentives) also apply forcustomers.

U.S. Grissemann, N.E. Stokburger-Sauer / Tourism Management 33 (2012) 1483e1492 1491

Finally, we emphasize the need for managers to better under-stand the role of companyecustomer communication and thussupport the theoretical implications of S-D logic proposing thatvalue is not only created by the provision of the service per se, butduring the actual service development process (Lusch & Vargo,2006). This means that company communication has to gobeyond classical advertisements or standardized mailings. Toenhance customer and company value, an active dialog is needed.In this sense, it is not only the service that has to be customized butit is the communication itself that has to be tailored to thecustomer. In the travel agency setting, we found that intensecustomerecompany interactions (i.e., direct counseling, thoroughphone calls) motivate customers to get more involved in the crea-tion of their travel arrangements, that is, finding the best flight,accommodation, and entertainment program that fitted theirindividual needs.

5.4. Limitations and directions for future research

Although this study offers considerable insights into co-creationin a tourism service context, it entails several limitations thatshould be acknowledged. Our model was tested in one travelagency only. Thus, testing our model in several tourism servicesettings might have complemented our results. This may also applyto the size of the travel agency under investigation. For largercompanies customerecompany interactions might be less intenseand demand other communication tools than for small companies.Co-creating a travel package might also require other forms ofcompany support than, for instance, co-creating financial services.Co-creation activities and their relating outcomes thus aresupposed to vary intensively between different service settings.Additionally, customers might only like to co-create up to a certainextent. A degree of co-creation that is too high might lead todissatisfaction with the company. Thus, future studies could elab-orate on a curvilinear relationship between co-creation andcompany outcome variables. Research should also elaborate on theconcept “satisfactionwith the co-creation performance” to developare liable and valid multi-item scale.

Almost every study setting draws a simplified model ofreality. This is the case for our model as well. There might beadditional variables than perceived company support thatinfluence degree of co-creation. Further research could makeefforts into this direction and focus on other individual differ-ence variables.

Consistent with Hoyer et al. (2010) we note that the truepotential of co-creation is still unexplored and that there existfruitful avenues for further research. In particular, empiricalevidence and validations of the existing theoretical considerationsare vitally needed. Thus, we call for more research on individualdifference variables that might be drivers of customer co-creationactivities. Research on motivational factors of co-creation wouldreveal deeper insights into how to enhance co-creation, and,subsequently develop innovative services with the company.Moreover, there is still a research gap concerning the benefits of co-creation for the customer in a service setting. Further researchcould also elaborate on a multi-dimensional approach to concep-tualize customer loyalty. Yuksel, Yuksel, and Bilim (2010), forexample, support the notion to investigate the cognitive, affective,and conative dimension of customer loyalty.

We further strongly support the notion of Nambisan and Baron(2009) that companiesmust establish proactivemeasures of how toassess the effect of co-creation on firm performance. Our studytried to shed some light into this topic but there are still variousopen questions: How much time and effort has to be put intocustomer-supporting activities? Which particular requirements

apply for employees in order to provide the best support possible?What are the costs of the additional resources the company needsto enhance customer co-creation? Particularly for the increasingsocial-media activities of companies, it will be an important issue tocalculate the costs of the online companyecustomer dialog. Wehope that our study will stimulate more empirical research onthese issues.

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