The rise of tech-savvy consumers and their new demands pushes firms to transform their business strategies in order to respond to this changing consumer market. Digital transformation, in this regard, enhances the customer experience and satisfies digitally powered consumers by the integration of digital technology into all areas of a business that alters how a firm operates and delivers value to customers. Creation of value is replaced with co-creation that includes consumers as well as companies in the value creation process. Together with the emergence of digitalization, value creation is influenced again in terms of the uses of the digital tools by its participants. The first objective of this chapter is to give detailed information about the co-creation of value concept by explaining the drivers and the outcomes as well as the disadvantages and the benefits offered to consumers and to companies. The second objective is to examine the impact of digital transformation on the value co-creation process and to pay attention to the role of digital agility in this context.
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Consumers today can choose among many products and services that are offered by companies. They are also more powerful than before thanks to the existence of multiple technological tools for getting and sharing information with others easily. Shortly, it has become more difficult to satisfy customers during their purchase journeys. Previous studies include several factors that influence and are related to customer satisfaction such as customer loyalty (Donio’ et al., 2006), cross-national determinants (Morgeson et al., 2011), business-to-business (Molinari et al., 2008), and online purchasing behavior (Tzeng et al., 2021).
One of the factors that plays a key role in understanding customer satisfaction and purchase intentions is customers’ perceptions of value. Sweeney and Soutar (2001) proposed a four dimensional PERVAL scale that includes emotional, social, quality, and price elements. The fact that value can be seen from various perspectives results in a group of studies examining perceived value together with satisfaction and loyalty (Flint et al., 2011) while others including perceived risk (Agarwal & Teas, 2001), perceived product value (Snoj et al., 2004), switching costs (Yang & Peterson, 2004) and other related variables for the analysis of perceived value.
However, most of the previous research about value considers customers as inactive actors who only play the role of perceiving value during their purchase activities though customers can also participate in the creation of value (Vargo & Lusch, 2008). Service-dominant (S-D) logic (Vargo & Lusch, 2004), in this regard, triggers the need for a radical change in the marketing strategy perspective by considering customers as the co-creators of value (Lusch & Vargo, 2006; Vargo & Lusch, 2004) since value is created not only by the company but also by the actions of the customers. This process is called as “value co-creation” and is defined as the joint creation of value by the company and the customer (Prahalad & Ramaswamy, 2004). Value co-creation is also explained as a process that includes consumers who have active roles and create value together with companies across one or more stages of production and consumption (Sugathan et al., 2017; Ranjan & Read, 2016). It is also defined as the collective activities of the directly interacting participants that aim to create value for each party (Grönroos, 2012). This means that the customer is an active player instead of a passive audience (Payne et al. 2009; Prahalad & Ramaswamy, 2000) and that the customer’s role in the marketing process is redefined (Xie et al., 2008). It is also argued that value co-creation is not optional since value is always co-created (Vargo & Akaka, 2009).
Within today’s competitive market conditions, consumers’ dynamic roles as co-creators of value can be realized and monitored if firms acquire and use real-time data about consumers provided by the latest digital tools (Chawla & Goyal, 2021). Traditional ways of offering products and communicating with consumers can not be satisfactory for the digitally-powered dynamic consumers since they expect their actions to be seen instantly. In other words, co-creation of value requires companies to revise their business models in numerous ways such as digitalization of personalised offerings to consumers (Nambisan et al., 2017) and use of intelligent operating systems (Choudhury et al., 2021).
Digital transformation, in this respect, refers to the use of digital technologies in order to enhance customer experience by transforming company-wide business practices and operations (Vial, 2019). It has gained increased importance among scholars shown by a substantial growth of literature in multiple research domains such as new business models (Choudhury et al., 2021), strategic leadership (Tumbas et al., 2018), and firms’ innovative activities (Mishra et al., 2018; Muhuri et al., 2019). It is argued that digital transformation requires firms not only to explore new digital technologies but also to make necessary changes in their organizations (Steiber et al., 2020). This means that digital transformation includes the use of digital innovations that are shaped by both organizational and technological innovations (Hinings et al., 2018).