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

Abstract

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

Full text

Customer co-creation of travel services: The role of company support and
customer 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
article info
Article history:
Received 25 July 2011
Accepted 1 February 2012
Keywords:
Co-creation
Company support
Customer service expenditures
Customer satisfaction
Customer loyalty
abstract
The tourism industry is characterized by high-contact services in which co-creation of customers plays
a major role. This paper develops a conceptual model of customer co-creation of tourism services and
empirically tests this model in a travel agency context. Applying a SEM-approach, company support for
customers is found to significantly affect the degree of customer co-creation. The degree of co-creation
further positively affects customer satisfaction with the service company, customer loyalty, and service
expenditures. A test of the moderating effect of the customers’satisfaction with their own co-creation
performance on satisfaction with the service company and on service expenditures suggests that
those customers who are satisfied with their co-creation activities spend more on their travel
arrangements, but that they are less satisfied with the company. Important implications for co-creation
theory and practice in high-contact service industries can be derived.
Ó2012 Elsevier Ltd. All rights reserved.
1. Introduction
Research on customer engagement behavior such as co-creation
activities has recently been one of the top research priorities in
marketing 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 can
realize productivity gains through efficiency, such as speed to the
market (Carbonell, Rodríguez-Escudero, & Pujari, 2009), lower costs
and reduced risk (Bendapudi & Berry, 1997;Bendapudi & Leone,
2003;Prahalad & Ramaswamy, 2004). Second, they can reach
gains in the effectiveness of the co-created offering such as increased
willingness to pay (Chung, Kyle, Petric, & Absher, 2011;Franke,
Keinz, & Steger, 2009), increased revenues and profits (Ostrom
et 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 customer
experiences are of paramount importance for tourism service
providers in order to remain competitive. Creating a unique
experience involves both customer participation and a connection
which links the customer to the experience (Pine & Gilmore, 1998;
Shaw et al., 2011).
Service-Dominant (S-D) logic elaborates on this perspective and
gives priority to the interaction between the company and the
customer. This logic implies that value occurs in the interaction
process itself rather than exclusively in the provision of the service
(Etgar, 2008;Grönroos,1997). Therefore, involving customers in the
creation of a travel arrangement helps tailoring the service to the
customers’particular needs and hence assists in creating a unique
experience.
Second, the Internet has significantly changed the way
customers allocate knowledge about hotels, flights or even desti-
nations. New information and communication technologies, such as
online booking engines, have transformed the structure of the
tourism distribution system into a multi-channel network that rai-
ses new challenges for both customers and tourism companies (e.g.,
travel agencies). Customers now face more technologicallycomplex
purchasing processes and time-consuming price-comparisons due
to the partly absence of human interaction. Travel agencies, on the
other side, have to face a “re-intermediation process,”which means
that they have to reassert their intermediary role by enhancing
human 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 travel
arrangements tailored to each customer’s individual needs.
Third, customers create value not only for themselves and the
company, but also for other customers which is due to the fact that
*Corresponding author. Tel.: þ43 512 5077081; fax: þ43 512 507 2845.
E-mail addresses: ursula.grissemann@uibk.ac.at (U.S. Grissemann),
nicola.stokburger-sauer@uibk.ac.at (N.E. Stokburger-Sauer).
1
Tel.: þ43 512 5077081; fax: þ43 512 507 2845.
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Tourism Management
journal homepage: www.elsevier.com/locate/tourman
0261-5177/$ esee front matter Ó2012 Elsevier Ltd. All rights reserved.
doi:10.1016/j.tourman.2012.02.002
Tourism Management 33 (2012) 1483e1492

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 control
and instantly report the shortcomings of service companies in
online platforms. Online booking engines and websites that allow
customers to post their opinions and reviews about tourism service
companies are not only a helpful co-creation tool for customers, but
also an important source of marketing information about customer
experiences for companies (Shaw et al., 2011;Wang & Fesenmaier,
2004). Thus, the travel experience of a single customer is accessible
to multitudinous community members and, subsequently, shapes
their future purchase behavior.
Nevertheless, empirical evidence of co-creation research in
tourism is scarce and a number of research questions are still
unanswered. Shaw et al. (2011) were among the first to empirically
assess the concept of S-D logic and its implications for tourism
management in a hospitality setting. Li and Petrick (2008) concep-
tually looked into the importance of S-D logic for tourism marketing.
Both studies emphasize that S-D logic and co-creation activities
deserve further examination in tourism marketing and manage-
ment. Research is called for that, for instance, investigates theeffects
of co-creation on company success outcomes such as increased
revenues and profitability (Hoyer et al., 2010). Additionally, more
research should be devoted to the drivers of co-creation activities in
terms of firm actions and processes (vanDoorn et al., 2010).
In this research, we follow up on calls for further research on
customer co-creation and investigate both theoretically
and empirically a model of antecedents and consequences of
customer co-creation in tourism services. We examine company
support as one selected driver of co-creation, and customer loyalty
and customer expenditures as selected outcomes of co-creation.
Specifically, the present paper has three main objectives. First, it
develops a deeper understanding of company support in the co-
creation process, that is, we study whether increased company
support enhances the degree of co-creation. Second, it examines
the effect of customer co-creation on customer satisfaction,
customer loyalty, and company performance. In particular, we
want to find out if a higher degree of co-creation actually increases
satisfaction with and customer loyalty toward the service company
and customer expenditures. Third, it investigates if customers’
satisfaction with their own co-creation performance plays
a moderating role in the relationship between co-creation and
satisfaction 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 creation
process, Unified Services Theory (UST) (Sampson & Froehle, 2006)
deals with the understanding of the customer’s role in production
and operations management. The foundational core of UST is that
“within service processes, the customer provides significant inputs
into the production process”(Sampson & Froehle, 2006, p. 331).
UST thus understands a service process as a production process
where the presence of customer inputs is a necessary and sufficient
condition. As in S-D logic, customer input is thus central to define
services. Sampson and Froehle (2006) highlight two basic types of
customer input: The customer-self inputs (i.e., the employment of
customer labor in the service development process) and customer-
provided information (i.e., the provision of information by the
customer that is indispensable for the service delivery).
Integrating the marketing and operations perspective on tourism
service creation and production, we understand customer co-
creation of tourism services as the customer’s provision of input in
the development of their travel arrangement. This inputcan take the
form of customer-self input (e.g., byspending a considerable amount
of time developing the service) and customer-provided information
(e.g., telling the travel agency their wants and needs). Given the fact
that the customer always has to provide input in the service
productionprocess, our major premise is that the extent towhich this
input is provided significantly affects company outcome variables.
Customers could be considered as partial employees of the
company 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 and
customers are much more encompassing than in traditional
thinking, and customers take the role of prosumers who “undertake
value creating activities that result in the production of products
they eventually consume and that become their consumption
experiences”(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-customization
toolkits helping to co-create products (e.g., Fuchs & Schreier,
2011;Kohler, Matzler, & Füller, 2009). While these studies
provide evidence of the advantages of integrating the customer into
the co-creation process and of the importance for companies, there
are only a few empirical studies on customer co-creation activities
and their consequences for firms in a service and travel services
context (e.g., Auh, Bell, McLeod, & Shih, 2007;Carbonell et al., 2009;
Li & Petrick, 2008;Shaw et al., 2011). This is a major research void
since there are notable differences between products and services
and 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-creation
activities and the effects of these activities on firm outcomes. In
particular, the company’s rolein the co-creation process still remains
unclear, althoughthe approachesa firm takes to stimulateco-creation
activities are of great value for firms (Hoyer et al., 2010). Research on
customer empowerment (e.g., Fuchs & Schreier, 2011;Füller,
Mühlbacher, Matzler, & Jawecki, 2009;O’Hern & Rindfleisch, 2009),
for example, revealedthat companies empoweringtheir customers in
NPD enhance customer orientation and foster corporate firm associ-
ations. Elaborating on these findings we focus on the
companyecustomer interactions in a services context, which we call
company support, and analyze its effects on co-creation activities.
Since co-creation activities require customer investments in
terms 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), for
instance, 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 process
induces affectivereactions and thus increases the value the customer
attaches 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 the
service, as reflected in their service expenditures, is dependent on
their actual degree of participation. This value increment is also
considered to reflect on customers’overall satisfaction with the
service company. We thus include customer service expenditures,
customer satisfaction,and one additional variable, customer loyalty,as
consequences of co-creation into our model.
Taking one step further, it can be anticipated that the value
customers derive from co-creation activities is driven by their
U.S. Grissemann, N.E. Stokburger-Sauer / Tourism Management 33 (2012) 1483e1492148 4

assessment of how much of the process’s success can be ascribed to
themselves. Thus, the value customers attach to a product is
expected to be higher for customers who are more satisfied with
their own co-creation performance than those who are less satis-
fied. A final construct that we integrate into our model is therefore
customer satisfaction with the co-creation performance, which serves
the role as a moderating variable.
2.2. Company support for customers to co-create
Service and new service offerings (i.e., innovation) have been
democratized by empowering customers to get actively involved in
co-creation activities (Fuchs & Schreier, 2011), and customer
empowerment strategies incorporate active communication with
customers. Customers’direct involvement into ongoing operations
through their provision of input to the service creation process
leads to more variability in the service provision. This variability
can take the form of arrival variability (i.e., differing times at which
the 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 treated
well), capability variability (i.e., differing customers skills and
knowledge 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 variability
since it helps to overcome such variability due to enhanced
communication.
Service-Dominant (S-D) logic (Lusch, Vargo, & Wessels, 2008;
Vargo & Lusch, 2004) has changed the view of companyecustomer
communication (Payne, Storbacka, & Frow, 2008). While in a goods-
dominant logic communication is predominantly one-way, for
instance, through direct mailings or advertisements, in S-D logic,
a focus has been put on the dialog between the company and the
customer in order to jointly create a service. Following this
perspective, the company’s motivation should be to support the
customer in his or her co-creation activities by providing him or her
relevant information and necessary resources (Payne et al., 2008).
Effective communication between the company and the
customer involves regular contact and follow-ups between both
parties. Thus, regular interactions enhance the creation of a social
bond that helps, on the one hand, in making the
customerecompany relationship more resistant against service
failures and, on the other hand, improves perceived service quality
(Sharma & Patterson, 1999). Additionally, Tynan, McKechnie, and
Chhuon (2010) argue for a social construction of the market place
as this view offers deeper insights into the nature of value both in
exchange and use. They find that co-creating experiences forluxury
brands involve an active dialog between owners, employees and
customers. Managers should therefore use different channels of
communication and networks to stay at the cutting edge of inter-
actions in a highly competitive market place and to be able to
innovate continuously (Tynan et al., 2010). In an IT-innovation
context, the concept of perceived empowerment to engage in
new product development (NPD) has been empirically investigated
by Franke and Schreier (2010) and Füller et al. (2009). Both studies
find that tools which support co-creation make customers more
innovative and enjoy the co-creation experience. Likewise, Auh
et al. (2007) find companyecustomer communication being
a 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 importance
of customerecompany interactions in the lightof value co-creation.
Social exchange refers to “voluntary actions of an unspecified
nature that extend beyond basic role obligations and suggest
a personal commitment to the partner”(Bettencourt, 1997, p. 387).
Bettencourt (1997) identifies the concept of perceived support for
customers as an important antecedent to social exchanges in
consumption contexts. More specifically, a higher perceived
support for customers leads to a higher willingness of customers to
maintain a social exchange relationship with the company and,
thus, to more cooperation of customers in the service development
process (Bagozzi, 1995;Bettencourt, 1997). We therefore hypothe-
size a positive relationship between company support, that we
understand in terms of companyecustomer interactions, and the
degree 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, and
behavioral 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 loyalty
toward the service company, representing the company’s attitudinal
performance, and customers’service expenditures, representing the
company’sfinancial performance.
The major theoretical grounding of customer satisfaction research
is the confirmationedisconfirmation paradigm, proposing that
satisfaction results from the customer’scomparison of expectations
with performance (Oliver,1977). In general, the construct of customer
satisfaction 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 can
help in developing customer relationships which again lead to
positive market and financial performances of a company. This is
consistent with social identity theory, which posits that being
a member of a social group (e.g., being an employee, a citizen, or an
athlete) 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 theory
in a customerecompany context and propose that being a customer
of a company can also contribute to how customers define them-
selves. Van Doorn et al. (2010) suggest that the social identity of
a customer can be shaped and reinforced by co-creation activities.
If a company manages to constitute an in-group identity that
enforces customers’feelings of being part of a community, positive
perceptions and actions can be expected. Thus, we propose that
when customers engage in the service development process, their
perceptions of belonging to the company reflect on their satisfac-
tion and their loyalty with the service company. We understand
satisfaction with the service company as the customers’overall
satisfaction with the service company. Customer loyalty is defined
as “a deeply held commitment to re-buy or re-patronize a preferred
product 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 assume
that when customers have the opportunity to co-create a travel
package, they are more likely to re-purchase from the same
company again and to recommend the company to others. Like-
wise, customer satisfaction with the company should be positively
related to customer loyalty (e.g., Homburg & Giering, 2001).
The fact that co-creation enables customers to tailor a product
that fits their individual needs also leads to the assumption that
customers are willing to pay more for the co-created product.
Franke and Piller (2004) and Schreier (2006) provide empirical
evidence of a higher willingness to pay for products that are self-
designed than for standardized products. A possible reason for
U.S. Grissemann, N.E. Stokburger-Sauer / Tourism Management 33 (2012) 1483e1492 1485

a higher willingness to pay is that co-created products provide
a higher preference fit than their standardized counterparts (Franke
&Schreier,2010). The major weakness of taking willingness to pay
as dependent variable is that it tends to exceed actual payments of
up to 80% (Franke & Hippel, 2003). Therefore, the dependent vari-
able in this research is actual customer service expenditures,which
refers to the total amount of money a customer had actually spent
for his or her travel package. To sum up, we propose that the degree
of customer participation positively affects satisfaction with the
service company, customer loyalty, and service expenditures.
H2. The degree of co-creation has a positive effect on the
customers’satisfaction with the service company.
H3. The degree of co-creation has a positive effect on the
customers’loyalty with the service company.
H4. The degree of co-creation has a positive effect on the
customers’service expenditures.
2.4. Customer satisfaction with the co-creation process
The co-creation process offers various social benefits for
customers. Customers can, for instance, enhance their social status
through being recognized as a valuable information source byother
stakeholders. Additionally, active participation in communities
with persons sharing the same interests enhances communication
skills and creates social contacts and enjoyment (Etgar, 2008). This
is accompanied by feelings of pride because of the co-created
accomplishment (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 it myself effect,”referring
to the “value increment a subject ascribes to a self-designed object
arising purely from the fact that he/she feels like the originator of
that object.”Franke et al. (2010) further argue that this effect is
based on the fact that subjective attributions often matter more
than objective facts. However, they argue that “we do not know the
extent to which the feeling of having made a contribution is desir-
able”(Franke et al., 2010, p.137) and that co-creation outcomes
depend on customers’evaluation of their own contribution. We
elaborate on this concept and analyze whether an increased satis-
faction with the own co-creation performance always benefits the
company. Literature has proposed that when the self-efficiency of
customers increases, the amount of engagement in the service task
is not seen as a cost any longer, but rather contributes to customer
value (van Beuningen, Ruyter, & Wetzels, 2011).
Taking the case of an unskilled customer, Etgar (2008), however,
emphasizes the risk of misperformance and the subsequent effects
for the customer and the company. From a theoretical perspective,
the judgment of particular incidents depends on the customer’s
causal explanations of success and failure. This reasoning can be
explained by attribution theory (e.g., Heider, 1958;Kelley &
Michela, 1980;Weiner, 1972) according to which individuals try
to locate the causes of their successes or failures in social situations.
In doing so, individuals are viewed as naïve scientists that try to
attribute the outcomes of interactions (success or failure) to
themselves or external forces taking specific conditions into
consideration (e.g., stability and control of the outcome). Finally,
future behavior is determined by the individuals’explanations for
the outcomes of their own behaviors, that is, their perception of
causality (Martinko & Thomson, 1998). Applying this reasoning to
the context of co-creation, it can be anticipated that the value
customers derive from the co-creation process and, consequently,
their future behavior is determined by their assessment of how
much 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 that
customers experience satisfaction or dissatisfaction not only with
the purchased product but also with the purchase decision process
per 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 of
customers, the process effort is also perceived positive and
complements to the subjective value attached to the product. This
is because the efforts made in the co-creation process are
perceived as a rewarding and enjoyable experience that carries
over to the assessment of product value (Franke & Schreier, 2010).
Elaborating on these findings we propose that customers assess
the co-creation process with respect to the degree to which they
are satisfied with their own co-creation performance. Satisfaction
with the co-creation performance is understood as the satisfaction
with the customers’participation in the creation of the service
offering (e.g., with the recommendations the customer has made).
It can be argued that when customers are satisfied with their own
co-creation performance, they are willing to spend more money
for 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 influences
their assessment of overall satisfaction with the service company
(Bendapudi & Leone, 2003). If customers feel that the contribution
of the value creation partners is not fairly distributed, customer
satisfaction with the company decreases. Equity theory (Adams,
1963) can be helpful in explaining this process. Generally, equity
theory, as one form of justice theory, helps in explaining satisfac-
tion of the relationship partners based on their perceptions of the
partner’s resource distribution (i.e., fair or unfair input). Thus, one
might expect that when customers provide sufficient input in the
service development and when customers are satisfied with the
contribution they made to co-create the service, they perceive
a decreasing customer commitment of the company and, conse-
quently, an unfair distribution of resources. Customers then feel
that they should earn the credit for the positive service outcome
and not the company. Consequently, their willingness to re-visit or
recommend the company decreases. A negative effect for the
degree of co-creation on satisfaction with the company and on
customer loyalty is thus expected for customers who are more
satisfied with their own co-creation performance than those who
are less satisfied with themselves. In line with the theoretical
grounding 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 travel
agency context. Homburg, Wieseke, and Bornemann (2009)
emphasize the adequacy of studying travel agencies in a customer
behavior context due to close customerecompany interactions.
U.S. Grissemann, N.E. Stokburger-Sauer / Tourism Management 33 (2012) 1483e1492148 6

Our study was therefore conducted in a family-run Austrian
travel agency that is in close contact with its customers. The travel
agency was specialized in organizing travel arrangements for Aus-
trian students and young consumers which were traveling to Italy
and Spain. The relatively short travel distance between Austria and
Italy or Spain, respectively, made these destinations particularly
interesting for young travelers. In this context, a high degree of co-
creation would mean, for example, that the customers already had
a pretty good idea on how to spend their holidays (e.g., attending
a language course). Notably, customers vary to the extent they book
every component of their travel arrangement in advance. The focus
of this research, however, was not on the co-created product itself
(i.e., the travel arrangement) but on the degree the customer was
involved in the arrangement process. More specifically, we focused
on the co-creation process rather than on the outcome of this
process. In order to avoid biases caused by the travel experience
itself, 200 customers were asked to immediately complete a paper
and pencil-questionnaire after they had booked the travel
arrangement 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 to
Italy and Spain) we had not to account for sample variance with
respect to socio-demographic variables when collecting the data
and, therefore, accepted a convenience sampling method. We,
however, structured the data collection process by advising
employees to only hand out the questionnaire to customers who
entered the travel agency alone. This made sure that the degree of
co-creation was only measured with regard to the single customer
and the specific employee. Otherwise, customerecustomer inter-
actions might have biased the results. Research suggests outlier
elimination in order to rule out the effects of non-normality of
observed data by calculating their Mahalanobis distances (e.g.,
Bagley & Mokhtarian, 2002;Gao, Mokhtarian, & Johnston, 2008). We
followed this suggestion, however, since our sample size was rela-
tively small, only observations with a Mahalanobis distance higher
than 3.8 were deleted from the data set to reduce outliers and to
combat effects of non-normality (Gao et al., 2008). After applying
this procedure and removing incomplete questionnairesour sample
resulted in 185 observations. The sample consisted of 43% women
and 57% men. The majority of the customers (73%) were students.
The average expenditures for the booked travel arrangement were
892 Euros. Thus, our sample represents the basic population well.
3.2. Measures
A frequently mentioned weakness of cross-sectional data is the
occurrence of common method bias that can be understood as “the
variance that is attributable to measurement method rather than to
the constructs the measurement represents”(Podsakoff, MacKenzie,
Lee, & Podsakoff, 2003, p.879). Podsakoff et al. (2003) strongly
support the notion to collect data of predictorand outcome variables
from different sources. We, therefore, took a dyadic approach to data
collection. Inspired by the work of Homburg, Wieseke, and
Bornemann (2009) and Homburg, Wieseke, and Hoyer (2009) who
derived data from customers, managers, and employees in a travel
agency setting, we collected data from two sources, customers and
the travel agency. Objective data were directly derived from the
customer data base of the cooperating company. In this sense,
employees were asked to retrieve additional information about the
level of company support and the customer’s actual expenditures of
the booked travel arrangement for each completed questionnaire
from the company’s customer data base. Company support
comprised three categories of companyecustomer communication
(A ¼high support, B ¼moderate support, C ¼low support). Category
A 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 telephone
calls. Category C comprised lowcustomer contact between the travel
agency and the customer, standardized booking processes via email,
and no personal contact with the customer. Overall, 54.9% of the
respondents were Category C customers, 30.4% were in Category B
and 14.7% were Category A customers. Since company support is
a measure that captures the quantity of customerecompany
communication, we additionally assessed the customer’s
perceived company support and perceived communication to
capture the quality of communication. We thus measured
customers’perceived company support using three items derived
from Bettencourt (1997) and perceived communication with the
company using three items derived from Auh et al. (2007).Perceived
company support referredto the customers’feeling that the company
really cared about them (e.g., “This travel agency strongly considered
my needs and wants.”), whereas perceived communication with the
company referred tothe sharing of meaningful information between
the company and the customer(e.g., “The travel agency always offered
me as much information as I needed to arrange my trip.”). Table 2
provides evidence that there is a significant correlation between
company support and perceived company support and perceived
communication, respectively (r¼0.45 and r¼0.97,p<0.0 01)which
points to a high convergent validity of our measure.
One request of the cooperating travel agency was to keep the
questionnaire as short as possible to not overburden its customers.
The constructs were thus measured with a minimum number of
items. The degree of co-creation was measured as a multi-item
construct using four items derived from conceptual papers of
Bettencourt (1997) and Lengnick-Hall, Claycomb, and Inks (2000).
Interviews with marketing experts about the conceptualization of
the degree of co-creation supported the use of these items.
Fig. 1. Illustrates the theoretical framework of the study and hypotheses.
U.S. Grissemann, N.E. Stokburger-Sauer / Tourism Management 33 (2012) 1483e1492 1487

Satisfaction with the service company was measured using three
items derived from the study by Homburg, Wieseke, and
Bornemann (2009) and Homburg, Wieseke, and Hoyer (2009).
Customer satisfaction with their co-creation performance was
measured on a two-item scale, namely “I am satisfied with the
recommendations I have made to the travel agency in order to
improve my trip.”and “I am satisfied with the contribution I have
made to arrange my trip.”Customer loyalty captured four items
derived from studies of Bansal, Irving, and Taylor (2004), and Brodie,
Whittome, and Brush (2009).
With the exception of the expenditure variable and company
support, all variables were measured on a seven-point rating scale
(1 ¼strongly disagree, 7 ¼strongly agree). The specific item
formulations are provided in Table 1. In a second approach to avoid
common method bias, items were randomized within the ques-
tionnaire. Finally, the sequence of the items was intentionally
designed to be opposite to the causal direction of the hypotheses in
order to minimize any possible demand effects. Specifically,
respondents first had to answer questions on customer satisfaction
with the company, satisfaction with co-creation, and customer
expenditures. Next, the survey included items to assess the degree
of co-creation, and then the hypothesized antecedent variable. The
survey closed with a few demographic questions.
4. Results
4.1. Internal consistency and validity
In order to test our measurement model and the proposed
relationships, we applied structural equation modeling using the
statistical software package Mplus. Several goodness-of-fit
measures were used to evaluate the model’s global fit which
included Comparative Fit Index (CFI), TuckereLewis Index (TLI), and
Root Mean Squared Error of Approximation (RMSEA); those that
were used to evaluate local fit were Composite Reliability (CR),
Average Variance Extracted (AVE), and factor loadings from
Confirmatory Factor Analysis (CFA). Next, internal consistency and
validity of the four proposed multi-item constructs were evalu-
ated by calculating CR and AVE. Composite reliability was assessed
for the latent constructs degree of co-creation,customer satisfaction
with 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 Tab le 1, the average variance extracted met or exceeded
the recommended minimum value of 0.50 (Bagozzi & Yi, 1988). All
factor 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 the
FornelleLarcker criterion (Fornell & Larcker, 1981): Since the
squared multiple correlations of the constructs did not exceed AVE,
discriminant validity was achieved. We also used the Hoelter index
to determine the adequacy of sample size. This critical Nindex (N
crit
)
states the sample size at which
c
2
would no longer be significant.
Hoelter (1983) recommends values of at least 200, whereas values
less than 75 indicate very poor model fit. The Hoelter index should
only be computed if the
c
2
-value was significant. N
crit
for this study
was 127, thus our sample size of 185 observations was above the
necessary sample size. Table 2 shows means, standard deviations,
and correlations of the latent constructs. To sum up, the proposed
model constructs show validity and reliability for further analysis.
4.2. Main effects
In a first attempt to empirically test the conceptual model, we
assessed the main effects of our model and included correlations
between the exogenous variables (customer loyalty, satisfaction with
the company, and customer service expenditures). The overall model fit
of the SEM provided satisfying results (
c
2
¼146.1, df ¼60, p¼0.00,
CFI ¼0.94, TFI ¼0.92, RMSEA ¼0.09, SRMR ¼0.05). Company
support was found to significantly affect the customer’sdegreeofco-
Table 1
Measurement of the study constructs.
Latent constructs and measures MSDCFA
a
CR AVE
Degree of co-creation 0.88 0.87 0.70
I have been actively involved in the
packaging of my trip.
5.25 1.37 0.80
I have used my experience from previous
trips in order to arrange this trip.
5.11 1.55 0.84
The ideas of how to arrange this trip
were predominantly suggested
by myself.
4.92 1.60 0.75
I have spent a considerable amount
of time arranging this trip.
4.82 1.75 0.77
Customer satisfaction with the service
company
0.82 0.81 0.70
I am satisfied with the customer service
of the travel agency.
5.84 1.25 0.81
All in all, I am very satisfied with the
visit in this travel agency.
5.68 1.31 0.81
The purchase in this travel agency has
met my expectations.
5.57 1.32 0.72
Customer satisfaction with the co-creation
performance
0.76 0.70 0.50
I am satisfied with the recommendations
I have made to the travel agency in
order to improve my trip.
5.36 1.98 0.70
I am satisfied with the contribution
I have made to arrange my trip.
5.70 1.15 0.70
Customer loyalty 0.90 0.92 0.72
I 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 this
travel agency the next time I need
to travel.
5.23 1.58 0.86
I will recommend this travel agency to
my friends and relatives.
5.58 1.33 0.86
I enjoy discussing about this travel
agency with others.
5.1 1.49 0.76
Note. All variables were measured on a seven-point rating scale (1 ¼strongly
disagree, 7 ¼strongly agree).
Table 2
Means, standard deviations, and correlations of the constructs.
MSD1. 2. 3. 4. 5. 6. 7. 8.
1. Degree of co-creation 5.60 1.20 1
2. Customer loyalty 5.29 2.78 0.50 1
3. Customer satisfaction with the service company 5.70 1.02 0.49 0.84 1
4. Perceived company support 5.40 1.60 0.33 0.16 0.17 1
5. Perceived communication 5.20 1.80 0.41 0.20 0.20 0.97 1
6. Customer service expenditures 891.50 325.30 0.81 0.34 0.41 0.27 0.33 1
7. Customer satisfaction with the co-creation performance 5.80 1.30 0.84 0.40 0.25 0.19 0.26 0.26 1
8. Company support n.a. n.a. 0.74 0.37 0.36 0.45 0.55 0.60 0.30 1
Note. Company support comprises the three categories of companyecustomer communication. All correlations are significant at p<0.01.
U.S. Grissemann, N.E. Stokburger-Sauer / Tourism Management 33 (2012) 1483e1492148 8

creation, (
g
¼0.74, p<0.01, H1). The degree of co-creation was found
to significantly affect the customers’satisfaction with the service
company (
g
¼0.49, p<0.01, H2), customer loyalty (
g
¼0.50, p<0.01,
H2), and customers’expenditures (
g
¼0.81, p<0.01, H3). Customer
satisfaction with the company further significantly affects customer
loyalty (
g
¼0.85, p<0.01). Table 3 reports the proposed relationships.
4.3. Moderated effects
Customer satisfaction with the company was hypothesized to
alter the relationship between degree of co-creation and customer
expenditures (H5), customer satisfaction with the company (H6),
and customer loyalty (H7). To model these effects we introduced
a latent interaction term of degree of co-creation and customer
satisfaction with the company to the structural equation. “If the
interaction term is significant then the effect of the predictor
variable (X) on the outcome variable (Y) is dependent upon the
levels of the moderator variable (M). The product term provides
empirical evidence that the nonlinear combination of two variables
Xand Maccounts for a unique amount of variability in the outcome
variable Yabove and beyond the linear main effects of the two
variables (Xand 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) and
the 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 moderating
effect was found for the relationship between degree of co-creation
and expenditures (
g
¼0.04, n.s.), rejecting H5. In support of H6 and
H7, respectively, customer satisfaction with the co-creation
performance significantly changed the relationship between
degree 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 the
co-creation performance increases, customer satisfaction with the
company and customer loyalty decrease.
4.4. Mediated effects
In a third step, we ran an alternative model in order to test if
the degree of co-creation totally mediates the relationship
between company support to co-create and the outcome vari-
ables. To do so, we applied Baron and Kenny’s(1986)approach of
mediation analysis and followed the suggested four steps (Frazier,
Tix, & Barron, 2004,pp.125e128). The first step is to show that
there is a significant relationship between the predictor variable
and the outcome variable. The outcome variable is regressed on
the predictor to show that in fact, there is an effect to mediate. The
second step is to show that the predictor is related to the medi-
ator. Here, the mediator is regressed on the predictor variable to
establish a direct path in the mediational chain. The third step is
to show that the mediator is related to the outcome variable. The
outcome variable is regressed on both the predictor and the
mediator. The final step is to show that the strength of the rela-
tionship between the predictor and the outcome is significantly
reduced when the mediator is added to the model. Following
these steps, we found that there was a significant direct rela-
tionship between company support and satisfaction with the
service company (
b
¼0.45, p<0.01) as well as between company
support and customer loyalty (
b
¼0.35, p<0.01), and company
support and expenditures (
b
¼0.60, p<0.01). These relationships
became non-significant, however, when degree of co-creation was
introduced into the model (
b
¼0.22, n.s.,
b
¼0.03, n.s,and
b
¼0.01, n.s., respectively). This means that degree of co-
creation fully mediates the relationship between company
support and satisfaction with the company as well as company
support and customer loyalty, and company support and
expenditures.
5. Discussion and implications
5.1. Summary
The aim of this study was, first, to assess the effect of company
support on the degree of co-creation. Second, we investigated
whether co-creation actually enhances customer satisfaction with
and loyalty toward the service company, and customer service
expenditures. Third, we assessed whether the effects of co-
creation on satisfaction, customer loyalty, and expenditures are
moderated by the customer’s satisfaction with their co-creation
performance.
The results of the study show a significant relationship
between company support for the customer to co-create and the
degree of co-creation. Consequently, the degree of co-creation
Table 4
Results of the tests for moderating effects.
Relationships
g
t-value
H5 (Satisfaction with the Co-creation performance
Degree of co-creation) /Customer service
expenditures
0.04n.s. 1.15
H6 (Satisfaction with the Co-creation performance
Degree of co-creation) /Satisfaction with
the 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 of
co-creation
0.56** 10.84
Degree of co-creation /Satisfaction with
the company
0.15* 2.19
Degree of co-creation /Customer loyalty 0.21* 2.55
Degree of co-creation /Customer service
expenditures
0.74** 11.25
Satisfaction with the company /Customer loyalty 0.81** 5.53
Satisfaction with the Co-creation
performance /Satisfaction with the company
0.68** 6.00
Satisfaction with the Co-creation
performance /Customer loyalty
0.74** 5.50
Satisfaction with the Co-creation
performance /Customer service expenditures
0.12n.s. 0.12
Note. *Significant at p<0.01, **Significant at p<0.001.
Table 3
Results of the tests for main effects.
Relationships
g
t-value
H1 Company support to co-create /Degree
of co-creation
0.74** 19.39
H2 Degree of co-creation /Satisfaction with
the company
0.49** 70.21
H3 Degree of co-creation /Customer loyalty 0.50** 70.68
H4 Degree of co-creation /Customer service
expenditures
0.81** 26.68
Satisfaction with the company /Customer loyalty 0.85** 21.51
Correlations
Customer loyalty 4Customer service expenditures 0.12n.s. 10.33
Customer service expenditures 4Satisfaction with
the company
0.34n.s. 0.36
Global fit:
c
2
/df ¼146.1/60, SRMR ¼0.05,
RMSEA ¼0.09, TLI ¼0.92, CFI ¼0.94, N
crit
¼127
Note.
g
¼path coefficients; CFI ¼Comparative Fit Index; df ¼degrees of freedom;
RMSEA ¼Root Mean Squared Error of Approximation; TLI ¼TuckereLewis Index;
SRMR ¼Standardized Root Mean Square Residual; N
crit
¼Critical 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

affects customer satisfaction with the service company, customer
loyalty, and service expenditures. We found that the effects of
company support on the customer’s satisfaction with the service
company, customer loyalty, and service expenditures were all
fully mediated by the degree of co-creation. We further estab-
lished that the effects of degree of co-creation on satisfaction with
the service company and customer loyalty were both moderated
by the customer’s satisfaction with his or her own co-creation
performance. We found that these more satisfied customers
(with their own co-creation performance) do not exhibit more
satisfaction with the service company than the customers who are
less satisfied with their own co-creation performance. Following
equity theory (Adams, 1963), this might be the case because they
perceive an unfair distribution of resources and thus consider
themselves (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 marketing
and tourism research as it effectively measured customers’actual
degree of co-creation. This was achieved by handing out the
questionnaire to customers right after they had booked their travel
arrangement. In doing so, the travel experience could per se not
influence respondents’responses to the questionnaire. This
procedure distinguishes our study from previous studies that
frequently solely measured the customer’s intention to co-create,
or that were subject to a time lag between the co-creation
activity and the survey. We also strongly recommend the use of
multiple sources in survey design studies. Since we integrated
objective data into our model, we could interrelate data from the
customer data base to data from customer perceptions which
resulted in interesting managerial insights.
Second, we contribute to research on attribution theory and
decision satisfaction in a co-creation context. We found that for
customers who are very satisfied with their own co-creation
performance, the effect of degree of co-creation on satisfaction
with the service company is not significant. It can be argued that
customers perceive lower engagement of the company the more
they get involved in the co-creation process of their travel
arrangement. Thus, they perceive an unfair distribution of
resources and, subsequently, might become dissatisfied with the
company’s performance. Future research should validate these
highly-relevant findings in both the service and classical goods
industry. We suspect that this outcome can be ascribed to the fact
that co-creating a travel arrangement differs substantially from co-
creating manufactured goods. The more customers get involved in
the arrangement of their travel packages, the less work is left for
the company. Different results, however, could be expected in
traditional manufacturing processes and should be a topic of future
research.
Notably, the more the customers were satisfied with their own
co-creation performance the more money they spent for their
travel arrangement. Following attribution theory, this means that
they ascribe the success of their co-creation performance to
themselves rather than to the service company. Since the causal
attributions 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 than
the actual outcome of the service. Therefore, besides focusing on
value in terms of service expenditures, the hedonic and utilitarian
value a customer achieves while co-creating has to be at the heart
of co-creation strategies. Enhancing co-creation activities means
to 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 their
individual needs well and thus are willing to spend more money
for it. These findings are in line with a study by Füller et al. (2009)
who argued that, considering the fact that the co-creation process
is a voluntary action of the customer, companies have to make the
customers enjoy their participation.
5.3. Managerial implications
The study model and findings have a number of important
implications for marketing and tourism management. First, we
can draw from these findings that integrating the customer into
the service development process must not mean to shift work
from the company to the customer and, thus, saving financial
and temporal resources. Giving the customer the opportunity to
co-create requires intense customerecompany interactions,
highly trained employees as well as close listening and prompt
reactions to customer needs. In this sense, our study supports
the findings of Homburg, Wieseke, and Bornemann (2009) and
Homburg, Wieseke, and Hoyer (2009), emphasizing that
employees have to generate knowledge about customer needs
when the company aims to create customer satisfaction and
value in the interaction with the individual customer. Compa-
nies are well advised to keep these findings in mind
when thinking about customer empowerment strategies (Füller
et al., 2009).
Second, as a quid pro quo, the company’sfinancial perfor-
mance (in terms of customers’service expenditures) and non-
financial performance (in terms of customer satisfaction with
and loyalty toward the service company) increases the higher the
degree of co-creation. We found that customers are willing to pay
more for their travel arrangement when they closely collaborate
with the travel agency and thus create a unique travel experience.
This indicates that customers attach more value to a service
which 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 get
involved into the creation of their travel arrangement, the more
value they attach to the company’s support which, again reflects
on their satisfaction with the company. The opportunity to co-
create also enhanced customers’intentions to re-purchase
travel arrangements from the same agency and to recommend
the travel agency to their friends. This supports the findings of
Zhang and Chen (2008), arguing that firms with better service
capabilities have a higher customization potential to meet
customers’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 significant
importance and must not be underestimated. Thus, companies
should address intrinsic and extrinsic motivations since they
account fundamentally for the customer’s willingness to co-
create. To create a winewin situation, companies have to design
co-creation options that customers will welcome. It has to be
considered, however, that motivation is not a one-dimensional
construct. It varies both in terms of level and orientation (i.e.,
what type) of motivation (Ryan & Deci, 2000). In line with
Bettencourt (1997), we argue that company support to co-create
acts 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 for
customers.
U.S. Grissemann, N.E. Stokburger-Sauer / Tourism Management 33 (2012) 1483e1492149 0

Finally, we emphasize the need for managers to better under-
stand the role of companyecustomer communication and thus
support the theoretical implications of S-D logic proposing that
value is not only created by the provision of the service per se, but
during the actual service development process (Lusch & Vargo,
2006). This means that company communication has to go
beyond classical advertisements or standardized mailings. To
enhance customer and company value, an active dialog is needed.
In this sense, it is not only the service that has to be customized but
it is the communication itself that has to be tailored to the
customer. In the travel agency setting, we found that intense
customerecompany interactions (i.e., direct counseling, thorough
phone 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 their
individual needs.
5.4. Limitations and directions for future research
Although this study offers considerable insights into co-creation
in a tourism service context, it entails several limitations that
should be acknowledged. Our model was tested in one travel
agency only. Thus, testing our model in several tourism service
settings might have complemented our results. This mayalso apply
to the size of the travel agency under investigation. For larger
companies customerecompany interactions might be less intense
and demand other communication tools than for small companies.
Co-creating a travel package might also require other forms of
company support than, for instance, co-creating financial services.
Co-creation activities and their relating outcomes thus are
supposed to vary intensively between different service settings.
Additionally, customers might only like to co-create up to a certain
extent. A degree of co-creation that is too high might lead to
dissatisfaction with the company. Thus, future studies could elab-
orate on a curvilinear relationship between co-creation and
company outcome variables. Research should also elaborate on the
concept “satisfaction with the co-creation performance”to develop
are liable and valid multi-item scale.
Almost every study setting draws a simplified model of
reality. This is the case for our model as well. There might be
additional variables than perceived company support that
influence degree of co-creation. Further research could make
efforts into this direction and focus on other individual differ-
ence variables.
Consistent with Hoyer et al. (2010) we note that the true
potential of co-creation is still unexplored and that there exist
fruitful avenues for further research. In particular, empirical
evidence and validations of the existing theoretical considerations
are vitally needed. Thus, we call for more research on individual
difference variables that might be drivers of customer co-creation
activities. Research on motivational factors of co-creation would
reveal 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 research
could also elaborate on a multi-dimensional approach to concep-
tualize customer loyalty. Yuksel, Yuksel, and Bilim (2010), for
example, 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 companies must establish proactive measures of how to
assess the effect of co-creation on firm performance. Our study
tried to shed some light into this topic but there are still various
open questions: How much time and effort has to be put into
customer-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 needs
to enhance customer co-creation? Particularly for the increasing
social-media activities of companies, it will be an important issue to
calculate the costs of the online companyecustomer dialog. We
hope that our study will stimulate more empirical research on
these issues.
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