Value Co-creation Through Integration of Employee and Customer Interaction: A Framework for Customer Satisfaction and Loyalty in Service Industry of Pakistan

Abstract

The research gap was explored that there exists dearth of research in examining antecedents on Value Co-creation and furthermore, its impact on Customer Loyalty with the mediating impact of Customer Satisfaction. The research conducted is important as organizations need to engage customers in the value co-creation process which results in increasing loyalty and competitive advantage. The aim behind conduction of this study was to develop an integrated framework between employee and customer and to study its relationship with Value Co-Creation and to study its impact on customer loyalty with a mediating impact of customer satisfaction. Social exchange theory has been used as the foundational support for the study conducted. According to the theory individual behavior is a determinant of rewards and the cost that are involved. Three research questions have been used to check the relationship among the variables under study. Data was collected from frontline service employees of private conventional banks and telecommunication companies and those customers who have been dealt by those respective employees. Data has been examined through Exploratory Factor Analysis and Confirmatory Factor Analysis. The findings of the research indicate that Employee Commitment, Perceived Organizational Support, Customer Trust and Customer Perceived Value has a significant relationship with Value Co-creation, whereas Employee engagement has an insignificant relationship with Value Co-creation and furthermore, Value Co-creation to have a significant relationship with Customer Loyalty with a partial mediation impact of Customer Satisfaction. Recommendation for future research includes extension of the given model on other service sectors within Pakistan. Keywords: Value Co-creation, Service Dominant Logic Model, Social Exchange Theory, Customer Satisfaction, Customer Loyalty