Proceedings of 8th Annual London Business Research Conference
Imperial College, London, UK, 8 - 9 July, 2013, ISBN: 978-1-922069-28-3
Consumer Trust in Service Brand and in Frontline Service
Personnel: Impact on Co-Production and Value Co-Creation
Behavior – A Cross-Country Study
Sherriff T. K. LUK, Esther L. Y. LI and Ben, S. C. LIU
The conventional wisdom in service marketing explains customers can serve as either
“resource providers for a firm” as illustrated in numerous self-service operations, or
“contributors for a company‟s service quality”, subjected to customer expectations and
perceptions over actual performance (Zeithmal et al. 2012). In this research stream,
much of the literature on factors influencing customer participation behavior throughout
the service delivery process has focused on the customer‟s knowledge, abilities and
incentives.
However, customer participation in service production, if not managed properly, may
lead to negative service performance gap. Negative behavioral consequences like
mutual blaming and withdrawal from co-production processes arise when participation
level is high (Yen et al., 2004). Inconsistent findings in previous studies thus imply the
need for more research efforts to investigate the consequences of service participation
(Bendapudi and Leone 2003, Meuter et al., 2005; Prahalad and Ramaswamy 2000).
Based on the service-dominant marketing logic, Lusch and Vargo (2008) have
delineated the concept of value co-creation which suggests that customers not only
work together with service personnel to co-produce the service, but also work through
this co-production process to ensure the service outcome will be of greater value to
them, the ultimate objective of customer participation in service delivery process. The
value co-creation paradigm not only conceptualizes service co-production and value cocreation as two different types of customer participation behavior but also places the
emphasis on the changing roles of customers, from co-producer to value co-creator.
This thus calls for additional research to investigate how customers participate in
service delivery and hence co-create value.
The majority of studies in service participation do not discriminate service co-production
behavior and value co-creation behavior. A significant knowledge gap is that there is a
dearth of knowledge concerning what the antecedents of a customer‟s co-production
and co-creation behavior are and what the outcomes of such behavior will be in relation
to customer perceived value and loyalty.
Interpersonal trust and inter-organizational trust are expected to play a role in facilitating
____________
Dr. Sherriff T. K. LUK, Department of Management & Marketing, the Hong Kong Polytechnic University,
Hung Hom, Kowloon, Hong Kong. Fax: 00852-27650611, E-mail: sherriff.luk@polyu.edu.hk.
Esther Li is Assoicate Professor of Marketing and Head of the Department of Marketing,
Lingnan University, Hong Kong.
Ben Liu is Professor of Marketing at Quinnipiac University, USA.
1
Proceedings of 8th Annual London Business Research Conference
Imperial College, London, UK, 8 - 9 July, 2013, ISBN: 978-1-922069-28-3
customers‟ service co-production and value co-creation behavior; but previous research
findings show differences in trust in service firms and in frontline service personnel
(Doney and Cannon 1997; Sirdeshmukh, Singh, and Sabol 2002). So far the existing
literature has been limited in specifying how different levels of trust foster different
degree of customer participation leading to high customer perceived value and strong
customer loyalty. Irrespective of the call for additional studies to explore varying effects
of trust as a multi-faceted phenomenon at a multi-level unit of analysis (Zahaar et al.
1998), there has been no empirical research specifically designed to examine how a
consumer‟s trust in the service brand and in its frontline service employee will affect
his/her value co-creation behavior and the resultant impact on perceived value and
brand loyalty.
The present research is based on the trust-commitment theory to examine the impact of
customers‟ trust in the retailer brand and its frontline service employees on customers‟
cooperative, value-adding service participation behavior, a kind of behavior crucial for
effective co-production of the required service and its values to customers. Specifically,
it aims to answer the following questions: To what extent will trust in the service brand
and its service personnel facilitate cooperative behavior from the consumer to coproduce the service and influence the value of the service outcome? Would service coproduction and value co-creation behavior from the customer have a positive effect on
the perceived value of the service offerings? Would the perceived value of the service
outcome have a positive effect on customer loyalty? By answering these questions, this
study endeavors to achieve the following research objectives:
1. To investigate the relative magnitude of the effect of trust in the service brand
and trust in the service personnel on service participation and value co-creation
behavior from the customers.
2. To explore the effect of customers‟ service co-production and value co-creation
behavior on the perceived value of the service and the resultant impact on brand
loyalty.
3. To compare the hypothetical relationships amongst trust, co-production and
value co-creation behavior, perceived value, and loyalty under different country
contexts, one is characterized with group-oriented culture and the other
dominated by individualist culture.
Accordingly, the present study endeavors to fill the aforesaid research gaps and
contribute to advance our knowledge of the roles of trust at different levels in both coproduction and value co-creation behavior and consequently the potential impact of
these types of service participation behavior on the value of the service as perceived by
the customer.
The Proposed Model
We developed a conceptual model (Diagram 1) on the hypothetical relationships
amongst service co-production and value co-creation behavior, consumer trust in
frontline service personnel and in the service brand, customers‟ perceived value, and
2
Proceedings of 8th Annual London Business Research Conference
Imperial College, London, UK, 8 - 9 July, 2013, ISBN: 978-1-922069-28-3
customer loyalty based on an extensive review of the literature which provides
theoretical justifications to the following hypotheses:
H1A: Consumers with higher level of trust in the service brand will be more
active in co-producing the service.
H1B: Consumers with higher level of trust in the service brand will be more
active in performing the tasks that add values to service outcome.
H2A: Consumers with higher level of trust in the frontline sales personnel will be
more active in co-producing the service.
H2B: Consumers with higher level of trust in the frontline sales personnel will be
more active in performing the tasks that add values to service outcome.
H3: Consumers spent more time and effort on service co-production activities
will be more likely to rate down the perceived value of the service.
H4: Consumers who exert more influences on the service outcome through
value co-creation activities will perceive greater value of the service.
H5: Greater perceived value will lead to higher level of brand loyalty.
A total of 448 respondents were successfully interviewed in New Heaven and Hong
Kong respectively. Three completed questionnaires had many missing items and
therefore 445 completed questionnaires were used for statistical analysis. Amongst
them, 274 respondents were interviewed in Hong Kong and 171 interviewed in New
Heaven, the United States.
All scales, except the co-creation scale, were all adopted in previous empirical studies;
therefore, a Cronbach Alpha Reliability test and confirmatory factor analysis were
performed based on the collected data to test the robustness of these scales. As
indicated in Table (1), the Cronback Alpha value of each scale ranges from 0.702 to
0.914, all higher than the recommended cut-off value of 0.700 (Bagozzi and Yi, 1988),
suggesting acceptable level of reliability. The statistics of confirmatory factor analysis
are all higher than the recommended thresholds and suggest good model fit (Chisquare value of 585.386, CFI = 0.927, NFI = 0.900, IFI = 0.927, RMSEA = 0.073, and
the standardized factor loadings are all statistically significant). The value of composite
3
Proceedings of 8th Annual London Business Research Conference
Imperial College, London, UK, 8 - 9 July, 2013, ISBN: 978-1-922069-28-3
reliability of each scale is higher than 0.70 whereas the average variance extracted
value of all scale is higher than 0.50, except the Trust-in-Personnel scale.
In addition, these scales have good convergent validity and discriminant validity. The fit
statistics obtained from the SEM analysis (Table 2) suggest acceptable model fit (CFI =
0.911, NFI = 0.883, IFI = 0.912, RMSEA = 0.079). The SEM results were based on the
data of the full sample. The findings suggest:
-
H1A is rejected.
H2A is not supported.
Both H1B and H2B are supported.
H3 is not supported.
Both H4 and H5 are supported.
But the effects of trust in the service brand and the trust in service personnel on both
co-production and value co-creation behavior vary across the two city samples and the
differences are statistically significant. The trust in service personnel has smaller
negative effect on service co-production in Hong Kong than in New Heaven. In contrast,
the trust in servicer brand has stronger positive effect on value co-creation behavior in
New Heaven than in Hong Kong. Further, service co-production behavior appears to
have negative impact on perceived value of the service in New Heaven but positive
impact in Hong Kong. Trusting behavior is culturally bounded (eg Doney, Cannon, and
Mullen 1998), the variations in these effects could be mainly attributed to cultural
influences rather than the differences in the retail contexts, given that the service
settings of salon service in the two cities where we sampled our respondents were quite
similar.
Conclusion
The present study represents the first attempt to investigate the potential impact of
consumer trust at multi-levels on customers‟ service co-production and value cocreation behavior during the service delivery process. In this regard, our research
provides an important extension to current theoretical perspectives on service
participation in two ways. First, it confirms service participation behavior is composed of
co-production behavior and value co-creation behavior, though the domain of each
construct may overlap to some extent. Second, the effect of co-production and value cocreation behavior on the perceived value of the service outcome could be in the
opposite way. Although service co-production behavior is critical to successful delivery
of the desired service and has long been assumed to have positive implication for
service evaluation, our findings indicate some consumers may focus on the cost aspect
of co-production activities when evaluating the value of the service outcome.
Another major contribution the present study makes to theories of consumer trust is to
discriminate its effect and role in service co-production and value co-creation behavior
at two different levels. Consumer trust at both brand and service personnel level can
facilitate co-production and value co-creation behavior but their impact on service co4
Proceedings of 8th Annual London Business Research Conference
Imperial College, London, UK, 8 - 9 July, 2013, ISBN: 978-1-922069-28-3
production behavior appears as more complicate than what have been suggested in the
extant literature, as manifested in the fact that such an effect may not be positive and
that it varies from country to country significantly. The findings from multi-group analysis
disclose that the relationships amongst trust in service personnel, trust in service brand,
co-production behavior, value co-creation behavior, and customers‟ perceived value
actually should be country-specific. Trust in the service personnel will have negative
impact on co-production behavior and the impact is smaller whereas its impact on value
co-creation behavior will be strong if the consumer is from the countries dominated by
collectivist culture. On the other hand, trust in the service brand has positive impact on
value co-creation behavior and the impact is stronger if the consumer is from
individualist culture. Besides, consumers from collectivist culture consider their coproduction activities positive inputs to the value of the service outcome and thus have
positive effect on the perceived value of the service. Consumers from individualist
culture consider their co-production behavior a type of sacrifice/cost and such
coproduction behavior has negative impact on the perceived value. .
Managerial implications: Our research provides several important insights to service
marketers on service strategy, service design, service operation, and service training.
All in all, trust is formed based on competence and performance and it is sustained as
long as the retail firm is able to maintain high level of performance. Since trust can
facilitate value co-creation behavior that leads to greater value of the service outcome
and customer loyalty. Increasing customer trust is warranted and this alerts retail firms
to exert their efforts relentlessly to perform better.
Limitations and implications for future research: This research was set in the context of
salon service in Hong Kong and New Haven and the findings revealed significant
country effect on the relationship between the two types of consumer trust on service
co-production and value co-creation behavior. We believe the country differences could
be explained by cultural influences, future empirical studies are encouraged to
investigate what particular culture values will have greater moderator effect on the
relationship between consumer trust and customer participation behavior.
Several factors which may moderate the effect of consumer trust on service
participation and service evaluation are not studied here but deserve future research
effort. These include: personal factors like demographics, service encounter duration,
relationship length, and service type. Empirical studies designed to test the model under
multiple service context are deserved.
Table 1: Measurement Items and Validity Assessment – Salon Sample
Standardized
Factor
Loading
Trust in Store: CR salon = .915; AVE salon = .730; Cronbach’s α = .914
1. I feel that this store is dependable.
.907
2. I feel that this store is competent.
.942
3. I feel that this store is of high integrity.
.794
5
Proceedings of 8th Annual London Business Research Conference
Imperial College, London, UK, 8 - 9 July, 2013, ISBN: 978-1-922069-28-3
4. I feel that this store is responsive to customers.
.761
Trust in Personnel: CR salon = .814; AVE salon = .462; Cronbach’s α = .802
1. I feel that the employee who served me this time is dependable.
2. I feel that the employee who served me this time is competent.
3. I feel that the employee who served me this time is of high integrity.
4. I feel that the employee who served me this time is responsive to
customers.
.815
.831
.717
.502
Effort: CR salon = .842; AVE salon = .574; Cronbach’s α = .838
1. I need to exert a lot of effort to use the service of this store.
2. I need to be persistent to use the service of this store.
3. I need to spend a lot of time to use the service of this store.
4. Too much intellectual effort is needed when using this service.
Co-creation C: CR salon = .870; AVE salon = .694; Cronbach’s α = .861
1. The service outcome meets my expectations because I explained in
detail what I wanted to the service personnel.
2. The service employee tended to go along with my wishes when I
assisted in the process the service was delivered.
3. I am confident with the service outcome because of my participation
in the process the service was delivered.
Value: CR salon = .706; AVE salon = .548; Cronbach’s α = .702
1. Overall, the value of the service offered to me at this store is high.
2. Compared to what I had to give up, the overall ability of this store to
satisfy my needs is high.
Loyalty: CR salon = .816; AVE salon = .528; Cronbach’s α = .812
1. I am likely to do most of my future services at this store.
2. I will recommend this store to friends, neighbors and relatives.
3. I am likely to use this store the very next time I need the services.
4. I will spend more than 50% of my service budget at this store.
Overall model
fit:
.768
.781
.849
.612
.900
.902
.678
.812
.661
.729
.775
.772
.621
Salon: 2(174) = 585.386***; CFI = .927; NFI = .900; IFI = .927; RMSEA = .073.
*p < .05, **p < .01, ***p < .001
Notes: CR = composite reliability
6
Proceedings of 8th Annual London Business Research Conference
Imperial College, London, UK, 8 - 9 July, 2013, ISBN: 978-1-922069-28-3
Table 2: Results of SEM Analysis and Multi-Group Analysis (Salon Service)
Full Sample
Hong Kong
USA Sample
N=445
Sample
N=274
N= 171
TSP>Effort
-.184
-.103
-.322#
TSP>Co-create C
.450***
.703***
.251
TStore>Effort
.038
.330#
.045#
TStore>Co-create C
.269**
.154
.380*
Effort>CPV
-.046
.246***
-.219***
Co-create C>CPV
.829***
.890***
.713***
CPV>Loyalty
.718***
.863***
.628***
684.469***
503.498***
437.658***
2
DF
181
CFI
.911
NFI
.883
IFI
.912
RMSEA
.079
#p > .10; *p > .05; **p > .01; ***p > .001
7
Proceedings of 8th Annual London Business Research Conference
Imperial College, London, UK, 8 - 9 July, 2013, ISBN: 978-1-922069-28-3
References:
Berry, L., Seiders, K. and Grewal, D. (2002). “Understanding service convenience”,
Journal of Marketing, Vol.66 No.3, pp.1-17.
Bitner, M., Faranda, W., Hubbert, A. and Zeithaml, V. (1997), “Customer contributions
and roles in service delivery”, International Journal of Service Industry Management,
Vol.8, pp.193-205.
Coulter, K. and Coulter, R. (2002), “Determinants of trust in a service provider: the
moderating role of length of relationship”, Journal of Services Marketing, Vol.16 No.4,
pp.35-50.
Doney, P., Cannon, J. and Mullen, M. (1998), “Understanding the influence of national
culture on the development of trust”, The Academy of Management Review, Vol.23 No.
3, pp.601-620.
Kelley, S., Donnelly, J., and Skinner, S. (1990). “Customer participation in service
production and delivery”, Journal of Retailing, Vol. 66 No.3, pp.315-335.
Kellogg, D., Youngdahl, W., and Bowen, D. (1997). “On the relationship between
customer participation and satisfaction: two frameworks”, International Journal of
Service Industries Management, Vol.8 No.3, pp206-219.
Luk, Sherriff T. K, Albaum, Gerald, and Fullgrabe, Lorna, (2013). ¨Trust in CustomerSalesperson Relationship in China´s Retail Sector”, International Journal of Retail &
Distribution Management, Vol.41 No. 3, pp.226-248.
Lusch, Robert F., Stephen L. Vargo, and Matthew O‟Brien (2007), “Competing Through
Service: Insights from Service-Dominant Logic,” Journal of Retailing, 83(1), pp. 5–18.
Mattila, A. (1999), “The role of culture in the service evaluation process”, Journal of
Service Research, Vol. 1 February, pp.250-261.
Orth, U., Bouzdine-Chameeva, T. and Brand, K. (2013), “Trust during retail encounter: a
touchy proposition”, Journal of Retailing,
Prahalad, C. and Ramaswamy, V. (2004), “Co-creation experiences: the next practice in
value creation”, Journal of Interactive Marketing, Vol. 18 No. 3, pp.5-14.
Romani, S., Grappi, S., and Dalli, D. (2012), “Emotions that drive consumers away from
brands: measuring negative emotions toward brands and their behavioral effects‟”
International Journal of Research in Marketing, Vol.29, pp.55-67.
Schumann, I, Wangebheim, F. Stringfellow, A., Yang, Z., Praxmarer, S., Jimenez, F.,
Blazevic, V., Shannon, R., and Komor, M. (2010), “Drivers of trust in relational service
exchange: understanding the importance of cross-cultural differences”, Journal of
Service Research, Vol. 13 No.4, pp.453-468.
Sharma, Piyush, Chen, Ivy, and (Luk, Sherriff). (2012) “Age and Gender as Moderators
in the Service Evaluation Process,” Journal of Services Marketing, Vol.26 No.2, pp.102114.
Sirdeshmukh, D., Singh, J. and Sabol, B (2002). “Consumer trust, value, and loyalty in
relational exchange”, Journal of Marketing, Vol.66. No. 3, pp15-37
Vargo, Stephen L. and Lusch, Robert F. (2004) „Evolving to a new dominant logic for
marketing‟, Journal of Marketing 68 (January). Pp. 1 – 17.
Vargo, S. and Lusch, R (2008), “Service-dominant logic: continuing the Evolution,”
Journal of the Academy of Marketing Science. Vol. 36 Spring , pp. 1-10.
8
Proceedings of 8th Annual London Business Research Conference
Imperial College, London, UK, 8 - 9 July, 2013, ISBN: 978-1-922069-28-3
Youngdahl, W., Kellog, D. and Bowen, D. (2003). “Revisiting customer participation in
service encounters: does culture mater? Journal of Operations Management, Vol.21
No.1, pp.109-120.
9