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values with companies by co-creating the function and the meanings of consumption experiences.
This leads to the defi nition of co-creation as consumer integration through participation in
consumption experiences, where consumers attach meanings and contextual values to products
and services.
Consumers' active role in service production and encounter (i.e. co-production) is also
believed to provide more value to consumers and companies. For example, researchers have
discovered that when consumers are more involved in the process of service production, which
leads to positive emotional interactions between consumers and companies during the service
encounter, the perceived value of the service increases (Bitner, Brown and Meuter 2000; Pugh
2001). The linkage between value created during consumption stage and value created at the
production stage has been discussed in literature (Ritzer and Jurgenson 2010). Lusch and Vargo
(2006) suggest that service production activities are connected with consumption activities.
Hence, co-production and co-creation are seen as nested concepts (Lusch and Vargo 2006).
Another stream of literature focuses more attention on consumer empowerment and
collaborative innovation (von Hippel 1986, 2005) to integrate consumers in the process of new
product or service development for companies' productivity gains (Inauen and Schencker-Wicki
2011). It is believed that innovation that starts with and is driven by the needs and requirements
of end users, also referred to as consumer-driven innovation, will be successful in the market.
In practice, earlier attempts on collaborative innovation typically involve select groups of lead
users, who are identifi ed as infl uential in their respective networks and communities. However,
companies have started to involve more general end users to participate in the creation of new
products and services. This leads to an interpretation of co-creation as integrating consumers
as partners for innovation through participatory activities that support consumer-company
collaboration whereby consumers are able to contribute their insights and knowledge to create
new or improve products and services (i.e. co-production). These co-creation activities occur at
the production stage preceding the consumption stage.
It is suggested that co-creation of value is inherent to tourism due to the experiential nature
of tourism products and services. The unique characteristics of tourism, where experiences are
produced and consumed simultaneously, make the concept of co-creation of value particularly
signifi cant in tourism. Binkhorst (2005) describes that the uniqueness in tourism lies in 'no
separation between supply and demand, company and customer, tourist and host . . .' (2005: 3).
Rather, tourism should be seen as 'a holistic network of stakeholders connected in experience
environments in which everyone operates from different spatiotemporal contexts' (Binkhorst
2005: 3). Furthermore, tourism experience may vary greatly due to contextual details and
subjective interpretation given by different types of tourists. Volo (2009) asserts that even the
same tourism activity can generate different experiences to people in the same market segment.
In line with Prahalad and Ramaswamy (2004), tourism destinations are creating experience
environments in which tourists have active dialogue to co-construct their own personalized
experiences. Therefore, co-creation between tourists and destinations in the process of experience
production and consumption is unmistakable.
Further, the concept of co-creation suggests that, in order to create value, companies and
organizations need to go beyond organizational boundaries into the value chain to foster
collaborative exchange and integrate resources and skills to gain competitive advantage. Prahalad
and Ramaswamy (2004) propose the convergence of companies and consumers by putting
multiple points of interaction between consumers and companies at the locus of value creation.
This indicates that companies and organizations need to transform their internal processes to be
able to accommodate the co-created problems and solutions resulting from their interactions
with consumers at different points in the value chain. However, there have been limited studies
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