Value Co-Creation in the IT Service Ecosystem
Maryam Heidari, Geraldine Torrisi and Sebastian Binnewies
School of Information and Communication Technology, Griffith University, Brisbane, Queensland, Australia
Keywords: IT Value Creation, Service-Dominant Logic, Service Well-Being, Information Systems.
Abstract: Despite extensive efforts to demonstrate the capabilities of the IT service to create value, existing frameworks
only partially address the complex nature of IT value creation. Most research in the IT service area focuses
on individual and micro-level interactions and practices and overlooks the importance of a holistic and
systematic view of understanding value co-creation. This research addresses this gap by exploring IT service
value co-creation from a “service ecosystem” perspective, considering value co-creation, co-destruction and
service well-being. This research-in-progress paper presents the preliminary literature review and elaborates
on the study design and research setting. In the future, we will conduct an interpretive case study with a
grounded theory approach to investigate how value can be co-created in a multi-level IT service ecosystem
that has barely been explored.
1 INTRODUCTION
IT service is “using information technology as a
means of enabling value co-creation by facilitating
outcomes that customers want to achieve, without the
customer having to manage specific costs and risks”
(Basham, 2019). IT services are the lifeblood of
modern organisations, helping to integrate people and
technologies with business processes to achieve
organisational goals. If effective, IT services reduce
costs, boost innovation, facilitate digital
transformation, and ensure that a business can survive
and thrive. Buffeted by unpredictable economic and
social forces, organisations are under intense pressure
to deliver IT services effectively and efficiently to
support their strategic objectives. (Galup et al., 2007,
Cusick, 2020).
Value and value creation is central to
contemporary IT service and thus pivotal to
organisational success. How value and its creation is
understood is important to organisations in that it
guides how organisations approach and manage their
IT services to maximise value. Unfortunately, value
and its creation processes are complicated and,
despite efforts, remain poorly understood. Value and
value creation are organisations' most problematic
dimensions of IT service (Cusick, 2020). Thus,
empirical research is needed to help further unravel
the complexities of IT service value and provide a
basis for informing organisational approaches to IT
services management (Lempinen and Rajala, 2014).
Thus, the work-in-progress described in the present
paper aims to develop an understanding of value
creation in IT services that is more holistic than
existing attempts and better captures the complexities
of value and value creation in IT services.
The necessity of taking a more holistic approach
to value in IT services is the fundamental premise of
the present research. In traditional perspectives of
value analysis, tangible outputs and discrete
transactions were the focal points, and value was
incorporated into a product and delivered to a
customer by a provider. Despite the importance of
such micro perspectives on value creation, there is a
strong need for adapting a broader context, such as a
service ecosystem in which individuals are nested,
interrelated, and interdependent (Gummesson, 2008).
According to (Vargo et al., 2008), the unbalanced and
one-directional view of value creation limits
understanding of the actual value creation process
driven by the integration and exchange of resources
among multiple actors. In the broader area of service
systems, researchers point out to need for more
understanding of the collective and systematic
aspects of value creation that could better explain the
complexity and dynamism of service interactions and
service delivery (Vargo et al., 2017). IT service
comprises various actors such as IT users, IT service
practitioners, IT decision-makers, business partners
and external entities such as vendors and consultant
Heidari, M., Torrisi, G. and Binnewies, S.
Value Co-Creation in the IT Service Ecosystem.
DOI: 10.5220/0012034500003467
In Proceedings of the 25th International Conference on Enterprise Information Systems (ICEIS 2023) - Volume 2, pages 219-226
ISBN: 978-989-758-648-4; ISSN: 2184-4992
Copyright
c
2023 by SCITEPRESS – Science and Technology Publications, Lda. Under CC license (CC BY-NC-ND 4.0)
219
agencies. Among these actors, there are different
levels of interactions and relationships. Hence, the
focus only on the individual level analysis, such as
dyadic user-service provider exchange, in explaining
the value creation phenomenon is narrow. Therefore,
a holistic perspective of IT service is needed to
explain the interplay between and across layers of
actors and their relationships (Lempinen and Rajala,
2014).
A holistic view is essential for understanding how
an entire ecosystem performs and supports embedded
actors in creating value. So, the theoretical foundation
adopted in the reported study is that of a “service
ecosystem”. The service ecosystem approach is
rooted in Service-Dominant logic (S-D logic). The
evolution of S-D logic underlines the importance of
the “service ecosystem” approach as the main unit of
analysis for the theoretical explanations (Vargo and
Lusch, 2017, Akaka and Vargo, 2015). The service
ecosystem consists of three levels of aggregation:
micro, meso and macro. These levels embed in each
other, and dynamic interactions between actors shape
the ecosystem and co-create value for the whole
organisation (Vargo et al., 2008). This aligns with the
idea that as enterprises grow in size and complexity,
the emphasis shifts from a primary focus on the micro
level to a focus on the meso and the macro levels
(Vargo and Lusch, 2019).
Extant discussions of service ecosystems identify
the need to understand the nature of interactions and
how value co-creates (Vargo et al., 2008) and co-
destructs (Plé, 2017) within layers of the service
ecosystem (Dam et al., 2020) and how these
interactions contribute to the “well-being” of the
whole ecosystem.
Well-being as an important
indicator of “system betterment” (Leo et al., 2019)
and “shared value creation” (Frow et al., 2019) of
services is a significant area of investigation for
understanding complex systems status. Researchers
call for more investigation of this phenomenon
(Ostrom et al., 2015), especially from more holistic
and systematic perspectives (Leo et al., 2019, Frow et
al., 2019).
Since a preliminary literature review revealed a
dearth of holistic frameworks or theories illustrating
how value can be co-created in the context of IT
service ecosystems and considering the explanatory
nature (Gregor, 2006) of this research, a grounded
theory approach was selected as a relevant
methodology (Birks and Mills, 2015). The study
revolves around the question: How can value co-
creation be understood in a multi-level IT service
ecosystem? We chose a large educational sector as
the case study as understanding the dimensions of
value creation in this sector is critical from both
theory and practice.
The present study contributes to the theory as
follows. The research is focused on value co-creation
in the context of IT service and explores the influence
of value co-creation and value co-destruction
(negative side of value co-creation) on service well-
being and vice versa in the IT service context that is
barely investigated. It also offers an ecosystem
approach for understanding the dynamics of multiple
actors’ interactions at the micro level of individual
and dyadic interactions, the meso level of IT teams
and IT department and the macro level of the focal
firm and external entities that provide a holistic
perspective to value co-creation in IT service.
This research-in-progress paper demonstrates the
research position with the preliminary literature
review. Then, we discuss the methods and research
setting for the subsequent phase of our investigation.
2 UNDERSTANDING THE
RESEARCH POSITION
2.1 Preliminary Literature Review
2.1.1 Service Ecosystem
Service ecosystem as one central theoretical
orientation of S-D logic attracts scholars’ attention
due to its potential to capture the dynamic and
multidimensional structure of changing world. The
network view in S-D logic is not simply a static
connection of resources, people, and products but has
a dynamic structure of service provision and service
exchange (Barile et al., 2016) and implies a
phenomenological, or experiential, view of value
within tiers of actors who interact and co-create value
(Vargo, 2011). A service ecosystem is defined as a
‘relatively self-contained, self-adjusting system of
resource-integrating actors connected by shared
institutional arrangements and mutual value creation
through service exchange (Vargo and Lusch, 2016).
The service ecosystem’s structure is multi-level,
meaning higher-level structures emerge from lower-
level interactions (Vargo, 2019). In other words, to
better understanding of how value is cocreated,
researchers should investigate value or determination
at and from multiple levels, as well as the
relationships among those levels (Chandler and
Vargo, 2011). At the micro level of the service
ecosystem, buyers-sellers and firms-customer
interactions as service encounters (Akaka and Vargo,
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220
2015) are central. At the meso level, the focus of
analysis lifts to the triads and interactions within the
focal firm. At the highest level, the macro level, the
focus is on the market, society, and community.
Further research is needed to understand value co-
creation interactions and outcomes in service
ecosystems (Akaka et al., 2012, Edvardsson et al.,
2012) at various levels of aggregation (micro, meso,
and macro) (Chandler and Vargo, 2011).
2.1.2 Value Co-Creation and IT Service
The Value concept emerged from economics and was
analysed through cost and benefit evaluation in a
dyadic (two-way) context (Porter, 1985) as “firm-
derived value”. Furthermore, most prior research has
viewed IT value from the perspective of a single actor
like a customer (Dam et al., 2020) or a business
department (Afflerbach, 2015, Buchwald et al., 2014,
Kohli et al., 2008) or a single firm with the mindset
that IT investment in a single entity creates value for
that entity of the organisation. More recently,
decisions made by multiple actors with a focus on
shared resources led to the concept of value co-
creation (Gobel et al., 2016, Mandrella et al., 2016,
Winkler and Wulf, 2019). Most researchers agree that
the next generation of IT value research should
change the mindset from a one-directional and
unbalanced focus on customer and business value
analysis to a focus on the co-creation of value through
IT (Mandrella et al., 2016). Also, the nature and
process of value creation remain poorly understood
(Payne et al., 2008, Vargo et al., 2017) - especially
concerning the interactions between actors, levels and
outcomes in service systems (Beirão et al., 2017).
In the IT service domain, scholars have called for
a more holistic understanding of IT value, e.g.
(Wiengarten et al., 2013, Lempinen and Rajala,
2014). Gobel et al. (2016) analysis of service and
value as represented in popular ITSM frameworks
and standards: ITIL, CMMI, COBIT and ISO/IEC
20000 showed that a traditional view of value as
something delivered by service providers to
customers persists, and the view of the customer as an
active creator, rather than a passive recipient of value
is overlooked. S-D logic emphasises that value is
perceived and determined by the beneficiary (e.g., the
customer) and service providers and customers are
regarded as resource integrators collaborating to
reach a shared goal more compatible with the modern
perspective of service. Furthermore, the ecosystem of
value creation embodies various levels of actors.
Popular frameworks such as ITIL mainly target the
micro group consisting of individuals and their
actions (Cronholm et al., 2020). Scholars highlight
the need for further research to refine the frameworks
to consider all stakeholders (Wilkin et al., 2013) and
call for more evidence-based research to enhance IT
value creation from the perspective of the service
ecosystem (Cronholm et al., 2020, Vargo and Lusch,
2017). Such research could also contribute to
providing a deeper understanding of desired
conditions and success factors of IT-based value co-
creation (Mandrella et al., 2016). It is from this
background that the present research emerges.
2.1.3 Value Co-Destruction and IT Service
Value co-creation may be the main purpose of service
ecosystems, but their actors could have various aims
within or across the ecosystem levels. Because of
that, value co-creation may sometimes lead to the co-
destruction of value (Plé and Chumpitaz Cáceres,
2010), and value outcomes can vary between value
co-creation and co-destruction. Co-destruction is
defined as ‘an interaction process between service
systems that result in a decline in at least one of the
system’s wellbeing. It could happen because of many
reasons s, such as failed interaction process or failed
resource integration that leads to a decline in well-
being. This means that when collaborating parties fail
to integrate the resources, the interaction process
between the parties can fail m(Plé and Chumpitaz
Cáceres, 2010). Thus, value co-destruction is closely
connected to value co-creation (Vargo et al., 2008).
Many questions emerge regarding the co-created
or co-destroyed value and the well-being outcomes
for the actors or the ecosystem across different levels.
Recent research calls for more studies on value co-
destruction (Mustak and Plé, 2020) to identify the
antecedents and outcomes of value co-destruction
(Saha et al., 2021) for the ecosystem. Plé (2017) study
indicates that value co-creation and co-destruction are
two sides of the same coin, and they co-exist, so both
aspects should be considered when assessing value
perception. Previous value co-creation research
mainly focus on positive value co-creation, with a few
studies on conflictual value co-creation (Laamanen
and Skålén, 2015) or value co-destruction (Dam et al.,
2020).
2.1.4 Service Ecosystem Well-Being
Creating positive changes for individuals and
societies has emerged as a new research priority in
recent years (Ostrom et al., 2015). Therefore, well-
being has become the primary outcome and variable
of interest in a growing number of service research
studies (Tang et al., 2016).
Value Co-Creation in the IT Service Ecosystem
221
Adopting the holistic view of service ecosystems
facilitates an understanding of well-being as a
characteristic of the system rather than only of the
individual actors. Service system well-being (Leo et
al., 2019, Laud et al., 2022) shows “the aggregate
perception of actor assessments of the system in terms
of the fulfilment of their collective, and by
implication, the satisfaction of their individual
needs”. Thus, the system-based conceptualisation
represents how collective well-being emerges in a
service system. Leo et al. (2019) introduced various
domains
of well-being among service stakeholders
that emerge at different levels of the service system.
They claimed that over time, these levels have
bidirectional influences on each other and contribute
to sustainable overall service system well-being (Leo
et al., 2019).
The service ecosystem perspective focuses on
contextual value as an increase in the viability or
well-being of a system (Vargo et al., 2008). Thus,
well-being, the same as value, can be both
experiential and contextual, meaning that value and
well-being could be considered differently from
different viewpoints at different levels and contexts
(Vargo et al., 2017). This interpretation implies that
well-being has a dynamic nature and can be changed
depending on the change in the well-being of an
individual or social system over time (Akaka et al.,
2015). Hence, significant challenges exist in
identifying the characteristics of service ecosystem
well-being. Because considering multiple
determinants, goals, and levels and defining and
exploring well-being within them is a complex issue
(Bache et al., 2016).
While some scholars believe that well-being is an
end state that enables the whole system to collaborate
(Mazzara, 2014), others suggest that ecosystem well-
being is not an end state and an optimal situation for
the ecosystem . Instead, it has multiple goals across
different ecosystem layers (Leo et al., 2019). Based
on S-D logic, Frow et al. (2019) propose the
conceptualization of service ecosystem well-being as
a holistic and dynamic state that is resulting in shared
value co-creation”. Researchers call for more study to
better understand aspects of well-being in service
ecosystems (Dam et al., 2020).
2.2 Position of the Study
In ecosystem perspective, value can be defined as an
improvement in system well-being (Vargo et al.,
2008), and the service well-being can result in shared
value co-creation (Frow et al., 2019). Adversely,
researches show that well-being emerges as the
primary outcome of the value creation process
(Anderson and Ostrom, 2015). So, we conclude that
there is an iterative process between value co-creation
and the well-being of the service ecosystem. On the
other hand, Identifying and eliminating value
destruction factors in such a positive process is
necessary because destructing factors negatively
affect the well-being of the ecosystem (Plé, 2017).
In addition, understanding value requires an
understanding of the cocreation process at each
ecosystem level (Chandler and Vargo, 2011). Such an
account requires the consideration of value co-
creation interactions and outcomes at various levels
of aggregation (micro, meso, and macro) (Strokosch
and Osborne, 2020). In IT services, value co-creation
happens across and within layers of people,
processes, and interactions. This dynamic and
continuous IT service improvement process occurs
within and across layers of the IT service ecosystem.
Figure 1 depicts a holistic picture of the research
position, with the potential relationships between tiers
of the IT service ecosystem. This is the basis for
further empirical investigation of the phenomena of
value co-creation.
Figure 1: Position of current study.
IT value scholars call for more practical and
evidence-based research to justify and enhance the
value creation involving IT processes based on the
modern perspective of the service ecosystem
(Cronholm et al., 2020, Cronholm et al., 2017, Vargo
and Lusch, 2017). From this background, current
research emerges.
3 PROPOSED METHODOLOGY
The study adopted a qualitative approach based on
Grounded Theory (Charmaz, 2006, Gioia et al., 2013)
to gain an in-depth understanding of value co-creation
in the IT service ecosystem from a multilevel
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perspective. Since the main focus of grounded theory
research is to propose theories that are strongly
connected to the field data (Urquhart and Fernández,
2016), and the explanatory generation of theory is a
desired outcome (Birks and Mills, 2015) of current
research.
To enable the study of value co-creation at the
different ecosystem levels, an interpretive case study
approach was used to define the units of analysis
(Walsham, 1995). Following this approach, a case
study with embedded units of analysis was used. We
employ an inductive form of reasoning by drawing
conclusions based on observations. Following the
grounded theory perspective, the researcher draw
upon ideas from the literature and other sources to
formulate the elements of the theory. This is
important since the literature will be consulted in the
final stages of the study (Glasser and Strauss, 1967)
3.1 Research Setting, Data Collection
It is important to examine service ecosystems in a
specific context (Voss et al., 2016). For our study, we
chose a higher education context as the creation of
value and improving well-being are key success
factors for these types of organizations. Within the
selected institution taking advantage of technologies
for purposes of efficiency and ensuring that
technologies are ‘fit for purpose’ are critical strategic
priorities. According to the strategy plan 2020-2025
of the case study institution, the university made a
major investment of around 350 million dollars in
digital infrastructure, including 20 million dollars in
educational technologies such as virtual learning and
digital research infrastructure to support major
functions of learning and teaching, research, and
engagement.
The research is set in the IT department (~ 320
workers) within a large Australian educational
institution (~50,000 enrolments). The IT department
has a complex structure with various internal and
external stakeholders with seven main IT domains. IT
foundations, IT learning and teaching, IT research, IT
service centre, IT operations and IT value
management. Each IT domain comprises different
levels of IT directors, IT managers, IT supervisors
and IT engineers who are dealing with various users
and customers. As such, this empirical ground is
suitable for the purpose of our study as it not only
comprising of dyadic interactions between ecosystem
actors on an actor-to-actor level but also represents a
network of interactions and exchanges in higher
levels of teamwork, within a broader IT department,
with business actors and external environment of the
organization.
This aligns with the fact that as
enterprises grow in size and complexity, the emphasis
shifts from focusing on the micro level to the meso
and the macro levels (Vargo and Lusch, 2019).
The educational institution represented the case
study (macro level) with an embedded IT department
(meso level), which in turn has embedded individual
users and IT actors (students, researchers, academics,
and staff) (micro level). Figure 2 shows the case study
actor2actor ecosystem. IT service in this context
creates and delivers ICT and related practices and
processes to facilitate learning, teaching and research
for users and customers of the institution (strategy
plan 2020-2025).
Figure 2: IT service ecosystem of the current study
(actor2actor map).
The analysis of the IT service ecosystem uses the
Chandler and Vargo (2011) three-level model of
context. The respondents' perceptions of value
creation when using IT services to interact with
customers and users are represented at the micro
level. The respondents' perceptions of the IT service
regarding management and supervisory levels are
represented at the meso level. Respondents’
perception when considering IT services in dealing
with business and IT direction is shown at the macro
level. Additionally, the interactions between the
levels and within them define and facilitate the
ecosystem's constant emergence. Table 1 provides
details on level definitions and their interpretations.
We completed the ethical approval process for
conducting open-ended interviews and focus groups.
We will randomly send the request for participation
to potential candidates via email. Following the
snowball sampling approach, we discover
stakeholders involved in the IT service process as we
go through interviews and focus groups and gradually
learn about the ecosystem. With a loose study design,
we begin data collection with IT directors, managers,
and supervisors in the study’s first phase. In the next
step, we will run focus groups with users to capture
their viewpoints on the phenomenon.
Value Co-Creation in the IT Service Ecosystem
223
Table 1: IT service ecosystem levels of current research.
Definition
(Chandler and
Vargo, 2011)
Definition
in the IT
service context
Actors and
exchange
in this study
Micro
Service
exchange
among actors
as dyads
IT user-service
provider dyadic
exchange
Direct service
Exchange
between IT
frontliners such as
help desk serving
students, staff, and
researchers
Meso
Service
exchange
among dyads
as triads
Indirect service
exchange
through IT
teams, including
engineers,
supervisors,
managers
Indirect Exchange
between IT teams,
engineers,
supervisors, and
managers
Macro
Service
exchange
among triads
as ecosystems
Indirect
exchange
through IT
directors,
business
partners, and
external entities
The indirect
exchange between
IT team directors
and business
partners such as
CFO and external
consultants
4 CONCLUSION
In the widening space of increasingly connected
technologies, people, and entities, it is critically
important for IT value researchers to expand their
scope to more holistic directions to be compatible
with a dynamic and complex world. Studies show a
significant gap in addressing the holistic, multi-level
nature of value co-creation in IT service ecosystems.
The current research guided by the main question of
“How can value co-creation be understood in a multi-
level IT service ecosystem?” The study aims to
develop a framework for value co-creation in the IT
service ecosystem. Such framework will contribute to
both S-D logic and IT service value research domains
by applying a multi-level perspective to the IT value
co-creation process from the “service ecosystem”
perspective and considering value co-destruction and
well-being of the IT service ecosystem that is barely
considered and investigated.
Our conceptualization changes the way we think
about the value co-creation concept as a dyadic
exchange between user and service provider to a
holistic and multi-level phenomenon. This novel
approach is especially significant for understanding
the complex context of IT service that has critical
priority in the strategic goals of organizations. The
disaggregation of the ecosystem levels enables the
investigation of value creation factors within and
across levels. This is in line with previous research
stating that the understanding of service ecosystems
requires a multilevel perspective, considering an
interplay between micro, meso, and macro levels of
the ecosystem (Chandler and Vargo, 2011).In the IT
service ecosystem, interconnected levels influence
and form each other as multiple actors (individuals,
IT teams, IT department, business actors and external
entities) engage in dynamic, interdependent
interactions shaping and improving the ecosystem
value creation. It could also be argued that this
research will use data from only one educational
institution. This focus enables an in-depth analysis of
value creation which is a contextual phenomenon
(Vargo et al., 2017). Studying and comparing other
diverse settings may provide new insights into how
the nature of the sector influence value creation at
different levels.
Given that value and well-being can
vary over time, a longitudinal study of value creation
dynamics may provide further insights.
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