Available online at www.sciencedirect.

com

ScienceDirect
Procedia - Social and Behavioral Sciences 189 (2015) 442 448

XVIII Annual International Conference of the Society of Operations Management (SOM-14)

Co-creation of social value through integration of stakeholders

Amit Kumar Agrawala,*, Arun Kumar Kaushikb, Zillur Rahmanc
a, b
c

Research Scholar, Department of Management Studies, Indian Institute of Tehnology, Roorkee (247667), India
Associate Professor, Department of Management Studies, Indian Institute of Tehnology, Roorkee (247667), India

Abstract
Co-creation of value has emerged as the most recent and dynamic phenomenon in management literature. Resource integrators as
actors (customers, suppliers, intermediaries) are at the helm of every value co-creation process, nesting it in the social context.
Thus, the value emerging from co-creation is social in nature. The purpose of our study is to define how stakeholders are creating
social value in co-creation for themselves and other customers. Considering the case study of Rastriya Swasthya Bima Yojna
(RSBY), we would be discussing how the engagement of various stakeholders led to the evolution of social value for all the
stakeholders involved in value co-creation. The study primarily focuses on social value through co-creation. Thus, other outcomes
have been purposely left out which is a major limitation of this study.
2015
2015The
TheAuthors.
Authors.
Published
Elsevier

Published
by by
Elsevier
Ltd.Ltd.
This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the scientific committee of XVIII Annual International Conference of the Society of
Peer-review
responsibility
of the scientific committee of XVIII Annual International Conference of the Society of
Operations under
Management
(SOM-14).
Operations Management (SOM-14).
Keywords: Value co-creation; customer engagement; social value; network

1. Introduction
Multidimensional aspects of value and complexities surrounding its nature have long been attracting the attention
of management scholars across the world. Holbrook (1996) defined value as an interactive relativistic preferential
experience. The concept of value has also evolved over time - from functional or utilitarian, to perceived value, value
for customer, value chain concept, relationship value, superior value and recently co-created value. Such is the
importance of value that Marketing Science Institute (MSI) has included it in top research priorities for the years 201012, and 2012-14 (MSI 2012; 2014).

*Corresponding author. Tel. +918954167407.

E-mail address: amitkddm@iitr.ac.in

1877-0428 2015 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the scientific committee of XVIII Annual International Conference of the Society of Operations
Management (SOM-14).
doi:10.1016/j.sbspro.2015.03.198

Amit Kumar Agrawal et al. / Procedia - Social and Behavioral Sciences 189 (2015) 442 448

The most important development in the concept of value over time has been the realization that value to the
customer is not the exchange value, i.e. products or services they received through the transaction; actual value is
value in-use or experiences undergone through the use of the product or service. Products or services received by the
customer signify only the attribute satisfaction whereas the experiences undergone through the use of the products
symbolise goal satisfaction (Wodruff, 1997). Emergence of service dominant (SD) logic has reinstated that firm is
merely the facilitator of value proposition and it is the customer who co-creates value (Vargo and Lusch, 2004; 2007).
It is also proposed in SD logic that all social and economic actors are resource integrators (Vargo and Lusch, 2007
p.7). These two propositions bring to the front the role of customers and other stakeholders in the co-creation of value.
Every value co-creation process is nested in social context with interaction and dialog as building blocks (Gummesson,
2004; Edvardsson et al., 2011). So whenever value co-creation is discussed, it should be appreciated in a social context
where a large number of actors such as firms, suppliers and customers are present in the system. Network and
configuration of multiple actors play the most important role in reshaping and developing value.
The present paper deals with how involvement of various stakeholders in co-creation can lead to the development
of social value. We would specifically be presenting the roles of various actors in value co-creation through the case
of Rashtriya Swathya Bima Yojna, an innovative health insurance scheme ran by the Indian government to help poor
people avail health facilities. Various stakeholder involved in co-creation were Government of India (GOI), doctors,
insurance companies, patients and society as a whole. We would shed light on how society benefits when various
stakeholders come together and interact, and how social value is achieved in the form of improved health and better
society.
The paper is structured as follows: First section discusses value co-creation followed by the second section
presenting the roles of various stakeholders. Finally, we consider the case of the rural health insurance scheme to
exhibit how value is co-created by stakeholders through an innovative scheme, thus leading to the benefit of society.
2. Literature review
2.1. Value co-creation
Creating, communicating and delivering value are identified as primary activities of any firm. Value is defined as
the capacity of goods, services or activity to satisfy a need or provide a benefit to a person or legal entity (Haksever
et al 2004, p.292). While existing studies on value creation have addressed added value, value chain analysis, superior
value, perceived value, relationship value, stake holder value and value in-use, studies on value creation and cocreation are still fragmented (Payne and Holt 2001; Wodruff 1997; Snchez-Fernndez and Iniesta-Bonillo, 2007).
Various perspectives have been considered by authors to study value co-creation. Different perspectives outlined
are: management perspective (Prahalad and Ramaswamy 2000, 2004; Etgar 2008: Nambisan and Baron 2008; Payne
et al. 2008), marketing perspective (Prahalad and Ramaswamy 2004; Payne et al. 2008; Cova and Dalli 2009;
Gummesson, 2004; Grnroos and Ravald, 2011), service logic and service dominant logic(Vargo and Lusch 2004;
Edvardsson et al. 2011; Vargo 2008), design logic (Nenonen and Storbacka 2010; Kohler et al., 2011), innovation and
new product development perspective (Kaushik and Rahman 2014; Prahalad and Ramaswamy 2003; Sawhney et al.
2005; OHern and Rindfleisch 2010).
Various definitions of value co-creation have been discussed in management literature with perspectives from
marketing, service, interaction, design, innovation and NPD. Kambil et al. (1996) were the first to coin the term value
co-creation for emphasizing the role of customers in business strategy and marketing, but the term was popularized
and disseminated by Prahalad and Ramaswamy (2000; 2004) who conceptualized value co-creation as the co-creation
of personalized experiences with the customers. Instead of focusing only on the offering, organizations should
emphasize on experience creation as the basis of value co-creation at multiple points of exchange. Table 1 presents
various definitions of value co-creation as given by different authors.

443

444

Amit Kumar Agrawal et al. / Procedia - Social and Behavioral Sciences 189 (2015) 442 448
Table 1. Various definitions of value co-creation
Authors

Value co-creation

Grnroos and
Voima (2013)

[] refers to customers creation of value-in-use where co-creation is a function of interaction.

Roser et al. (2013

p.23)

[] an interactive, creative and social process between stakeholders that is initiated by the firm at different stages of
the value creation process.

Ind and Coates

(2013 p.92)

[] as a process that provides an opportunity for on-going interaction, where the organization is willing to share its
world with external stakeholders and can generate in return the insight that can be derived from their engagement.

Gronroos (2012
p.1523)

[] is a joint collaborative activity by parties involved in direct interactions, aiming to contribute to the value that
emerges for one or both parties.

Edvardsson et
al.(2011 p.327)

[...] is shaped by social forces, is reproduced in social structures, and can be asymmetric for the actors involved.

Xie et al.(2008)

[] Prosumption as value creation activities undertaken by the consumer that result in the production of products
they eventually consume and that become their consumption experiences.

Payne et al. (2008

p.84)

[] process involves the supplier creating superior value propositions, with customers determining value when a
good or service is consumed.

The definitions in the table 1 reflect some of the attempts to conceptualize value co-creation. Our conceptualization
of value co-creation is that of creation and delivery of richer experiences to stakeholders as a part of the process along
with tangible outcomes, for instance, in the case study considered in this paper, availing of health care facilities by
stakeholders.
Most of the research on value co-creation has been done either with business to consumer, or consumer to business
perspective; the stakeholder approach has recently been adopted in value co-creation studies. Thus, involvement of
stakeholders in co-creation of value remained in nascent stages. Stakeholder involvement in value co-creation started
getting attention of researchers only when network study and role of various other actors came to light.
2.2. Role of stakeholders
Earlier studies on value creation concentrated on the customer as a focal point. Customer importance in value
creation gained prominence with the concept of quality improvement and productivity gains (Ziethmal, 1998).
Customer as a resource was considered key to achieving competitive advantage because of the free labour the customer
provided. Later, various researchers spoke for customer integration in the firms value chain through expansion of
organizational boundaries. Customers later came to be considered human resources which were to be managed by the
firm to increase efficiency and effectiveness. Also, the role of customers in service settings and creating value started
gaining importance.
Normann and Remirez (1993) proposed that value started becoming denser in nature when actors started moving
from their pre-defined roles in the network towards newer and dynamic functions. Kuppelwieser (2013) identified the
role of customers in co-creating value for other customers through an example of YouTube.
3. Methodology
Case study methodology is used in the present study to obtain an answer to how stakeholders are creating value in
co-creation (Yin, 1994). The case study used is a single case design which is the most appropriate when the study
deals with an exercise that brings in fresh perspective to the problem and challenges existing knowledge and untested
assumptions.
A healthy population is the reflection of social and economic progression of any nation. Ill-health can induce the
vicious circle of poverty, resulting into indebtedness and impoverishment. We present co-creation as means to creating
social value and extending health care services to the wide poor population of India. Through a critical review of
literature and the case-study on Rastriya Swasthya Bima Yojna (RSBY) scheme, we propose engagement of various
stakeholders in co-creation of value to fight the menace that has captivated rural India. In addition to stakeholders

Amit Kumar Agrawal et al. / Procedia - Social and Behavioral Sciences 189 (2015) 442 448

engagement for co-creation of social value, the incentives present for each party can help further extend the reach of
health care to far flung areas.
The case study on RSBY or rural health insurance policy launched by GOI is chosen due to four main reasons:
1) The stated mission of RSBY is to :
x Provide financial security to people belonging to the BPL category from hospitalization related expenses.
x Increase access to quality health care.
x Provide beneficiaries the power of choice to select a health care provider.
x Provide a scheme which is simple and transparent for the end user.
2) As an innovative rural scheme, it is committed to provide innovative health care solutions to the poor living
below poverty line, and give them a choice to select between private and public hospitals for availing health care
facilities.
3) RSBY is a business model for the social sector with a win-win proposition for all stakeholders: government,
doctors, health insurance providers, hospitals and patients.
4) This is the first scheme of its kind to employ the use of smart card.
5) RSBY has robust monitoring and evaluation programs.
3.1. About RSBY
Rastriya Swasthya Bima Yojna (RSBY) was introduced in August 2008 by GOI for extending health insurance
facility of Rs. 30,000 per annum to people below the poverty line. Surging health costs tremendously increase the
financial burden on families in India and in the case of BPL families, they may even lead to abject poverty. The
scheme reaches out to this segment of society, charging them Rs. 30 as insurance premium while the rest is paid by
central and state governments in a 75:25 ratio. Till date, 28 states with 364 districts have witnessed the success of the
RSBY scheme (Jaiswal, 2010; Swarup and Jain, 2010).
Within a short span of time RSBY has been able to acquire a long list of customers, insurance agents, hospitals,
and technology service providers, thus creating a platform where one of the weakest sections of society could avail
medical facilities while other stakeholders also benefitted through acquisition of new customers, flow of money, and
increased reach of service providers.
3.2. Value co-creation through stakeholders involvement
RSBY as a business model has emerged as a platform for the engagement of six stakeholders: GOI, insurance
companies, hospitals, doctors, technology service providers and BPL families. We would be discussing each of them
individually to see how they helped in co-creation of value (Jaiswal, 2010; Swarup and Jain, 2010).
3.2.1. Government of India (GOI)
India is a welfare state and GOI is entrusted with the responsibility of looking after each section of society,
particularly the poor and weak. Rising population, income inequalities and surging health costs have widened social
gaps and it is the responsibility of the government to bridge these gaps which may otherwise have serious
repercussions in the form of crime and other social menaces that may further deteriorate the health of the country
(Jaiswal, 2010; Swarup and Jain, 2010).
GOI acts as a partner in the co-creation of social value by extending support to the scheme and paying 75% of the
premium. Thus, it shares the burden of the poor by financing the scheme. GOI also extends various other services and
helps in regular monitoring of the scheme. The scheme has emerged as one of the biggest social schemes where the
poor can avail health benefits and contribute towards the countrys GDP (Gross domestic product).
3.2.2. Insurance companies
Insurance companies are benefitted by the scheme by getting access to a segment which was hitherto untapped by
them; it helps them extend their reach to the lower strata of society. They are able to increase their reach by bringing
more and more people in the ambit of the scheme, insuring more people. Participation in a social scheme also helps

445

446

Amit Kumar Agrawal et al. / Procedia - Social and Behavioral Sciences 189 (2015) 442 448

in building a good brand image of the company. Both public and private insurance companies have shown keen interest
in the insurance scheme (Jaiswal, 2010; Swarup and Jain, 2010).
3.2.3. Doctors
Doctors have also emerged as key beneficiaries in RSBY with the government allowing government doctors a
share of the revenue collected through the scheme. With increased empanelment, doctors are able to get larger number
of patients who earlier did not come to hospitals. These doctors receive their fee from GOI. A sense of serving the
society has also motivated more doctors to engage with the scheme (Jaiswal, 2010; Swarup and Jain, 2010).
3.2.4. Technology service providers
Technology has remained key to RSBY scheme with the whole scheme run as a cashless smart card health scheme.
Right from BPL data collection/validation, generation of identity numbers, enrolment of beneficiaries, database
management, networking with healthcare providers and claim reimbursements, the scheme is administered through
standard IT software and maintained by various software vendors. RSBY has also led to generation of job
opportunities for vendors, and development of innovative techniques for registering and monitoring BPL families,
and providing them feedback (Jaiswal, 2010; Swarup and Jain, 2010).
3.2.5. Below Poverty Line (BPL) families/customers
The scheme was specifically launched for underprivileged people belonging to the unorganized sector. These
people lived in abject poverty and were not able to avail health facilities for themselves and their families. BPL
families also co-create value through their active participation and experiences they undergo by availing the health
facilities using smart card. Social value co-created for BPL families comes in the form of better health and protection
from debt for paying health bills. Thus, a better, healthier and more prosperous society can be created through the
engagement of BPL families (Jaiswal, 2010; Swarup and Jain, 2010).
4. Discussion
The present study is an attempt to emphasize the fact that value co-creation is not limited to customers only. Indeed,
efforts of various stakeholders engaged in co-creation of value for themselves and others is an example of how cocreation can greatly impact society. As RSBY has helped increase the prosperity of various stakeholders and also
created social value, we propose that interaction and relationships are key to value co-creation.
Technology and disruptive innovation have resulted in successful value co-creation which was otherwise
hampered due to physical and situational limitations. Technology has helped in co-creation in far-flung areas thus
increasing the range and width of co-creation efforts. Also, co-creation leads to the development of innovative
solutions which reflects that customers and various stakeholders are well aware of their needs and that it is their
involvement which could bring out customized and personalized products and services tailored according to their
requirements.
5. Conclusion and recommendations
Citing the case of RSBY, we would like to conclude that seeing co-creation as a customerfirm interaction will
not justify the concept as at any point of time, the customer is not alone and is surrounded by various other actors.
Thus, value co-creation happens in a social context with interaction and relationships as building blocks. Prahalad and
Ramaswamy (2004) enunciated DART model where they emphasize on dialogue, accessibility, risk and transparency
as founding stones. We found each of these founding stones implicit in our study.
Further studies should look into how value co-creation gets disrupted and what are the factors that could lead to
value destruction. Future research should also examine the role of trust and cultural context in value co-creation.

Amit Kumar Agrawal et al. / Procedia - Social and Behavioral Sciences 189 (2015) 442 448

References
Cova, B., & Dalli, D. (2009). Working consumers: the next step in marketing theory? Marketing Theory, 9 (3), 315-339.
Edvardsson, B., Tronvoll, B., & Gruber, T. (2011). Expanding Understanding of Service Exchange and Value Co-creation: A Social Construction
Approach. Journal of the Academy of Marketing Science, 39 (2), 327-339.
Etgar, M. (2008). A descriptive model of the consumer co-production process. Journal of the academy of marketing science, 36 (1), 97-108.
Grnroos, C., & Ravald, A. (2011). Service as business logic: implications for value creation and marketing. Journal of Service Management, 22
(1), 5-22.
Grnroos, C., & Voima, P. (2013). Critical service logic: Making sense of value creation and value co-creation. Journal of the Academy of
Marketing Science, 41, 133-150.
Gummesson, E. (2004). Return on relationships (ROR): the value of relationship marketing and CRM in business-to-business contexts. Journal of
Business & Industrial Marketing, 19 (2), 36 148.
Haksever, C., Chaganti, R., & Cook, R.G. (2004). A model of value creation: strategic view. Journal of Business Ethics, 49 (3), 295-307.
Holbrook, M.B. (1996). Consumer Value-A Framework for Analysis and Research. New York: Routledge.
Ind, N., & Coates, N. (2013). The meanings of co-creation. European Business Review, 25 (1), 86-95.
Jaswal, M. (2010). Insuring Health of Millions - Smart Use of Technology. IRDA Journal, 8 (12), 25-28.
Kambil, A., Ginsberg, A., & Bloch, M. (1996). Re-inventing value proposition. Working Paper No. 2451/14205, New York University.
Kaushik, A.K., & Rahman, Z. (2014). Perspectives and Dimensions of Consumer Innovativeness: A Literature Review and Future Agenda. Journal
of International Consumer Marketing, 26 (3), 239-263.
Kohler, T., Fueller, J., Stieger, D., & Matzler, K. (2011). Avatar-based innovation: Consequences of the virtual co-creation experience. Computers
in Human Behavior, 27 (1), 160-168.
Kuppelwieser, V.G., Merlin, C.S., & Gabriel, C. (2013). 1+1 does not always equal value creation: The case of YouTube. Marketing Letters, 24
(3), 311-321.
Nambisan, S., & Baron, R.A. (2009). Virtual Customer Environments: Testing a Model of Voluntary Participation in Value Co-creation Activities.
Journal of Product Innovation Management, 26 (4), 388-406.
Nenonen, S., & Storbacka, K. (2010). Business model design: conceptualizing networked value co-creation. International Journal of Quality and
Service Sciences, 2 (1), 43-59.
Norman, R., & Ramirez, R. (1993). From Value Chain to Value Constellation: Designing Interactive Strategy. Harvard Business Review, 71 (4),
65-77.
OHern, M.S., & Rindfleisch, A. (2010). Customer co-creation: a typology and research agenda. Review of Marketing Research, 6 (1), 84-106.
Payne, A., & Holt, S. (2001). Diagnosing customer value: integrating the value process and relationship marketing. British Journal of Management,
12 (2), 159-182.
Payne, A.F., Storbacka, K., & Frow, P. (2008). Managing the Co-creation of Value. Journal of the Academy of Marketing Science, 36 (1), 83-96.

Prahalad, C. K., & Ramaswamy, V. (2000). Co-opting Customer Competence. Harvard Business Review, 78 (1), 79-90.
Prahalad, C. K. & Ramaswamy, V. (2004). Co-creation Experiences: The Next Practice in Value Creation. Journal of Interactive Marketing, 18
(3), 5-14.

447

448

Amit Kumar Agrawal et al. / Procedia - Social and Behavioral Sciences 189 (2015) 442 448
Roser, T., DeFillippi, R., & Samson, A. (2013). Managing your co-creation mix: co-creation ventures in distinctive contexts. European Business
Review, 25 (1), 20-4.
Snchez-Fernndez, R., & Iniesta-Bonillo, M.. (2007). The concept of perceived value: a systematic review of the research. Marketing Theory, 7
(4), 427-451.
Sawhney, M., Verona, G., & Prandelli, E. (2005). Collaborating to create: The internet as a platform for customer engagement in product innovation.
Journal of Interactive Marketing, 19 (4), 4-17.
Swarup, A., & Jain, N. (2010). Rashtriya Swasthya Bima
http://eprints.cscsarchive.org/id/eprint/357 (accessed 28 May 2014).

Yojana

Case

Study

from

India.

Available

at:

Vargo, S.L., & Lusch, R.F. (2004). Evolving to a New Dominant Logic for a Marketing. Journal of Marketing, 68 (1), 1-17.
Vargo, S.L. (2008). Customer integration and value creation Paradigmatic Traps and Perspectives. Journal of Service Research, 11 (2), 211-215.
Woodruff, R.B. (1997). Customer value: The next source for competitive advantage. Journal of the Academy of Marketing Science, 25 (2), 139153.
Xie, C., Bagozzi, R.P., & Troye, S.V. (2008). Trying to Prosume: Toward a Theory of Consumers and Co-creators of Value. Journal of the Academy
of Marketing Science, 36 (1), 109-122.
Yin, R.K. (1994). Case Study Research (2nd ed.). Thousand Oaks, CA: Sage.
Ziethaml, V.A. (1988). Consumer perceptions of price, quality, and value: A means-end model and synthesis of evidence. Journal of Marketing,
52 (3), 2-22.