The Influence of Context on Value Proposition Co-creation of

Online Shopping Platform in China

Fan Yuan, Yufang Jin and Dahai Dong

School of Economics and Management, Dalian University of Technology, Dalian, China

Keywords: Service-Dominant Logic, Value Proposition, Context, Online Shopping Platform.

Abstract: Service-Dominant (S-D) logic emphasizes contextual conceptualization of value, while relatively little

attention has been paid on context within value proposition co-creation research. This paper contributes to

value proposition (VP) co-creation within S-D logic by providing the empirical evidence of how context,

defined as stakeholders with unique reciprocal links among them, influencing this process of the online

shopping platform. Synthesizing S-D logic and social network theory, the VP co-creation is conceptualized

as an operant resource integration process that is influenced by the tie strength among the consumer and

three core stakeholder groups, namely core service providers, supporting service providers and other

consumers, of the platform. Data collected from 380 consumers of major online shopping platforms in

China provide support for the study and demonstrate the influence on VP co-creation brought by

stakeholder context is mediated by quality of shared information and trust among stakeholders.

1 INTRODUCTION

Vargo and Lusch (2004) highlighted the importance

of value proposition (VP) in the work on service-

dominant (S-D) logic. As mentioned in the ten

foundational premises (FPs) of this paper, firm and

customer should be considered in a relational context

(FP8), and the significant role of VPs should be

recognized (FP7). More recently, researchers extend

their focus on dyad interactions between customer

and supplier to consider value co-creation of

stakeholders' interacting and exchanging across

networks (Vargo and Lusch, 2008). VP within the

domain of S-D logic is, therefore, defined as a

process that enables the alignment of value within all

marketing stakeholder groups (Vargo and Lusch,

2017; Frow and Payne, 2011). Context as a set of

unique actors with unique reciprocal links among

them (Carrington, Scott and Wasserman, 2005;

Sheth and Uslay, 1997), affects stakeholders' ability

to directly access and leverage resources and thus

influence the whole process of value co-creation

(Chandler and Vargo, 2011). S-D logic emphasizes a

phenomenological and experiential conceptualization of

value (Vargo, Maglio and Akaka, 2008), and hence,

context acts as a critical variable both in the creation

and determination of value (Vargo, Lusch and

Akaka, 2010). For this reason, the concept of value

has been extended to value-in-context. According to

Chandler and Vargo (2011), value propositions are

created through practices among stakeholders that

integrate operand/operant resources，which cannot

be understood without considering context.

However, the context of multiple stakeholders has,

to date, received relatively little attention within VP

development research (Frow and Payne, 2011).

This study thus would like to address such an

issue and empirically illustrate the role context plays

in co-creating VP within S-D logic domains. By

considering this purpose at a network level, we call

for an extension of thinking beyond customer-

supplier relationships to a network of stakeholder

relationships (Frow and Payne, 2011; Lusch, Vargo

and O'Brien, 2007). The study is set in the online

shopping platform sector, the businesses of which

are dependent on stakeholder value network viewed

as pertinent for the study of VP co-creation (Quero

and Ventura, 2018; Ballantyne, Frow, Varey and

Payne, 2011).

The paper is organized as follows: First, the

author reviews the relevant concepts as the

theoretical background. Second, the mechanism on

how multiple stakeholder relationships of the online

shopping platform influence the co-creation of VP is

proposed and the hypotheses are thus raised. Third,

Yuan, F., Jin, Y. and Dong, D.

The Inﬂuence of Context on Value Proposition Co-creation of Online Shopping Platform in China.

DOI: 10.5220/0010417200150022

In Proceedings of the 3rd International Conference on Finance, Economics, Management and IT Business (FEMIB 2021), pages 15-22

ISBN: 978-989-758-507-4

the research method is clarified and data statistics are

analyzed. A short discussion and implication on

managerial practices is given as the conclusion.

2 THEORETICAL BACKGROUND

2.1 The Concept of VP

The original conceptualization placed VP as the first

step in value delivery. In contrast, S-D logic suggests

that value is not delivered by one party to another,

and that VP potentially plays a key coordination role

between stakeholders of marketing system (Frow

and Payne, 2011). Therefore, the concept moves its

focus from customer-supplier relationships to a

stakeholder-unifying process (Lusch and Webster,

2011), combining the willingness of stakeholders to

subordinate individual goals and associated actions

to collective ones.

Within S-D logic, the co-creation of VP could

be considered as an operant resource integration

process. The process is no longer the conventional

“producing” led by the firm, but the process of

“resourcing” focusing on resource creation,

resource integration and resistance removal among

stakeholders (Lusch, Vargo and Wessels, 2008).

Ballantyne and Varey (2006) made this idea more

specific and indicate that VPs in the S-D logic

perspective are formed through activities of

reciprocal exchange of knowledge among

stakeholders. Since value is described as being

“idiosyncratic, experiential and contextual” (Vargo

and Lusch, 2008), stakeholders may have different

views on value in accordance with the context they

are embedded (Frow and Payne, 2011). As a result,

context can play an important role in VP co-

creation.

2.2 The Concept of Context

S-D logic redirects the focal point of value creation

to the value uniquely derived and determined by an

individual service system that implies the context is

important to the creation of value (Vargo, Lusch and

Akaka, 2010). Context, as Chandler and Vargo

(2011) defined, is a set of unique actors with unique

reciprocal links among them. Existing researches

point out that the fundamental parts of value co-

creation, resource and service are critically

dependent on the contexts they are embedded in

(Chandler and Vargo, 2011; Uzzi, 1997; Vargo et

al., 2010). Especially when stakeholders' unique

positions in contexts affect their ability to access and

leverage resources both directly and indirectly (Uzzi,

1997), context could no longer be considered

exogenous to value creation. This has been

recognized in S-D logic as “ value-in-context ”

(Vargo ， Maglio and Akaka, 2008). Focusing on

value creation and drawing heavily from the social

networks analysis literature makes salient the

heterogeneous nature of context (Wasserman and

Faust, 1994).

2.3 Social Network Analysis

Social relationships are studied mainly from two

perspectives. One is ego network analysis, starting

with an individual and studying the relationships

he/she has with other people (Arnaboldi, Guazzini,

and Passarella, 2013). Since an open network

environment such as the online shopping platform

may find it hard to get a panoramic view of the

whole picture, ego network analysis could help

make salient the properties between the ego and

alters.

In the context of online shopping platform, we'd

like to partially accept the Christopher, Payne and

Ballantyne (1991) model, since it identifies a

manageable group of categories (Frow and Payne,

2011). In this model, the external core stakeholders

could be organized into groups of customer markets,

supplier/alliance markets, influence and referral

markets, each being sub-divided into more specific

entities. As proposed in this framework, the main

stakeholders of online shopping platform could be

divided into three groups as: 1) core service

providers of physical goods and knowledge-based

services on the platform; 2) supporting service

providers of a broader range providing assistant

services like payment, detection and logistics to

support transactions there; 3) other consumers with

similar shopping experiences there.

Of the key properties characterizing the social

relationships among stakeholders, tie strength - the

importance of the social relationship between two

individuals - is found to be one of the most

imperative features. The existing literature has

demonstrated the significant influence of tie strength

on social capital, which includes resources like

information (Chiu, Hsu and Wang, 2006;

Granovetter, 1973) and commitment to community

(Zhou, Zheng and Zhang, 2013), both theoretically

and empirically. Thus, there is reason to believe that

tie strength among stakeholders can possibly be a

decisive antecedent for VP development.

FEMIB 2021 - 3rd International Conference on Finance, Economics, Management and IT Business

3 CONCEPTUAL MODEL AND

HYPOTHESES

3.1 Conceptual Model

As mentioned above, the set of stakeholders and the

tie strength among them will partly define the

consumer's access to information, which will

influence the potential of resources to be drawn upon

for integration and trust, which in turn will influence

the extent of resource integration resistance removal,

and a stakeholder perspective of VP development

accordingly. As such, the author would like to

propose a conceptual model for co-creating VP as

follows:

Figure 1: Conceptual model.

Note: CSPT= core service provider tie strength, OCT=

other consumer tie strength, SSP = supporting service

provider tie strength, IFQ= information quality, TRU=

trust, WIL= willingness, SV= shared vision

3.2 Hypotheses

3.2.1 Context and Resourcing Process

Considered as an important antecedent of intellectual

capital exchange ( Nahapiet and Ghoshal, 1998),

trust refers to an individual' s expectation that

members on the platform will follow a generally

accepted set of values, norms, and principles (Chiu

et al., 2006) and information quality mainly focuses

on the qualities of information content and

information interactivity (Wei and Tang, 2016). Tsai

and Ghoshal (1998) provide empirical support for

the influence of social interaction ties on

interknitting resource exchange and combination.

Although Grannovetter (1973) has theoretically

demonstrated that weak ties serve as information

bridges connecting individuals with different socio-

economic characteristics, which could effectively

transmit information absent in their strong-tie

relationships, the research by Kowalkowski, Ridell,

Röndell and Sörhammar (1992) suggests strong tie

advantages in forming more trust and reducing the

uncertainty faced by individuals. Empirical evidence

suggests that strong tie strength is indeed positively

associated with the amount of knowledge overlap

between the source and the recipient (Reagans,

2005). In addition, community members with strong

ties are prone to attachment and belonging to the

community which encourages them to trust each

other (Zhou et al., 2013).

Accordingly, hypotheses are set as follows:

H1a. The tie strength between the consumer and

the core service providers has positive effects on the

quality of information shared on the online shopping

platform.

H1b. The tie strength between the consumer and

the core service providers has positive effects on the

consumer’s trust to the online shopping platform.

H2a. The tie strength between the consumer and

other consumers has positive effects on the quality of

information shared on the online shopping platform.

H2b. The tie strength between the consumer and

other consumers has positive effects on the

consumer’s trust to the online shopping platform.

H3a. The tie strength between the consumer and

the supporting service providers has positive effects

on the quality of information shared on the online

shopping platform.

H3b. The tie strength between the consumer and

the supporting service providers has positive effects

on the consumer’s trust to the online shopping

platform.

3.2.2 Resourcing Process and VP

Development

As defined above, the VP development emphasizes

on the willingness of stakeholders to subordinate

individual goals and associated actions to collective

goals and actions, as well as the shared vision which

binds stakeholders together. Yim and Leem (2013)

suggests that as the level of mutual trust

accumulates, there are more exchanges of business

values and goals. Buckley, Clegg and Wang's (2006)

multiple case studies point out the necessity of trust

to foster a shared mindset. In short, the process of

VP development is fostered as a result of enhanced

mutual trust. High-quality information exchanged

among stakeholders is an essential operant resource

helping them to seek their own and mutually shared

range of benefits which forms the basis of

knowledge identified in shared vision (Frow and

Payne, 2011). Information quality effects cognitive

The Inﬂuence of Context on Value Proposition Co-creation of Online Shopping Platform in China

heritage of the stakeholders (Gummesson and Mele,

2010), which could generate social capital and

ultimately form a sense of belonging (Zhou et al.,

2013), triggering off the community identification,

and in turn consumer’s willingness to co-create VP.

Thus more hypotheses are raised:

H4a. The quality of information shared on the

online shopping platform has positive effects on

consumer’s willingness to co-create VP.

H4b. The quality of information shared on the

online shopping platform has positive effects on

shared vision of the platform.

H5a. Consumer’s trust in the online shopping

platform has positive effects on consumer’s

willingness to co-create VP.

H5b. Consumer’s trust in the online shopping

platform has positive effects on shared vision of the

platform.

4 REASERCH METHODOLOGY

AND RESULTS

4.1 Measurement Development

This conceptual model contains seven constructs,

including core service provider tie strength (CSPT),

other consumer tie strength (OCT), supporting

service provider tie strength (SSPT), information

quality (IFQ), trust (TRU), willingness (WIL) and

shared vision (SV), all being adapted from existing

literature (see Appendix for specific questionnaire

items and references).Synthesizing researches of tie

strength prediction and network density, tie strength

of core stakeholders is measured with four items

based on the combination of the amount of time and

recency of contact (Arnaboldi et al., 2013;

Granovetter, 1973). Information quality is assessed

with six items considering the quality and

interactivity of information content (Chiu et al.,

2006; Wei and Tang, 2016). Trust is assessed with

four items adapted to reflect the consumer’s beliefs

in stakeholders' credibility, promise keeping,

behavior consistency, and truthfulness, following

prior studies (McKnight, Choudhury and Kacmar,

2002; Ridings, Gefen and Arinze, 2002; Tsai and

Ghoshal, 1998). Based on the definition developed

above, the dependent variables of the model are

willingness and shared vision generated for VP co-

creation. Willingness is assessed through two items

considering the consumer’s enthusiasm to co-create

value on the platform, and the shared vision is

assessed with two items measuring the consumer’s

perceptions on whether stakeholders share the same

vision and goal for the platform's further

development (Chiu et al., 2006; Tsai and Ghoshal,

1998). Regarding all the measures, a six-point Likert

scale is adopted with anchors ranging from strongly

disagree (1) to strongly agree (6).

4.2 Survey Administration

Consumers are selected with different characteristics

from major online shopping platforms in China (e.g.

Taobao.com, JD.com and Xiaohongshu.com) as the

target group, and Questionnaire Star, a professional

online questionnaire platform, is used to collect

research data. The first page of the questionnaire

explain the purpose of this study and no breach of

confidentiality is ensured. 380 valid questionnaires

are collected through automatic deletion (setting a

threshold of a response time less than 1 second per

question) and manual exclusion (respondents with no

required shopping experience or those who clicked

through with the same option). Demographic

information of the respondents is shown in Appendix

table.

4.3 Questionnaire Data Analysis

Data analysis utilizes a two-step approach as

recommended by Anderson and Gerbing (1988).

Firstly, confirmatory factor analysis (CFA) is

applied to verify the relationships between observed

variables and latent variables in the hypotheses, and

then the structural relationships among latent

variables are tested. Both analyses are conducted

with AMOS 24.

4.4 Results

4.4.1 Reliability and Validity Tests

Reliability tests include internal consistency

reliability test and combination reliability test. The

result shows a high reliability of the model:

Cronbach's α for seven constructs all exceed 0.80

and composite reliabilities are all above 0.60.

Validity tests contain convergent validity test and

discriminant validity test. The CFA analysis for

convergent validity test shows that all variable

loadings are significant and exceed 0.60, and fitness

indexes meet the requirements. For detailed results

please see Appendix table: Reliability and Validity

Test Results.

FEMIB 2021 - 3rd International Conference on Finance, Economics, Management and IT Business

4.4.2 SEM Analysis of Conceptual Model

The model fit indices are within accepted thresholds,

and seven out of ten paths of it exhibit a p-value less

than 0.05 (see Table 1 and Figure 2), thus all

hypotheses are supported empirically, except

hypotheses 2a, 3a and 3b. As the model reflects, ties

among the consumer and core service providers

exhibit strong positive effect on resourcing process,

while effects of ties with other consumers and

supporting service providers are relatively weaker,

especially for the generation of the sense of trust.

Both information quality and the sense of trust have

a significant influence on the willingness and shared

vision to co-create an integrated VP, which proves

the importance of resourcing process for the

development of a stakeholder perspective of VP.

Table 1: SEM analysis of the conceptual model.

Estimate S.E. C.R. P

CSPT→TRU

.269 .050 5.419 ***

SSPT→TRU

.059 .039 1.501 .133

CSPT→IFQ .456 .067 6.790 ***

SSPT→IFQ .098 .053 1.848 .065

OCT→TRU .073 .045 1.620 .105

OCT→IFQ

.145 .061 2.376 .018

TRU→WIL

.117 .017 6.862 ***

TRU→SV .113 .049 2.306 .021

IFQ→WIL .073 .012 6.222 ***

IFQ→SV .253 .036 7.025 ***

Fitness indices

χ2/df=1.413, GFI=0.998 ,

RMSEA=0.033

NNFI=0.994, CFI=0.999

Figure 2: SEM analysis of the conceptual model.

5 DISCUSSION AND

IMPLICATION

5.1 Summary of Results

This study provides empirical evidence to illustrate

the mechanism of how VP co-creation process is

affected by network context. Tie strengths of

different stakeholder groups exhibit different

influence extents. When it comes to the online

shopping platform, influence of direct contact (e.g.

consumer with core service provider) tie strength is

the most significant, both for information and trust

acquiring. Whereas the influence brought by indirect

contacts (e.g. consumer with other consumers and

supporting service provider) is relatively weak.

Though partially demonstrating the advantage of

weak tie on information exchange (Granovetter,

1973), the drawbacks of weak tie strength in trust

acquisition also emerge at the same time. Trust

among stakeholders tends to have significant

positive effect on removal of resistance, which

contributes to consumer’s willingness to co-create

VP shared vision development. Information

exchanged from core stakeholders facilitates the

resource creation process, which helps consumers

recognize the components of stakeholders' VPs

depending on the in-use situation and take the

available value co-creation opportunities

accordingly.

5.2 Implications for Managerial

Practices

The result indicates that the context of the platform

will significantly affect the development process of

VP co-creation. Therefore, managers should develop

strategies such as expanding communication

channels and designing communication

encouragement mechanism to enhance the strength

of the relationships among stakeholders.

Additionally, the quality of shared information on

the platform forms the basis of VP co-creation.

Managers could design an auto-filtering mechanism

to help consumers get valuable information more

easily. The online shopping platform like

Taobao.com could add tags for comments from other

consumers, which helps facilitate information

collecting to meet their needs.

The Inﬂuence of Context on Value Proposition Co-creation of Online Shopping Platform in China

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APPENDIX

Demographic Information of Survey Respondents.

Measure Items Percentage

Gender Male 38.2%

Female 61.8%

Usage History Less than 1 year 32.6%

1-3 years 17.9%

More than 3 years 49.5%

Age 19-25 48.2%

26-30 18.7%

31-40 24.5%

41 or above 8.7%

Job Title Student 36.6%

Manager 8.7%

Administration staff 10.3%

Engineer 6.6%

Sales 5%

Others 32.9%

Education High school or below 6.1%

University 60.9%

Graduate school or above 16.1%

After-tax

Income

(per month)

3000 RMB or below 38.7%

3001-5000 RMB 19.5%

5001-8000 RBM 24.7%

8001 RMB or above 17.1%

Location First-tier cities 24.5%

Second-tier cities 55.3%

Prefecture-level cities 14.5%

Counties 3.7%

Small towns or villages 2.1%

Reliability and Validity Tests Results.

Construct Loading

Cronbach’s

alpha value

Composite

reliability

AVE

Core Service Provider

Tie Strength

0.855 0.764 0.588

CSP1 0.632

CSP2 0.727

CSP3 0.891

CSP4 0.860

Other Consumer Tie

Strength

0.873 0.798 0.607

OC1 0.777

OC2 0.793

OC3 0.753

OC4 0.786

Supporting Service

Provider Tie Strength

0.88 0.874 0.635

SSP1 0.788

SSP2 0.764

SSP3 0.771

SSP4 0.725

Information Quality 0.897 0.790 0.601

IFQ1 0.777

IFQ2 0.834

IFQ3 0.779

IFQ4 0.828

IFQ5 0.771

IFQ6 0.647

Trust 0.865 0.792 0.602

TRU1 0.735

TRU2 0.767

TRU3 0.806

TRU4 0.794

Willingness 0.834 0.694 0.751

WIL1 0.764

WIL2 0.693

Shared vision 0.823 0.751 0.798

SV1 0.813

SV2 0.737

The Inﬂuence of Context on Value Proposition Co-creation of Online Shopping Platform in China

Questionnaire Items and References.

Construct Item Reference

Context

Core service

provider (CSP) tie

strength;

 For the services I am interested in, I will spend a great

deal of time interacting with CSP/OC/SSPs.

 I have frequent communication with CSP/OC/SSPs

when I am shopping on the platform.

 I often exchange views with CSP/OC/SSPs on brands

and services.

 In the whole process of shopping (including pre-sale

consultation, shopping process and post-sale service),

I maintain a strong connection with CSP/OC/SSPs.

Arnaboldi et al.

(2013 );

Lin and Lu (2011);

Nahapiet and

Ghoshal (1998).

Other consumers

(OC) tie strength;

Supporting service

provider (SSP) tie

strength.

Resourcing

Process

Information quality

 The information shared by platform members is

relevant to my interests.

Chiu et al. (2006)；

Wei and Tang

(2016)；

DeLone and

McLean (2003).

 The information shared by platform members is

complete.

 The information shared by platform members is

timely.

 I have some control over the content of the platform

that I wanted to see.

 I could communicate with the service provider directly

for further questions if I want to.

 I could communicate in real time with other members

who share my interest in this platform.

Trust

 I believe that members on the platform have more

knowledge on services than I do.

McKnight (2002)；

Pavlou and Gefen

(2004)；

Ridings et al

(2002)；

Tsai and Ghoshal

(1998).

 Members on the platform will always keep promises

they make to one another.

 I believe that the cooperation among platform

members will produce beneficial results for everyone.

 Members on the platform are truthful in dealing with

one another.

Development

Willingness

 I would like to commit myself more to the platform, so

it will provide better products/services for me in the

future.

Anderson, Narus

and Van (2006)；

Chiu et al (2006)；

Nahapiet and

Ghoshal (1998).

 I think the members, including myself, are enthusiastic

about this development.

Shared vision

 The member of the platform shared the responsibility

for getting things done.

 I agree with the platform' s positioning and value

commitment.

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