Opportunities and challenges of value co-creation: the role of customer involvement in hotel service development

Purpose –The purpose of this paper is to identify the double-edged sword of customer involvement (perceived relationship quality and coordination cost) in new service development (NSD) in the hotel industry and to explore when customers should be involved from the service provider’s view.

Design/methodology/approach – A total of 252 valid questionnaires are collected from hotel managers, and ordinary least squares regression analysis is conducted to test the hypotheses.

Findings –Results show that customer involvement causes higher coordination cost but also shows no direct positive effect on perceived relationship quality. Furthermore, this study finds that service climate reduces the negative effect of customer involvement and enhances its positive effect. By contrast, customer complexity intensifies the negative effect of customer involvement.

Practical implications –Managers should realize that customer involvement creates a tension between benefits and costs. Such tension can be magnified or relieved according to the hotel’s internal service climate or external customer complexity.

Originality/value –This study empirically examines the double-edged sword of customer involvement and tests the boundary conditions associated with hotel back and front office factors (service climate versus customer complexity).