Value Co -Creation Model of Service Innovation: Symbiotic Hypergame Analysis

Santi Novani, Kyoichi Kijima


From service science perspective, value co-creation based on mutual understanding between customer and provider is one of fundamental importance. Service-dominant (S-D) logic is tied to the value-in-use meaning of value. The roles of providers and consumers are not distinct, meaning that value is co-created, jointly and reciprocally, also mutually beneficial relationship. However, at crucial points of interaction between customer and provider, where the co-creation experience occurs and where value is co-created, misunderstandings and service breakdowns can destroy the relationship. In this paper, we analyze formally how customer and provider are sharing internal model in the first phase of value co-creation model of service innovation, i.e., co-experience and co-definition. In co-experience, customer and provider perceived the value of each value proposition differently. Customer have an own internal model and so provider is, therefore co-experience is the most crucial feature of service system. Symbiotic hypergame analysis, in general explicitly assumes that the players involved possess subjective internal model of the environment including the counterparts. These assumptions convince us that it is the most adequate and convenient for describing value co-creation process by customer and provider. First, we categorizing customer and provider into the several types based on customer expectation and provider ability. Then, analyze formally using symbiotic hypergame analysis, how mutual understanding can be achieved between customer and provider. From the analysis, mutual understanding can be achieved as long as customer and provider have same interpretation, customer who has high expectation believes that provider is innovative and vice versa. It has been proven by analyzing Hyper Nash equilibrium in each scenario for pair of each type based on symbiotic hypergame analysis.


Co-experience, Co- definition, Value Co-creation, Symbiotic Hypergame

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