Author:
Chathoth Prakash K.,Ungson Gerardo R.
Abstract
Purpose
This paper aims to develop a conceptual framework for further understanding the risks embedded in co-creation services in high-contact service transactions. It delineates behavioral and economic perspectives focusing on agency costs, risk behavior, compensation structure and provides a context in which information is processed.
Design/methodology/approach
Following an extensive review of the literature, propositions are advanced that relate an agent’s risk behavior to information processing, compensation and the propensity to engage in co-creation. These propositions provide a complementary context for understanding risks in the co-creation process.
Findings
The propositions detail how a service agent’s information processing can be enhanced if the customer’s expected utility from transactions is maximized by managing the agent’s risk behavior and earnings potential. A compensation structure that balances fixed base and variable pay can motivate risk-taking and the agent’s propensity to engage in co-creation.
Originality/value
This paper extends the understanding of agency risks in the co-creation of hospitality services that integrates economic and behavioral perspectives with information processing. Theoretical implications include a broader context of the risks underlying co-creation. Practical implications relate to how earnings potential could be maximized by considering the agent’s risk behavior and the expected utility arising from such transactions.
Subject
Tourism, Leisure and Hospitality Management
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1 articles.
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