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Customer co-creation in hotel service innovation: An interpretive structural

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DOI: 10.1108/BIJ-09-2016-0145

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 Benchmarking: An International Journal
Customer co-creation in hotel service innovation: An interpretive structural modeling and MICMAC
analysis approach
Bijoylaxmi Sarmah, Zillur Rahman,
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Bijoylaxmi Sarmah, Zillur Rahman, "Customer co-creation in hotel service innovation: An interpretive structural modeling and
MICMAC analysis approach", Benchmarking: An International Journal, https://doi.org/10.1108/BIJ-09-2016-0145
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 Customer co-creation in hotel service innovation: An interpretive structural modeling and
MICMAC analysis approach
Abstract
Purpose: With increased competition in service sector due to dynamic nature of customers’ taste
and preferences, service providers have realized the importance of co-creating with customers
across various stages of new service development. Co-creating with customers requires a focused
attention on the psychological variables that influence customers to participate in developing a
new service. However, availability of scant literature creates difficulty in comprehending co-
creative hotel service innovation practices, especially in developing country like India. The
purpose of the study is to explore and identify the psychological variables affecting customer
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participation in hotel service innovation (CPSI) and the possible interrelationships among them
with the help of interpretive structural modeling (ISM) approach.
Methodology: ISM approach is used to determine the direction of customer participation and
categorization of psychological variables with their driving and dependence power. Identification
of related variables was done through a review of literature initially and arrived at a common
consensus through brain storming sessions with academicians and hotel industry experts.
Findings: The results indicate that a few variables possess higher driving power such as:
customer innovativeness (CI), customer participative behavior (CPB), customer socialization
(CS), willingness to co-create (WCC), role clarity (RC), customer ability (CA) and their
interlinking. Thus, the research contributes in the development of relationship among various
identified variables of customer participation in service innovation using ISM methodology.
Research limitations/implications: Since customer participation in hotel service innovation
variables have been identified considering existing literature and experts’ opinion, chances are
there that some other variables may have been ignored. Similarly, the contextual relationships
among the identified variables have been developed through the knowledge of experts and their
understanding about the variables, may also result in judgment biasness. Additionally, customer
participation in co-creative service innovation has been examined in the context of hotel industry
in India only. These may limit the generalizability of results to other industry and country
contexts.
Practical implications: This study suggests that hoteliers should co-create with customers to
develop new services by understanding the enablers of customer participation in co-creative

1
 hotel service innovation. Hoteliers can have hierarchical map of their customers for co-creating
at different stages of service innovation or can segregate the variables as per their driving and
dependence power for enhanced applicability of the variables. Further, the observed inter-
relationships among the customer participation in service innovation variables, can guide the
managers in planning and implementing identified relationships for successful implementation of
co-creative service innovation.
Originality: To the best of this authors’ knowledge this study is the first to provide an integrated
model using ISM and MICMAC analysis with a goal to identify and classify various key
enablers of customer participation in co-creative hotel service innovation in India. We believe
that this study will enhance the understanding of the psychological factors influencing customer-
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firm co-creative service innovation activities and help the academicians and industry
practitioners to select right enablers for customer participation in co-creative hotel service
innovation. Thus, this study will be foundation for studying co-creative service innovation using
ISM and MICMAC approach.
Keywords. Customer participation; Hotel industry; ISM; Service innovation.

Introduction
Service innovation plays a pivotal role in survival and growth of service companies in
turbulent business environment (Geroski and Machin, 1992) and especially, the companies need
it most to face ever changing customers’ needs. Companies look for innovative ways to satisfy
customers. However, with numerous companies offering similar services to customers, customer
loyalty is a dream for the service companies. To satisfy and create loyal customers, Prahalad and
Ramaswamy (2004) proposed customer-firm co-creation in order to develop new services as per
customers’ wants and preferences (Massa and Testa, 2004) and improve service quality (Bitner
et al., 2002). Following Bitner et al. (2002), Zhang and Lu (2012) suggested that higher level of
customer participation is co-creation in which customers spend their valuable time, energy,
intelligence, and effort to develop their preferred services, thereby, acknowledging the role of
customer participation in service innovation as an area of concern for the service companies to
bring preferred changes to customers’ behavior towards developing and consuming new services.
Customer participation in service innovation is increasingly gaining attention in management
literature (Bowen and Ford, 2004). The concept has been defined as “the degree to which a
customer is involved in producing and delivering the service” (Dabholkar, 1990). O’Hern and

2
 Rindfleisch (2010) discussed co-creation as “a collaborative NPD activity in which customers
actively contribute and/or select the content of a new product offering”. Co-creation is
considered as the next frontier of competitive effectiveness and viewed as a major domain shift
from goods dominant logic (G-D logic) to service- dominant logic (S-D logic) in marketing
(Bendapudi and Leone, 2003; Vargo and Lusch, 2004). In S-D logic, customer participation has
received immense attention from previous researchers (see Vargo and Lusch, 2004; Morosan,
2015). As prior to purchase and consumption, services cannot be fully experienced by customers
leading to uncertainty about the ability of the service to satisfy them; active participation of
customers during developing and designing a service minimize this risk and make them
confident to buy the new service. Moreover, co-creating customers bring with them their
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knowledge, experience and information about required changes in the service proposition and
other services available in the market. Customers participate in services in multifarious ways:
such as by using self-service technologies (e.g., ATM) or by cooperating with service companies
(e.g., e-travel services, Grissemann and Stokburger-Sauer, 2012; health care; Claycomb et al.,
2001; financial services; Alam and Perry, 2002) etc., and thereby, facilitates customers in
creating, purchasing and consuming new services, resulting in new service success (Zeithaml et
al., 2006).
Customer participation in new hotel service development is also a popular area of study. Shaw et
al. (2011) studied eight hotels of varying sizes and market segments and argued that co-creation
based on the theory S-D logic provides an opportunity to demonstrate the usefulness of co-
creative service innovation to stimulate tourism. Cabiddu et al. (2013) examined how IT enables
value co-creation in tourism and why some players appear to appropriate the value co-created in
the partnership more successfully as compared to others. They concluded that it is necessary to
demonstrate a certain level of strategic fit and synergy to achieve the co-creation of value within
an inter-organizational context. Grissemann and Stokburger-Sauer (2012) developed a
conceptual model of customer co-creation of tourism services and empirically tested this model
in a travel agency context. They found that a company’s support for customers affected the
degree of customer co-creation significantly, while the degree of co-creation further positively
affected customer satisfaction with the service company, customer loyalty and service
expenditures also. Khanagha et al. (2016) suggested that customer co-creation was a potential
means for increasing both senior managers’ attentiveness to the consequences of emerging

3
 technologies as well as overall organizational ability for introducing the required managerial
initiatives that underlie exploratory behavior in an emerging technology field. Previous studies
also emphasize the positive effects of customer co-creation in service recovery, Heidenreich et
al. (2015) investigated the effectiveness of co-creation in service recovery and argued that
customers may be increasingly motivated to take an active role in overcoming a co-created
failure, assuming a perceived responsibility for the flawed service. Theilacker et al. (2016)
proposed four fundamental dimensions of co-creation (degree of interaction with customers,
information sharing with customers, the structuredness of interaction with customers, and lastly,
motivators for customers to interact with the firm).
While co-creating with the service companies to co-develop a new service, several psychological
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variables influence customer participation, these are- consumer innovativeness (Heidenreich and
Handrich, 2015), customer socialization (Wu, 2011), customer participative behavior (Thuy,
2015), consumers’ willingness to co-create (Handrich and Heidenreich, 2013) that play a crucial
role. Although, importance of psychological variables has been discussed in extant literature
(Ennew and Binks, 1999), literature on complexities of inter-relationships between the
psychological variables influencing customer’s participation in new service development is still
scant in number (Ennew and Binks, 1999; Bendapudi and Leone, 2003). Previous management
researchers used the application of Interpretive Structural Modeling or shortly ISM (Patil and
Warkhedkar, 2016; Lin and Yeh, 2013; Warfield, 1974) to explore the inter-relationships
between the variables of customer participation in service innovation (CPSI) variables and
classify them according to their driving and dependence power. As psychological variables
affecting customer co-creation in service innovation is also relatively new and emerging topic of
discussion (Hoyer, 2010; Grisseman and Stockberger- Souer, 2012) and there are not much
studies on identification of variables and relationship development, ISM-based approach can be
applied for exploring the relationships (Bolanos et al., 2005). This study aims to (a) identify the
variables facilitating customer participation in service innovation (CPSI), (b) establish the inter-
relationship among the variables and (c) discuss findings and implications of the present study
for the hotel companies willing to co-create new services with customers in India.
The article is organized as follows: the next section provides an extensive review of extant
literature to discuss the identification of CPSI enablers. Next, ISM methodology and
development of the relationships model using ISM are presented to inter-relate CPSI enablers.

4
 Further, MICMAC analysis is used to develop a matrix. Results of the study follow. Finally,
implications, limitations, future research avenues and conclusions are discussed.
Co-creation in service innovation research: A theoretical background
Co-creation is viewed as the processes by which two or more parties collaborate, or participate,
in creating value for themselves or others. The theoretical understanding of co-creative service
innovation is based on the works of S-D logic (Vargo and Lusch, 2004). In S-D logic, innovation
is related to service systems as the actors integrate and act on available resources to create value
for themselves or others in new and better ways (Vargo and Lusch, 2004). It also proposes
service as a co-creative process that involves the application of competences, which is relevant
for innovations. Vargo and Lusch (2004) argue that value occurs as a result of the interaction
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between a firm and a customer (Vargo and Lusch, 2004). Thus, customers are considered as co-
creators of value and their involvement in the creation of new services may help both customer
and firm. Customers also act as resource integrators as they can invest to co-creation process in
terms of skills, time, money and psychological efforts (foundational proposition (FP) 6 of
Service-Dominant (S-D) Logic; Payne et al., 2008; Hoyer et al., 2010).
Co-creative innovation entails the application of co-creation principles to innovation and
participating customers known as ‘co-creators’ get involved into the new service development
(NSD) process (Ramaswamy and Gouillart, 2010; Vargo et al., 2004). Customer participation in
service innovation occurs at three levels i.e., low, moderate and high (Bitner et al., 2002). At low
level of participation, only customer’s presence is expected; at moderate level of participation,
customers provide their valuable feedback and inputs for new service development and at high
level of participation, customers actively participate as co-producers of the service (Bitner et al.
2002). Researchers agree that co-creation is the highest level of customer participation and
intrinsically attractive (Dabholkar, 1996) to customers due to a sense of greater control over the
service outcome, or simple enjoyment of the task and the price discount advantages (Dabholkar,
1996). During active participation in service innovation directly or via frontline employees
(Melton and Hartline, 2015), customers become highly informed, networked, and empowered to
express their unfulfilled needs and desires (Füller et al., 2008). Modern customers are also able
and willing to communicate their need and share their ideas with the service companies through
communication mediums such as websites, online communities and social networking sites. This
information is valuable to service companies as they help them to identify what customers want,

5
 design services to serve the unfulfilled need and align these needs with the company’s
competences (Füller and Matzler, 2007).
Recently, the tourism and hospitality services have witnessed increased co-creative innovation
activities. Tourism is considered as a major service that contributes to economies worldwide and
is expected to grow at an annual rate of 6 percent globally till 2020 (World Tourism
Organization, 2010). Consequently, many countries are looking at tourism as a driver of regional
economic growth (Wilde and Cox, 2008; Johann and Panchapakesan, 2016). Tourism and
hospitality services such as vacations, hotel rooms, travel booking and restaurant services are
high in credence qualities i.e., comfort, excitement, taste, etc. and can be improved by co-
creating with customers. A growing number of academicians and practitioners have studied the
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practice of co-creation in tourism and hospitality services. In the hospitality and the related
tourism industry, Jones (1996) outlined a 15-step approach to the innovation development
process. Ottenbacher (2007) identified 12 determinants of successful hospitality innovation by
analyzing a set of 185 hospitality innovations in Germany. A few detailed case studies on
innovation (mostly in individual hotels) were conducted on innovation in the Plaza Athenee
Hotel in Paris (Phan, 2007); e-commerce strategies in the Bed and Breakfast industry in Taiwan
(Huang, 2008) and effect of technological innovations on the relationships with customers in
hospitality firms (Khan and Khan, 2009). Furthermore, Victorino et al. (2005) performed a
survey of under 1000 business and leisure travelers in the USA and argued that service
innovation (hotel type, technology and customization) affect customer choice.
Thus, in tourism and hospitality services, through collaboration with the hotel service companies,
co-creative tourists and guests become more aware, involved (Morosan, 2015), satisfied and
display more loyalty (Grissemann and Stokburger-Sauer, 2012) resulting in a positive co-
creation and adoption intention toward co-creatively developed new services in future
(Heidenreich and Handrich, 2015; Morosan, 2015). However, the process of customer
participation in hotel service innovation depends on several enablers and particularly
psychological variables are important area of study and this study aims to explore the
interrelationships among the variables and their dependency on each-other.
Enablers of customer participation in service innovation (CPSI)
Past literature guides us to identify the enablers that need to be addressed during customer
participation in service innovation and to explore inter-relationship between the enablers. These

6
 variables may further facilitate to seek answers of following research inquiries: Firstly, why do
customers take part in service innovation process? Secondly, what are the enabling and
dependence variables that influence as well as get influenced by customers’ participation in
service innovation? To achieve these two goals, 10 enablers were identified from the previous
research that were purified with the help of academic as well as hotel industry experts keeping
the service sector in focus that are pursuing customer co-creation in service innovation through
customer participation in various stages of new service development. A brief discussion of the
enabling variables is provided below
Consumer innovativeness
Innovativeness is defined as "the degree to which an individual is relatively earlier in adopting an
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innovation than other members of his system" (Rogers and Shoemaker, 1971), and by relatively
earlier is meant earlier in terms of actual time of adoption, rather than whether the individual
perceives he adopted the innovation relatively earlier than others in his system. Following
Rogers’s (1962) seminal work on diffusion, many consumer studies have measured
innovativeness using time of adoption method as an indicator of an individual’s innovativeness.
However, Midgley and Dowling (1978) termed consumer innovativeness as “a consumer’s
tendency to adopt new products more often and more frequently as compared to other
consumers. Innovative consumers tend to be more involved and responsive to firms’ offerings
than non-innovative consumers” (Walczuch et al., 2007). Studies show that in a hotel service
innovation context, guests who are innovative and inclined toward technology are more likely to
use their mobile devices to complete hotel-related tasks, or engage in an information exchange
with the hotel, establishing a link between innovativeness and participation (Morosan, 2015).
Customer participative behavior
Customer participative behavior is viewed as the required essential behavior that may lead to
successful co-creation to develop new hotel services (Hau and Thuey, 2015). However, the
nature of customers’ participative behavior is determined by customers’ characteristics that may
be psychological in nature (Hau and Thuey, 2015).
Customer socialization
It is generally viewed as “a process pertaining to the development of customer skills, knowledge,
and attitudes relevant to the marketplace in general and increased customer socialization
facilitates greater customer participation” (Wu, 2011; Ward, 1974). Customer socialization can

7
 improve their understanding of the co-creating hotel service companies’ expectations from them
and also enhance their knowledge to effectively perform their role (Lengnick‐Hall, 1996) during
their participation in the new service development activities (Kelley et al., 1990)
Customers’ willingness to co-create
Prahalad and Ramaswamy (2004) describe customers’ willingness to co-create (WCC) as “a
condition or state in which a customer is prepared and likely to create value together with the
service providing company by actively engaging in the service provision and consumption of a
service”. Customers’ willingness to co-create also determines their degree of participation in the
co-creative service innovation process (Handrich and Heidenreich, 2013).
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Role clarity
Customer role clarity is defined as “the extent to which the procedures, goals, criteria, and
knowledge of consequences are clear to a customer and influence his/her likelihood of
participation in service innovation” (Dong et al., 2008). Due to participation in hotel service
innovation activities with the service staffs, customers get clear idea about the role to be
performed by them and expected outcomes out of the interaction process. Hence, role clarity is a
consequence of customer participation in hotel service innovation activities.
Customer ability
Customer ability is viewed as “customers’ knowledge and skills that enable them to perform
effectively in co-creative hotel service innovation” (Dong et al., 2008). It basically describes
what customers “can do” instead of what they “want to do” or “know how to do” (Meuter et al.,
2005). Similarly, Schneider and Bowen (1995) discuss customer ability as the quality of input
they themselves provide to the hotel service co-creation process (Kelley et al. 1990). Role clarity
enhances customer ability and customer ability leads to improved performance quality that
further satisfies co-creating customers.
Customer satisfaction
Customer satisfaction in hotel service co-creation is understood as “the satisfaction with the
customers’ participation in the creation of the service offering and it is a consequence of
customer participation” (Dong et al., 2008). Co-creating customers feel more responsible
towards the innovating company and satisfied with the offerings designed as per their need and
expectations. Satisfaction brings customer loyalty with more customer commitment to

8
 repurchase services offered by the hotel company in future. satisfaction is regarded to be an
essential predictor of loyalty (e.g., Bigné et al., 2001; Yoon and Uysal, 2005).
Customer loyalty
Michels and Bowen (2005) defined customer loyalty as “a deeply held commitment to re-buy or
re-patronize a preferred product or service consistently in the future”. In this study, loyalty is
customers’ repeated visit to the hotel and recommendation intentions to other customers.
Customer loyalty to a firm is traditionally viewed as the situation in which a customer generally
buys the same manufacturer-originated product or service repeatedly over time rather than
switching among multiple competitors within the category (Oliver, 1980). Customers who co-
create hotel service offerings show more loyalty and re-purchase from the same hotel group and
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to recommend it to fellow customers. Satisfied customers are loyal customers (Homburg and
Giering, 2001). That is, tourism service providers have the ability to develop loyal customers if
they provide their clients the opportunity to participate and become involved in the creation
process. As such, tourists may appreciate the chance to provide their own ideas and feedback in
the co-creation process. If the co-creation process results in customer satisfaction, tourists are
likely to return to the same company. Customer loyalty further leads to a positive intention to co-
create with the company in future too.
Future co-creation intention
Customers’ future co-creation intention is defined as “a customer’s willingness to participate in
service production and delivery in the future” (Dong et al., 2008). As customers participate more
in service production or co-creating a new service, they gain confidence with the company.
Future co-creation intention also driven by customer satisfaction and customer loyalty towards
the innovating company (Meuter et al., 2005). Grissemann and Stokburger-Sauer (2012)
hypothesized that ‘‘when tourists have the opportunity to co-create a travel package, they are
more likely to re-purchase from the same company and recommend the company to others,” (p.
1485).
ISM methodology
In research, researchers need to solve critical problems to achieve optimal solution. A few
problems become more complex due to presence and interactions among large number of related
variables (Jayant et al., 2015) that affect the problem area directly or indirectly. Although,
statistical technique, such as structural equation modeling is available to test developed

9
 theory/model (Hair et al., 2006), they cannot help in preparing an initial model and in such
context, Interpretive Structural Modelling (ISM) method can provide an initial model (Warfield,
1974). ISM was first proposed and developed by Warfield, (1974) for “structuring complex
issues” (Malhotra, 2014). This method was defined by Raj et al. (2008) as “a process aimed at
assisting the human beings for better understanding of what they believe, and to recognize
clearly what they do not know”. ISM is also considered as “a group learning process that assists
to transform unclear, poorly articulated models of systems into visible and well defined models”
(Talib et al. 2011; Attri et al., 2013). Finally, Patil and Warkhedkar (2016) finds that in ISM
helps to find out the relationships exists within variables and to develop an overall structure on
the basis of available set of factors.
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ISM is widely studied in various research fields, for example, educational programs planning
(Hawthorne and Sage, 1975), cross-cultural interactions (Jedlicka and Mayer, 1980) and inter-
relationships among knowledge management variables (Singh et al. 2003) and supplier selection
(Kannan and Haq, 2007). Patil and Warkhedkar (2016) applied it for studying knowledge
management in manufacturing industries.
As the previous studies applied ISM methodology to simplify the order and direction of complex
relationships among variables and present it with the help of a structural model or graphical
representation (Jain and Raj, 2016; Mittal and Sangwan, 2013), this methodology proved to be
helpful for understanding of the meaning and significance of a specified list of variables.
There are few limitations of the ISM methodology. The contextual relationship among the
variables always depends on the user’s knowledge and familiarity with the firm, its operations
and its industry. Therefore, the bias of the person who is judging the variables might influence
the final result. ISM can only act as a tool for imposing order and direction on the complexity of
relationships among the variables. It does not give any weightage associated with the variables.
[Insert Fig.1 Flow diagram for ISM methodology]
Methodology of finding the enablers
Management researchers suggest that there should be a proper balance in using both qualitative
and quantitative methods (Khan and Rahman, 2016) in research. Qualitative studies can be used
initially to understand a subject area which may further be validated through quantitative
methods (Agarwal and Selen, 2009). Several studies have employed qualitative research at initial
stage for understanding co-creative service innovation construct and validated further by using

10
 quantitative methods (Gustafsson et al., 2012; Dong et al., 2008; Morosan and DeFranco, 2016).
In the same way, the concept of co-creative service innovation is relatively new (Kandampully et
al., 2016; Alves et al., 2016) and existing literature is not rich enough for identification of
variables and relationship development, thus, a qualitative ISM based approach is considered
relevant for the present study (Bolanos et al., 2015).
ISM approach incorporates the expert’s opinion in a more systematic manner that ascertains its
application in marketing contexts (see De Ruyter and Scholl, 1998). For instance, studies in
tourism and hospitality research have employed ISM as an effective analytical tool in planning
the sequence of marketing strategies to enhance tour value (Lee et al., 2014). To determine the
reliability issue in ISM, which refers to the extent to which same results are obtained while
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repetition of operations, the present research has collected the facts using multiple
sources/strategies like semi structured interviews, well explored literature, brain storming
sessions and expert opinions (See Yin, 2003; Gummesson, 2005).
Since, ISM based model relies on extensive literature review, experts’ subjective judgements,
and group problem solving techniques to identify variables and well-defined relationships.
Because of this, several studies develop initial model by employing ISM and proposed further
validation through quantitative methods (Talib et al., 2011; Lin and Yeh, 2013). This technique
has better ability simplify poorly articulated mental models and complex systems with large
number of elements into a visualized hierarchical structure, specifically, when concept is unclear
and unexplored (Thakkar et al., 2005).
In the present study, the literature from the year 2001 to 2016 (July) has been reviewed. In order
to collect the research papers for the review, a rigorous search was carried out using the
following databases: Scopus, EBSCO, Emerald Full Text, Elsevier, Taylor and Francis etc. An
advance search, within the preview of present title, was carried out using different combination
of words such as, “Service innovation”; “New Product/Service Development”; “Co-creation and
Service innovation”; “Customer involvement” and “New product development/Service
innovation”; “Innovation”; “Value co-creation and Innovation”; and “Co-production and
Innovation”. To keep the search process specific to the objectives of this study, above keywords
were used with the subject limits of “Business, management and accounting”; “Social Sciences”;
and “psychology.” The search resulted in more than 250 research papers. Interestingly, these
results also included some unrelated research papers, for instance, co-creation can be found in

11
 the education field to describe the cooperative and constructive relationship between teachers
and students (e.g. Journal of Management Education, Journal of Research on Technology in
Education). In the field of interorganizational cooperation (e.g. joint ventures), co-creation
involves different companies and institutions (Long Range Planning); the patient-professional
relationship in psychology (e.g. Journal of Counseling & Development) is often considered in
terms of co-creation. The same holds for the role of children in the family, as well as gender
roles (e.g. Family Studies). Creativity studies (e.g. Creativity & Innovation Management)
address the generation of new ideas in terms of collaborative and shared co-creation processes.
Planning and development studies often address new venture designs in terms of co-creation,
involving multiple agencies, and constituencies in the project (e.g. European Planning Studies)
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(Galvagno and Dalli, 2014).

Criteria used for final selection
After the identification of research papers, the criteria for selecting the research papers finally
were established. Only the papers appearing in journals were included in the review of literature
and articles, represented a higher level of research (Dewangan et al., 2015; Nord and Nord,
1995). Therefore, dissertations, conference papers, unpublished working papers and textbooks
were excluded from the review process. For a better exploration of the field, the references of the
remaining papers were also taken into consideration according to the year of their publication.
Afterwards, the abstracts of the selected papers were thoroughly studied. Finally, after reading
the abstracts of these papers, 100 papers associated with the area, which were published in 27
different journals, were considered in the review of literature. From, the rigorous literature
review 9 key enablers for customer participation in service innovation in the Indian hotel
industry have been identified. Only those enablers are considered which emphasized in recent
years, particularly after year 2001. Apart from that the Delphi Technique was used to grouping
these enablers into proper manner. The Delphi Technique is described below.
The Delphi Technique
"The Delphi technique is a group process used to survey and collect the opinions of experts on a
particular subject. The main components of Delphi techniques include the communication
process, a group of experts, and essential feedback" (Yousuf, 2007).
Following steps of the Delphi technique as identified by Brooks (1979), were conducted in the
present study:

12
 a. “Identifying the panel of experts.
b. Determining the willingness of individuals to serve on the panel.
c. Gathering individual input on the specific issue and then compiling it into basic statements.
d. Analyzing data from the panel.
e. Compiling information on a new questionnaire and sending to each panel member for
review.
f. Analyzing the new input and returning to the panel members the distribution of the
responses.
g. Asking each panel member to study the data and evaluate their own position based on the
responses from the group. When individual responses vary significantly from that of the
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group norm, the individual is asked to provide a rationale for their differing viewpoint while
limitations are placed on the length of the remarks in order to keep responses brief.
h. Analyzing the input, and sharing the minority supporting statements with the panel. Panel
members are again asked to review their position and if not within a specified range, to
justify the position with a brief statement".

Modeling of customer participation variables by using ISM

The stages of developing an ISM-based model are discussed below:
Identification of variables
To apply ISM in hotel service innovation, initially, a literature review was conducted to explore
the related variables influencing customer participation in service innovation.
Sandelowski (1995) mentioned that “adequacy of sample size in qualitative research is relative, a
matter of judging a sample neither small nor large per se, but rather too small or too large for the
intended purposes of sampling and for the intended qualitative product”. In this study, purposeful
sampling method was employed to meet the research objectives, followed by meetings and brain
storming sessions with academicians and hotel service industry experts to reach at an agreed
point regarding the selection of variables. With this purpose, three academic experts (one
professor and two associate professors of marketing) and four managers (hotel service industry)
were invited to develop consensus on the included variables. The experts were selected based on
two criteria: (a) more than ten years of work experience and (b) previous knowledge about
conducting co-creative service innovation in hotel industry (Gustafsson et al., 2012). Qualitative
validity was tested through the theoretical study as well as through expert comments (Sahney et

13
 al., 2006). Following Raudonis (1992), considerable thought was given to protecting participant
rights and participants’ identities. Participants were informed about how results would be
published and publication of quotations, the participants approved the results and use of
quotations used in publications (Orb et al., 2001).
In the first meeting itself, the list of included variables was circulated among them, followed by a
first round of brain storming session after a week to finalize the variables of customer
participation in service innovation for the application of ISM. We simplified all relevant
variables by removing duplicates and those that were ambiguous, too broadly defined, not
specific to qualitative research, or impractical to assess. Where necessary, the remaining items
were rephrased for clarity. Consequently, during the brain storming session, experts declare 12
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variables and further the number was 10 as experts could not agree on the relevancy of 2
variables in a later discussion session. Thus, having consensus among academic and industry
experts in the field of co-creative service innovation (Khan and Rahman, 2016), the final list of
relevant variables is prepared.
Development of structural-self interactive matrix (SSIM)
To develop structural–self interactive matrix (SSIM) by finding out the “leads to” relationship
among the listed variables, the opinion of experts was preferred in order to determine how a
particular variable facilitates another variable. After ten days of first round of brain storming
session, the experts were requested for second round of brain storming session. During this
round, the developed diagram of relationships was distributed for insertion of further
modifications, if any.
The final SSIM was prepared for the 9 identified variables of customer co-creation in service
innovation and one variable ‘customer participation in service innovation’ itself. Overall, 10
variables were used in the SSIM as shown in Table 2. Table 2 reveals that customer
innovativeness (CI) leads to customer participation in service innovation (CPSI), therefore the
notation V was assigned to this relationship. In the case of customer role clarity and (RC) and
customer participation in service innovation (CPSI), variable CPSI is preceded by variable RC
and notation A represented this relationship. Similarly, in the case of willingness to co-create
(WCC) and customer ability (CA), variable WCC is unrelated to variable CA; therefore, the
notation O was representing this relationship. However, four symbols (V, A, X, O) have been
used to denote the direction of inter- relationship between factors (i and j) in the SSIM matrix.

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 [Insert Table 1. Notations depicting inter-relationships between variables]
[Insert Table 2. Entry in Structural self-interactive matrix (SSIM)]
[Insert Table 3. Development of Structural self-interactive matrix (SSIM)]

Developing the reachability matrix

From SSIM, we can obtain the reachability matrix. Reachability matrix indicates the relationship
between variables in the binary form and by replacing symbols such as V, A, X, O by binary
digits of 0 and 1. The below mentioned rules are also followed to derive a reachability matrix.
• If the (i, j) entry in the SSIM is V, then the (i, j) entry in the reachability matrix becomes 1 and
the (j, i) entry becomes 0.
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• If the (i, j) entry in the SSIM is A, then the (i, j) entry in the reachability matrix becomes 0 and
the (j, i) entry becomes 1.
• If the (i, j) entry in the SSIM is X, then the (i, j) entry in the reachability matrix becomes 1 and
the (j, i) entry also becomes 1.
• If the (i, j) entry in the SSIM is O, then the (i, j) entry in the reachability matrix becomes 0 and
the (j, i) entry also becomes 0.
Partitioning the reachability Matrix
The reachability set comprises of the variable itself and other variables to which it may facilitate
to achieve. Reachability matrix further assist to derive both the reachability and antecedent set
for each variable (Warfield, 1974). The antecedent set includes the variable itself and other
variables that may help in achieving it (Khan and Rahman, 2016). Next, an intersection set is
developed including the variables of both the reachability set and antecedent set. The variable
that acquires the same intersection and reachability set is given the top-level position and
consequently removed from the group of variables under consideration. The horizontal variables
are included in the reachability set and the vertical variables are included in the antecedent set.
The intersection set include all the variables. The variables observed in both the reachability and
the intersection sets are placed at the top level in the ISM hierarchy and gradually are separated
from the other variables. This process is repeated until the level of each variable is determined.
All these determined levels further assist in developing a diagraph.
[Insert Table4. Reachability matrix here]
[Insert Table5 (i). Level iteration1 here]

[Insert Table5 (ii). Level Iteration 2-10 here]

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 Conical matrix development
At step 5, a conical matrix is developed by summing up the same level variables across rows and
columns of the final reachability matrix. Consequently, the drive power and dependence power
of a variable is calculated summing up the total number of ones in the rows and in the columns.
Thereafter, variables are ranked as per their drive and dependence power on other variables.
[Insert Table 6. Development of conical matrix here]
Development of digraph
At step 6, a diagraph is developed in which the top level enabler is positioned at the top of the
digraph, second level enabler is placed at second position and it continues until the bottom level
variable is placed at the lowest position in the digraph.
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Development of ISM-based model

At step 7, the diagraph is converted into an ISM model by replacing nodes of the elements with
variables as shown in Fig.2. The ISM model reveals that a few variables (CI, CPB, CA, RC and
CS) possess higher driving power and low dependency on other variables in comparison to the
rest of the variables. Other variables i.e., S, CL, FCCI and CPSI possess moderate to low driving
power and high dependency power. Highly dependent variables are mostly influenced by driving
variables at all other levels. Although the conical (lower triangular) matrix is common in
mathematics, it may not be familiar to practitioners. Hence, from the level partitions (Tables 4
and 5) and conical matrix (Table 7), a structural model is prepared by means of nodes or vertices
and lines of edges known as diagraph or directed graph. After the replacement of variable nodes
with statements as mentioned in the ISM methodology, the diagraph is finally transformed into
an ISM as shown in Fig.2.
[Insert Fig.2 Interpretive structural modeling for customer participation in service
innovation (CPSI)]
MICMAC Analysis
Matrix Impact Cross-Reference Multiplication Applied to a Classification shortly MICMAC
analysis is a structural analysis tool to describe a system using a matrix and categorizing
variables into four clusters (Mandal and Deshmukh, 1994) on the basis of their relationships and
influence on one another and to find out the key variables (Hu et al. 2009). The four clusters are:
Autonomous variables cluster; dependent variables cluster; linkage variables cluster and driving
variables cluster. ‘Autonomous variables cluster’ possess both weak drive power and dependence

16
 power. These variables have only few links with the system, and are relatively disconnected. In
this cluster (see Fig.3), we do not have any variable. ‘Dependence variables cluster’ possess
weak drive power but show strong dependence on other variables. In this cluster (see Fig.3), we
have five variables - satisfaction, customer loyalty, future co-creation intention and customer
participation in service innovation showing high dependence power with low driving power
(factors 7, 8, 9 and 10) respectively. ‘Linkage variables cluster’ possess both strong drive power
and dependence power. Linkage variables influence others and also get influenced by them
which bring instability to their nature. In this cluster (see Fig.3), we have no variable. ‘Driving
variables cluster’ possess strong drive power but also possess weak dependence power. In this
cluster (see fig.3), we have six factors i.e. consumer innovativeness, customer participative
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behavior, customer socialization, willingness to co-create, role clarity and customer ability
(Factors 1, 2,3,4,5 and 6) respectively.
[Insert Fig. 3 ISM Model for customer participation in service innovation (CPSI)]
Results and Discussion
Although, it is argued that customer participation plays a crucial role in service innovation
success because customers contribute to “the process of marketing, consumption, and delivery of
services” (Dong et al., 2008), there has been little research on influence of psychological factors
on customer participation (Hoyer et al., 2010; Ennew and Binks, 1999) and only a few studies
shed light on the psychological consequences of this phenomenon in a limited fashion (e.g. Dong
et al., 2008; Lengnick-Hall et al., 2000) or with experimental approaches (e.g. Bendapudi and
Leone, 2003; (Chathoth et al., 2013). In this study, the inter relationship among a few
psychological factors related to customer participation have been identified and analyzed. This
result reveals that there are a number of high driving power variables, which influence customer
participation in service innovation practices. These variables are: consumer innovativeness (CI),
customer participative behavior (CPB), customer socialization (CS), willingness to co-create
(WCC), role clarity (RC) and customer ability (CA). The top-level variables (i.e., customer
satisfaction, future co-creation intention and loyalty) possess weak driving power and mostly
influenced by customer. The occurrence of the two variables: role clarity and customer ability
further depends on extent of customer participation in service innovation activities and other
strong driving power variables (see Fig. 2). Customer participation in hotel service innovation is
further driven by customers’ willingness to participate/co-creation and participative behavior.

17
 Customers’ willingness to participate and participative behavior are influenced by consumer
innovativeness i.e., the degree adopting an innovation relatively earlier than others and customer
socialization variables.
Past studies also support the findings of the study. Dong et al. (2008) proposed and verified that
that customer participation in service innovation influences role clarity (RC) and customer ability
(CA) initially and role clarity (RC) and customer ability (CA) influence customer satisfaction
(CS) (Dellande et al. 2004). Consequently, customer satisfaction (CS) influences both customer
loyalty (CL) (Oliva et al.1992) and customers’ future co-creation intention (FCCI) (Dong et
al.2008). Finally, the mid and bottom level variables, namely, customer participative behavior
(CPB) (Thuy, 2015), willingness to co-create (WCC) (Heidenreich and Handrich, 2015),
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customer innovativeness (CI) (Ennew and Binks, 1999; Morosan, 2015) and customer
socialization (CS) (Wu, 2011) determine the level of customer participation in service innovation
(Alam, 2006; Ordanini and Parasuraman, 2011; Abramovici et al. 2004; Matthing et al., 2004) in
tourism and hospitality services (Victorino et al., 2005; Shaw et al., 2011). Williams (2006)
suggested that the improvements in these variables improve the new service offerings and
enhance the future co-creation intention to co-create along with service providers in similar
innovative activities. The mid- level variables (customer participation in service innovation,
participative behavior and customers’ willingness to co-create) can only be improved by the
bottom-level variables (consumer innovativeness and customer socialization) (Ranjan et al.,
2013). It is possible that the improved mid-level variables also improve the top-level variables,
i.e., customer satisfaction, loyalty and customers’ future co-creation intention. The top-level
variables are the reasons for sustainability and growth for any service organization.
Consequently, customer participation results in customers’ role clarity. Role clarity increases
customer ability and jointly results in satisfaction for the co-creating customers.
The findings of the study are consistent to previous findings stating the influence of customer
participation on customer satisfaction (Meuter et al., 2000), loyalty (Auh et al., 2007) and future
co-creation intention (Dong et al., 2008).
Implications
Theoretical implication
The theoretical implications of the study are discussed below:

18
 Firstly, this study applies the S-D logic concept in tourism and hospitality services to extend the
customer co-creation perspective. Extant literature on customer co-creation highlights the notion
of customer participation in service innovation to achieve better outcomes.
Secondly, this study adds to the existing knowledge of customer co-creation in service
innovation by providing a framework to highlight the inter-relationship, driving and dependency
power of each variable.
Thirdly, by establishing inter-relationships among the identified variables, this study also offers a
directional approach in co-creative service innovation practices.
Finally, absence of autonomous variables in the MICMAC analysis further confirms the
importance of the variables in customer participation in service innovation (CPSI) activities.
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Practical implication
In addition to the theoretical implications, this study also has practical implication for the
hoteliers and practitioners.
The extant literature supports that customers can contribute toward co-creative service
innovation (Hoyer et al., 2010; Kandampully et al., 2016), which is considered as a key feature
of S-D logic. Sundbo (1997) argue that customers are required to play new role and their
interfaces with companies prove beneficial for the co-creative companies. For improved co-
creative service innovation, hoteliers can have hierarchical map of their customers, co-create
with selected regular customers in the formative co-creative stage of innovation and other
customers in the confirmative final stages of testing prior to rolling out the innovation across the
hotel network. This will need management expertise in the different stages of co-creation.
However, managers should segregate the customer participation in co-creative service innovation
variables as per their driving and dependence power that further enhance the applicability of the
variables. Further, the interrelationships that are observed among the customer participation in
service innovation variables, can guide the hoteliers in planning and implementing identified
relationships towards successful application of co-creative service innovation.
Limitations and future research directions
Similar to other research, this study also has few limitations.
In this study, customer participation in service innovation variables are identified considering
existing literature and experts’ opinion. In this process, chances are there that some other
variables may have been ignored. Future studies may include other aspects of S-D logic, both

19
 further along the supplier value chain, and in terms of the engagement of frontline employees
(FLEs), cross-functional teams (CFTs) (Melton and Hartline, 2015) and their influence on the
service innovation outcomes. Furthermore, as Hoyer et al. (2010) observed that “the true
potential of co-creation is still unexplored and there exists fruitful avenues for further research”,
future researchers may examine empirically how the psychological factors influence customers’
participation in co-creative service innovation that may result into competitive advantage for co-
creative companies. Future studies may adapt this study in other service settings (for example,
banking or in hospitals), and also may examine other possible drivers and outcomes of customer
participation in co-creative service innovation.
As ISM helps in building up an initial model using available literature with the help of
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brainstorming sessions with the experts, it is not statistically validated. Future studies may apply
structural equation modeling to test reliability and validity of the relationships among customer
participation in co-creative service innovation variables. This study considered different type of
communication channels (mass media) based on past studies in literature, however, increasing
role of internet media (social media or social networking sites) has not been considered in this
research. Future researches in this area should consider the internet also as a communication
channel that helps in encouraging customer participation in co-creative service innovation (Shaw
et al., 2011). Since the ISM methodology is based on contextual relationships that have
developed through the knowledge of experts and their expertise in understanding variables. Any
kind of judgment bias in the variable relationship might affect the outcomes. There may be
occurrences of judgment biasness due to determination of contextual relationships depending
upon knowledge and expertise of area experts in understanding variables that limits its
generalizability to other context of this study. Customer participation in co-creative service
innovation has been examined in the context of hotels in India only and thereby limits
generalization of results to other industry and country contexts too.
Conclusion
Recent research in marketing management has increasingly been drawn to the concepts and ideas
encompassed by S-D logic, with its emphasis on customer co-creation. In this study, we have
extended the application of this concept to co-creative hotel service innovation in developing
country context. This study achieves the research objectives by exploring the variables
influencing customer participation in service innovation and highlighting their inter-relationship

20
 as well as their driving and dependency power through ISM and MICMAC analysis. The model
shows the inter-relationship among various factors and establishes the hierarchy among them,
which will help to identify the main causes that need faster implementation in the context of
customer participation in hotel service innovation. This study also adds to the understanding of
the customer participation variables that lead to higher customer satisfaction, loyalty and future
co-creation intention. Thus, this study will help to stimulate tourism and hospitality research on
customer participation in cocreation and will provide a fresh perspective on co-creatively
developed new hotel services. With the insights provided in this study, both academicians and
service managers can develop action plans by selecting and managing the combination of the
driving and dependence variables. Moreover, this is the foundational study that could guide
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future researchers in applying ISM methodology in exploring the interrelationships among the
psychological factors affecting customer participation in co-creative service innovation.

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 List of Figures:

Fig.1 Flow diagram for ISM methodology

Literature Review
List of variables
Expert opinion
Establish contextual relationship (Xij)
between variables (i,j)

Develop structural self-interaction matrix

(SSSIM)
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Develop reachability matrix (RM)

Partition the reachability matrix into

various levels

Develop conical form of reachability matrix

Remove transititvity from Develop diagraph

diagraph

Replace variable nodes with

the relationship statement Yes
Is there any
conceptual
inconsistency

No

Represent relationship statement into a

nodal CPSI
 Figure2.

Customer loyalty (CL) Future co-creation intention (FCCI)

Satisfaction (S)

Role clarity (RC) Customer ability (CA)

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Customer participation in service innovation

(CPSI)

Customer participative behavior (CPB)

Willingness to co-create (WCC)

Consumer Customer
innovativeness (CI) socialization (CS)
 Figure 3. MICMAC analysis

Driving 10
power 9 IV III
8 WCC
7 CPB CI
6 CS CA RC
5
4 I II
3
2 S CL FCCI CPSI
1
1 2 3 4 5 6 7 8 9 10
Dependence power
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 Annexure I

List of tables:

Table1. Notations depicting inter-relationships between variables.

V: For the relation from i to j, but not in both directions

A: For the relation from j to i, but not in both directions
X: The relationship between i and j is in both directions, i.e., variable i facilitates
variable j and variable j facilitates variable i.
O: When both the variables i and j are unrelated.

Table2. Entry in SSIM and Reachability Matrix

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Entry in SSIM V A X O
Entry in reachability matrix (i,j) 1 0 1 0

Table3. Structural self-interaction matrix (SSIM)

S.No. Variables CPSI FCCI CL S CA RC WCC CS CPB

1. Consumer innovativeness V O V O A V O V O
(CI)
2. Customer participative V V V V O V A A
behavior(CPB)
3. Customer socialization (CS) V O O O O O V

4. Willingness to co-create V V V V O O
(WCC)
5. Role clarity (RC) A V V V V
6. Customer ability (CA) A V V V
7. Satisfaction(S) A V V
8. Customer loyalty (CL) A V
9. Future co-creation intention A
(FCCI)
 Table4. Reachability matrix

Variables Reachability set Antecedent set Intersection Level

set
CI CI, CPB,CS,CL,CPSI CI CI
CPB CPB,RC,S,CL,FCCI,CPSI CC,CPB,CS,WCC,CA CPB
CS CPB, CS,WCC,CPSI CC,CS CS
WCC CPB, WCC,S,CL,FCCI,CPSI CC,WCC,S WCC,S
RC RC,CA,S,CL,FCCI CPB,RC RC
CA CA,S,CL,FCCI RC,CA CA
S S,CL,FCCI CPB,RC,CA,S S
CL CL,FCCI CC,CPB,WCC, CL
RC,CA,S,CL,CPB
FCCI FCCI CPB,WCC,RC,CA,S,CL,FCCI FCCI
CPSI CPSI CC,CPB,CS,WCC,CPSI CPSI I
Table5 (i) Level Iteration1
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Variables Reachability set Antecedent set Intersection set Le

ve
l
CI CI, CPB,CS,CL,CPSI CI CI
CPB CPB,RC,S,CL,FCCI,CPSI CI,CPB,CS,WCC,CA CPB
CS CPB, CS,WCC,CPCCSI CI,CS CS
WCC CPB, WCC,S,CL,FCCI,CPSI CI,WCC,S WCC,S
RC RC,CA,S,CL,FCCI CPB,RC RC
CA CA,S,CL,FCCI RC,CA CA
S S,CL,FCCI CPB,RC,CA,S S
CL CL,FCCI CI,CPB,WCC, CL
RC,CA,S,CL,CPB
FCCI FCCI CPB,WCC,RC,CA,S,CL,FCCI FCCI
CPSI CPSI CI,CPB,CS,WCC,CPSI CPSI I

Table 5(ii). Level Iteration 2-10

Iteration Variables Reachability Antecedent set Intersection Level

set set
2. FCCI FCCI CPB,WCC,RC,CA,S,CL,FCCI FCCI II
3. CL CL CI,CPB,WCC, CL III
RC,CA,S,CL,CPB
4. S S CPB,RC,CA,S S IV
5. CA CA RC,CA CA V
6. RC RC CPB,RC RC VI
7. CPB CPB CI,CPB,CS,WCC,CA CPB VII
8. WCC WCC CI,WCC,S WCC VIII
9. CS CS CI,CS CS IX
10. CI CI CI CI X
 Table 6. Conical Matrix
Variables CPSI FCCI CL S CA RC CPB WCC CS CI Drive
Power
CPSI 1 0 0 0 0 0 0 0 0 0 1
FCCI 0 1 0 0 0 0 0 0 0 0 1
CL 0 1 1 0 0 0 0 0 0 0 2
S 0 1 1 1 0 0 0 0 0 0 3
CA 0 1 1 1 1 0 0 0 0 0 4
RC 0 1 1 1 1 1 0 0 0 0 5
CPB 1 1 1 1 0 1 1 0 0 0 6
WCC 1 1 1 1 0 0 1 1 0 0 6
CS 1 0 0 0 0 0 1 1 1 0 4
CI 1 0 1 0 0 0 1 0 1 1 5
Dependence 5 7 7 5 2 2 4 2 2 1 37/37
power
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