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Customer
Customer engagement and engagement
co-created value in social media
Sara Quach
Department of Marketing, Griffith University, Southport, Australia
Wei Shao
Griffith University, Gold Coast, Australia Received 13 April 2019
Mitchell Ross Revised 23 June 2019
13 August 2019
Department of Marketing, Griffith University, Gold Coast, Australia, and 28 August 2019
Accepted 2 September 2019
Park Thaichon
Department of Marketing, Griffith University, Southport, Australia

Abstract
Purpose – The purpose of this paper is to understand the relationship between customer participation,
co-created value and customer engagement as well as customer motivation involved in this process.
Design/methodology/approach – Respondents were randomly exposed to one of the six types of social
media scenarios. A total of 181 respondents were drawn from an MTurk opt-in survey panel of individuals
who resided in America and were over the age of 18 years.
Findings – Overall, the results of this study showed that as the level of customer participation increased, the
level of co-created value decreased. The relationship between customer participation and customer
engagement was fully mediated by co-created value. Extrinsic motivation was found to moderate the
relationship between customer participation and co-created value but did not moderate the relationship
between customer participation and customer engagement. Moreover, customer engagement was at its
highest when an external reward was not offered, in other words, when customers were intrinsically
motivated. Furthermore, when an external reward was offered, a significant effect of privacy concern on
customer engagement was observed.
Originality/value – The study extends the current understanding of customer engagement through value
co-creation, customer participation and perceptions of privacy in firm-initiated activities in social media.
Keywords Social media, Privacy, Customer engagement, Customer participation, Co-created value,
Extrinsic motivations
Paper type Research paper

1. Introduction
Social media such as Facebook and Twitter have become a platform for sharing activities and
customer participation, a vital way for firms to communicate with their target market
(Murdough, 2009). According to the CMO survey in 2018 (CMO, 2018), marketers’ spending on
social media has increased by 13 per cent in 2019 and is predicted to accelerate over the next
five years by 66 per cent. The number of social media users worldwide in 2019 is 3.484bn, an
increase of 9 per cent from 2018 (We Are Social, 2019). Empowered by the internet and
information technologies, customers’ role in the consumption and exchange process with
companies has changed from “passive receivers” to “active co-producers” (Fernandes and
Remelhe, 2016). Customers can co-create value with firms through their participation in
firm-initiated activities in social media which help form their identities, express their
preferences, socialise with other users and create different experiences (Gambetti and
Graffigna, 2010). This study defines customer participation as a customer’s active
involvement in firm-initiated activities. This is consistent with service-dominant logic which
highlights the importance of understanding customers’ active participation in the value
creation process (Vargo and Lusch, 2016) and customer engagement (Kumar et al., 2016). Marketing Intelligence & Planning
On the other hand, customer participation in social media can also increase customers’ © Emerald Publishing Limited
0263-4503
perceived susceptibility to harm due to exposure of their personal data. Communication in DOI 10.1108/MIP-04-2019-0218
MIP firm owned social networks involves sharing personal information outside a closed circle of
friends, increasing the possibility for such data to be assessed by many other network users
(Mačiulienė and Skaržauskienė, 2016). In particular, the main privacy concerns are the
dissemination and collection of online personal information that specifically identifies them
as individuals. Therefore, customer participation in social media activities might have a
dark side, and customers’ perceived privacy risks could have a negative impact on their
perceived value and engagement (Martin et al., 2017).
Drawing on concepts and insights from the areas of value co-creation in social media
activities and customer engagement, this study seeks to understand the relationship
between customer participation, co-created value and customer engagement as well as
customer privacy concerns and motivation involved in this process. The remainder of this
paper is organised as follows. First, the literature review is presented and followed by the
methodology section, which describes how the data were collected, and the analysis was
conducted. Next, the results of the study are presented. In the subsequent section, we
provide a discussion of findings as well as theoretical and managerial implications. Finally,
conclusions, limitations and future research directions are provided.

2. Literature review
2.1 The relationship between customer engagement and co-created value
Value co-creation is defined as a shared, cooperative, simultaneous process of generating new
value, both materially and symbolically, through the voluntary contributions of multiple
actors resulting in reciprocal well-being (Vargo and Lusch, 2016). Therefore, the value is not
created and provided passively to the customer but is embedded in the co-creation process
between the company and its customers (Quach and Thaichon, 2017; Rosenthal and Brito,
2017). On the basis of this discussion, co-created value is defined from the customer
perspective as “a personal appraisal of the meaningfulness of a target (product or service,
further referred to as service) based on what is contributed and what is realized through the
process of co-creation” (Busser and Shulga, 2018, p.70) and includes personal, relational,
economic, interactional and experiential components (Agrawal and Rahman, 2019). Personal
value refers to the sense of accomplishment and acknowledgment of their inherent worth
derived during interactions with a firm (Busser and Shulga, 2018). The relational value
represents the friendships and connections between the firm and customers and between
customers and customers. Interactional value is created through the exchange of resources
such as ideas, knowledge and information (Rosenthal and Brito, 2017). Economic value depicts
the potential benefits such as lower prices, better deals and higher quality of offerings from
the interaction process. Experiential value refers to the overall emotional reaction to
co-creation, including affective responses such as interest, joy, happiness and fun (Tuan, 2016).
On the other hand, Van Doorn et al. (2010) define customer engagement behaviours as
“the customer’s behavioural manifestations towards a brand or firm, beyond purchase,
resulting from motivational drivers” (p. 253). This study focuses on the behavioural
manifestations of customer engagement that occur in interactions between the firm and
customers (Brodie et al., 2013; Parihar et al., 2019). Whereas value co-creation refers to the
process in which value is generated with customers’ inputs, customer engagement is
considered as the mechanism of how customers create value for the firm through their direct
and/or indirect contribution (Kumar et al., 2016). Kumar et al. (2010) propose that direct
contribution refers to customer purchases, contributing directly to firm value (Gupta et al.,
2004). There are three types of indirect contributions (Kumar et al., 2016). The first one is
customer referrals and recommendations. Second, customers can indirectly contribute to
firms through influential behaviours in a social network such as their reviews and social
media conversations (Kumar, 2013). Finally, another indirect contribution is customer
feedback and suggestions to the firm.
 Customer engagement requires customers’ willingness to invest significant amounts of Customer
their time and resources, which increase both monetary and non-monetary costs (Fernandes engagement
and Remelhe, 2016). Customers will compare these costs to the benefits of their engagement
behaviour (Hoyer et al., 2010), and only decide to engage if it is deemed rewarding (Füller,
2010). In other words, customer engagement is pertinent to their goals and expectation of
value outcomes (Vivek et al., 2012) or perceived co-created value (Hollebeek, 2011). As such,
we propose that the more co-created value customer receives in a firm-initiated activity, the
more likely customers will increase their overall engagement behaviour, namely purchase,
referrals, influence and feedback ( Jaakkola and Alexander, 2014). Therefore, we hypothesise
the following:
H1. Co-created value is positively related to customer engagement.

2.2 Effects of customers’ social media participation in co-created value

and customer engagement
Customer participation is considered as the extent to which a customer contributes their
resources during their interaction with the firm (Bharti et al., 2014; Chan et al., 2010). Silpakit
and Fisk (1985) argue that this refers to a customer’s active role, which consists of different
activities and inputs beyond the mere consumption of the products, for example,
information seeking and sharing, being a critical ingredient for successful value co-creation
(Yi and Gong, 2013).
This study focuses on customers’ participation in a social media activity initiated by a
firm. Firm’s social media activities are often different in terms of the effort that customers
are required to exert during their participation, which is referred to as “level of customer
participation” in this study. We propose that required level of participation in social media
can have an impact on the outcomes of customer participation. When participating in a
firm’s activity, customers are required to use their resources such as knowledge, emotions
and social networks (Yi and Gong, 2013). By doing this, they can, directly and indirectly, add
value to the firm. In other words, customer participation increases the engagement value for
a firm (Chen and Raab, 2017). On the other hand, a higher level of resources customers has to
invest in an interaction can increase customers’ perceived costs. As value is an overall
assessment of what is received (i.e. benefit) and what is given (cost), this can result in a
decreased in the value customers receive (Kumar and Reinartz, 2016). Therefore, the
following hypotheses are proposed:
H2. The level of customer participation is negatively related to co-created value.
H3. The level of customer participation is positively related to customer engagement.
A useful theoretical framework for understanding the motivation for customer participation
in firm-initiated activities in social media is self-determination theory. Self-determination is
considered as an individual’s sense of independence and control over their behaviour and
decisions (Kim and Drumwright, 2016). According to self-determination theory, customers
participate in different social media activities for two reasons: intrinsic and extrinsic
motivations (Ryan and Deci, 2000). Intrinsic motivation refers to the activity itself and its
inherent quality, such as interests, fun or enjoyment. In an intrinsically motivated activity,
customer participation is voluntary in the absence of reinforcement or reward because of the
activity itself enjoyable and satisfying (Deci and Ryan, 1985). Extrinsic motivation involves
the performance of activity due to factors beyond the task itself, including the quest for an
external reward such as financial incentives and gifts (Ryan and Deci, 2000).
We propose that by including an external reward to a social media activity, the firm can
increase the benefit that customer received in the activity. As the added benefits can offset
MIP customers’ sacrifices such as time and effort, customers are more extrinsically motivated
and are more likely to perceive greater value from their participation (Kumar and Reinartz,
2016). As such, we suggest that the negative effect of participation on co-created value can
be reduced by including an external reward due to the cost-benefit calculation. Similarly,
when the extrinsic value is present, it is expected that customer participation can have a
more significant effect on customer engagement as customers are more motivated to reward
the firm after they benefit from the firm effort (Quach et al., 2019; Martins and Patrício,
2013). On the basis of this discussion, it is hypothesised that:
H4. External motivation moderates the relationship between customer participation and
co-created value (i.e. when the external motivation is present, the level of customer
participation has a less negative impact on co-created value compared to when the
external motivation is absent).
H5. External motivation moderates the relationship between customer participation and
customer engagement (e.g. when the external motivation is present, customer
participation has a higher impact on customer engagement compared to when the
external motivation is absent).
Figure 1 depicts the relationship between the level of participation, co-created value,
customer engagement and the moderating effects of external reward (Model 1).

2.3 Effects of customers’ privacy concerns on value co-creation and customer engagement
As firms expand their efforts to collect and use customer data, customers become more
concerned about their privacy and the associated negative consequences such as
unauthorised use of information (Martin et al., 2017). Although there has not been consensus
on the definition of privacy, in the context of consumer marketplace privacy pertains to
personal information and is commonly considered as control over information
dissemination (i.e., disclosure) and information use (i.e., appropriation, invasion and false
light) (Phelps et al., 2000).
Customer participation in social media activities requires a certain level of revelation of
personal information, which triggers customers’ privacy concerns. Customers with greater

Model 1
External reward Co-created value
(FIN) H4 (COC)

H5 H1

H2

Participation Engagement
(PAR) H3 (ENG)

Model 2
External reward Co-created value
(FIN) (COC)
H8

H9
H1

Figure 1. H6
Models 1 and 2 Privacy Concern Engagement
(PRC) H7 (ENG)
privacy concerns tend to believe that there are high risks in their social media activities Customer
(Bansal et al., 2016). As such, they are more likely to perceive less value in the co-creation engagement
process due to the perception of diminished benefits ( Joinson and Paine, 2007). Similarly,
privacy concerns can also limit customers’ engagement behaviour as customers are more
hesitant to share their resources such as a personal network or sensitive information
(Kumar et al., 2016) and minimise their interactions with the firm (Martin et al., 2017).
In other words, customers who have higher privacy concerns are less engaged
(Staddon et al., 2012). Therefore, we propose the following hypotheses:
H6. Privacy concerns are negatively related to co-created value.
H7. Privacy concerns are negatively related to customer engagement.
Furthermore, Norberg et al. (2007) revealed the presence of a “privacy paradox” which refers
to the situation in which despite expressing concerns about privacy invasion, customers are
still willing to disclose their personal data to firms in exchange for some benefits such as
convenience or financial incentives. To be more specific, as the benefits of disclosing
personal information may be instant (e.g. gaining a monetary reward), and the risk of such
information disclosure may not be obvious or may extend over time (e.g. cybercrimes)
(Smith et al., 2011), customers might attribute more weight to the benefits than to risks.
Hence, this study proposes that the presence of external rewards such as financial and
non-monetary incentives in social media activities increases customers’ perceived immediate
benefits ( Joinson and Paine, 2007). As a result, this can reduce the negative effect of privacy
concerns on the perceived value in the co-creation process. Similarly, Krafft et al. (2017)
indicate that using monetary rewards is one of the most popular strategies that firms use to
mitigate customers’ concerns on privacy issues and enhance customers’ interactions with
them. When customers receive an external reward for their interaction with a firm, the
negative effect of privacy concerns on customer engagement is discounted. Based on this
discussion, the following hypotheses are formulated:
H8. External motivation moderates the relationship between privacy concerns and
co-created value (i.e. when the external motivation is present, privacy concerns have
a less negative impact on co-created value compared to when the external motivation
is absent).
H9. External motivation moderates the relationship between privacy concerns and
customer engagement (e.g. when the external motivation is present, privacy
concerns have a less negative impact on customer engagement compared to when
the external motivation is absent).
The second part of Figure 1 depicts the relationship between privacy concerns, co-created
value, customer engagement and the moderating effects of external reward (Model 2).

3. Methodology
3.1 Research design
In this research, respondents were randomly allocated to be exposed to one of the six types
of social media activities, using a 3 (participation: low, medium, high)×2 (external reward:
no, yes) between-subjects design. The scenario presented to respondents was borrowed
from the Coca-Cola Co. Facebook page, where a picture of Coke can designs was shown.
In the low level of participation condition, respondents were told to “screenshot your
favourite design and share with us in the comment section below”. In the medium level of
participation condition, respondents were told to “screenshot your favourite design and tag
your best Coke mate to share this moment”. In the high level of participation condition,
respondents were told to “screenshot your favourite design and share it on your wall.
MIP Tag us so we can get to see it too”. By research design, half of the respondents were
provided with an external reward in the scenario “to win a personalised can with your
name”, whereas the other half of the respondents were not provided with this incentive.
Manipulation check was conducted where we used a sample of marketing students
(n−10), they were given the three social media activity scenarios and were asked to indicate
which scenario provides a low, medium or high participation in the direction that would
provide a greater opportunity for customers to voice their opinions and share experiences
about the firm with other customers as well as the firm (Rishika et al., 2013). The results
indicate that greater than 80 per cent of the agreement was reached among the students
regarding the perceived level of participation on social media.

3.2 Respondents
A total of 181 respondents were drawn from an MTurk opt-in survey panel of individuals
who resided in America and were over the age of 18 years (n ¼ 181). During the sampling
process, respondents were randomly allocated to one of the six experimental conditions until
there was at least a number of 30 respondents in each cell, thus resulting in a sample size of
181. In terms of age, there were 40 participants among the 18–24, 102 participants among
25-34, and 39 participants among 35+. Majority of the participants (i.e. 100) earn between
$10,000–49,999, 19 participants among the less than $10,000, 54 participants among the
$50,000–99,999 and 8 participants among the $100,000.

3.3 Measurement
The construct of co-created value was adapted from Agrawal and Rahman (2019) and
Ranjan and Read (2016), including relational, personal, economical, interactional and
experiential co-created value. Other key constructs are customer engagement (adapted from
Kumar and Pansari (2016) including referral, influence, knowledge and purchase
components) and privacy concern (adapted from Martin et al. (2017) including “I pay
attention to how companies handle my online personal information”, “I actively try to
protect my online personal information”, “The security of my online personal information is
important to me” and “I am concerned about risks associated with a breach of my online
personal information”). All respondents were asked to answer questions measuring the key
constructs on a scale of 1 (strongly disagree) to 5 (strongly agree).

4. Results
4.1 Model 1
Estimation of the model, as shown in Figure 1, was conducted using the PROCESS method
(Hayes, 2018). The research model estimates the effect of social media participation on
customer engagement directly as well as indirectly through co-created value, with the direct
and indirect effects moderated by the provision of external reward. In the model (Figure 1),
participation is a categorical variable (low, medium, high levels of participation), the
external reward is a categorical variable (yes, no) and co-created value and customer
engagement are numerical variables. Estimation generates 95% percentile bootstrap
confidence intervals based on 5,000 bootstrap samples for the conditional indirect effect of
participation on customer engagement through co-creation. The results of the regression
analyses are summarised in Table I.
As shown in Table I, the effect of participation on co-created value was significant
(t ¼ −2.2896, p ¼ 0.023), indicating that a higher level of participation negatively impacts on
co-created value. As expected, co-created value positively influences customer engagement
(t ¼ 18.42, p ¼ 0.000). However, the proposed direct effect of participation on customer
 Coefficient t p R (R2)
Customer
engagement
Model 1
PAR→COC −0.2812 −2.2896 0.0233 0.2029 (0.0412)
FIN→COC −0.1481 −0.3948 0.6935
PAR×FIN→COC −0.1481 −0.3948 0.6935
PAR→ENG 0.0606 0.9378 0.3496 0.8182 (0.6695)
COC→ENG 0.7263 18.4156 0.0000
FIN→ENG −0.0177 −0.0909 0.9277
PAR×FIN→ENG −0.0654 −0.7249 0.4695
Model 2
PRC→COC −0.3198 −1.5722 0.1180 0.1478 (0.0218)
FIN→COC −0.6321 −1.3941 0.1651
PRC×FIN→COC 0.5025 1.7439 0.083
PRC→ENG 0.0384 0.3690 0.7126 0.8226 (0.6766)
COC→ENG 0.7165 18.5486 0.0000
FIN→ENG −0.4348 −1.8769 0.0622
PRC×FIN→ENG 0.1828 1.2381 0.2174 Table I.
Notes: PAR, participation; COC, co-created value; FIN, external reward; ENG, engagement; PRC, Regression coefficient
privacy concerns for Models 1 and 2

engagement fails to be significant (t ¼ 0.9378, p ¼ 0.3496). Thus, co-created value fully

mediates the relationship between participation and customer engagement.
The moderator in the model is an external reward (Figure 1). Table I shows that the
product of the independent variable (participation) and the moderator (external reward) was
insignificant in the simple linear moderation model for the dependent variable of co-created
value (t ¼ −0.3948, p ¼ 0.694). Further examination of the conditional indirect effect of
participation on customer engagement through co-created value reveals that the indirect
effect (β ¼ −0.2042) was significant when the external reward was not provided and the
indirect effect (β ¼ −0.1122) was not significant when the external reward was provided.
Table I also shows that the product of the independent variable (participation) and the
moderator (external reward) was insignificant for the dependent variable of customer
engagement (t ¼ −0.7249, p ¼ 0.4695). Further examination of the conditional effect shows
that the direct effect of participation on customer engagement is independent on the external
reward. The direct effect was insignificant both with (t ¼ 0.064, p ¼ 0.9408) and without the
provision of external reward (t ¼ 0.9378, p ¼ 0.350).
Results based on regression analyses are summarised in the hypotheses summary table
(Table II). It is important to note that even though participation has a significant influence on
co-created value (supporting H2), the direction of the effect is negative rather than positive,
indicating that a lower level of participation is associated with a greater perceived value of
co-creation. Furthermore, external reward moderates the indirect effect of participation on
customer engagement through co-created value (supporting H4), when the external reward is
not provided, lowering the level of participation increases customer engagement through
co-creation. By contrast, when the external reward is provided, the indirect effect becomes
insignificant. The results also show that the direct effect of participation on customer
engagement does not depend on external reward (not supporting H5).
In order to further understand the relationship between participation, external reward
and customer engagement, a 3 (participation: low, medium, high)×2 (external reward: yes,
no) between-subject ANOVA was conducted. The results indicate that the direct effect of
participation on customer engagement (F ¼ 1.775, p ¼ 0.173) was not significant, and
motivation (F ¼ 0.324, p ¼ 0.324) has no significant direct effect on customer engagement.
MIP Hypotheses Estimates Supported

Model 1
H1 COC→ENG 0.7263 ( p ¼ 0.0000) (LLCI ¼ 0.6485, ULCI ¼ 0.8041) Yes
H3 PAR→ENG 0.0606 ( p ¼ 0.3496) (LLCI ¼ −0.0670, ULCI ¼ 0.1883) No
H2 PAR→COC −0.2812 ( p ¼ 0.0233) (LLCI ¼ −0.5236, Yes
ULCI ¼ −0.0388)
Moderation
H4 PAR→COC→ENG −0.2042 (BootLLCI ¼ −0.4044) (BootULCI ¼ −0.0040) Yes
(FIN ¼ 0)
PAR→COC→ENG −0.1122 (BootLLCI ¼ −0.2980) (BootULCI ¼ 0.0607)
(FIN ¼ 1)
H5: PAR→ENG (FIN ¼ 0) 0.0606 ( p ¼ 0.3496) (LLCI ¼ −0.0670, ULCI ¼ 0.1883) No
PAR→ENG (FIN ¼ 1) −0.0048 ( p ¼ 0.9408) (LLCI ¼ −0.1311, ULCI ¼ 0.1216)
Model 2
H1 COC→ENG 0.7165 ( p ¼ 0.0000) (LLCI ¼ 0.6402, ULCI ¼ 0.7927) Yes
H6 PRC→COC −0.3198 ( p ¼ 0.1180) (LLCI ¼ −0.7215, ULCI ¼ 0.0820) No
H7 PRC→ENG 0.0384 ( p ¼ 0.7126) (LLCI ¼ −0.1671, ULCI ¼ 0.2440) No
Moderation
H8 PRC→COC→ENG −0.2291 (BootLLCI ¼ −0.5455) No
(FIN ¼ 0) (BootULCI ¼ 0603)
PRC→COC→ENG 0.1390 (BootLLCI ¼ −0.1493) (BootULCI ¼ 0.4181)
(FIN ¼ 1)
H9 PRC→ENG (FIN ¼ 0) 0.0384 ( p ¼ 0.7126) (LLCI ¼ −0.1671, ULCI ¼ 0.2440) Yes
Table II. PRC→ENG (FIN ¼ 1) −0.2213 ( p ¼ 0.0346) (LLCI ¼ 0.0612, ULCI ¼ 0.4263)
Hypotheses summary Notes: 5,000 bootstrap estimates of the indirect effect was used. PAR, participation; COC, co-created value;
for Models 1 and 2 FIN, external reward; ENG, engagement; PRC, privacy

The interaction between participation and motivation was significant at a 0.10 level
(F ¼ 2.527, p ¼ 0.083). The interaction effect is illustrated in Figure 2.
As shown in Figure 1, when external reward was provided, a medium level
participation resulted in greater customer engagement (M ¼ 3.89, SD ¼ 0.93) than a high
level of participation (M ¼ 3.37, SD ¼ 1.05, p ¼ 0.019). Customer engagement was at the
highest point when the external reward was not provided, and the participation level was
low (M ¼ 2.91, SD ¼ 0.68). By contrast, customer engagement was at the lowest point
when the external reward was provided, and the participation level was high (M ¼ 3.37,
SD ¼ 1.05).
The ANOVA results not only confirms but also illustrates the role of external reward as a
moderator between participation and customer engagement. Regression analyses and
factorial ANOVA indicate that participation does not directly influence customer
engagement. Rather, the effect is mediated through co-created value, and the indirect
effect is moderated by external reward.

4.2 Model 2
Model 2 (see Figure 1) was estimated using regression analyses. The model (Figure 1)
estimates the effect of social media privacy concern on customer engagement directly as
well as indirectly through co-created value, with the direct and indirect effects moderated by
the provision of external reward. In the model (Figure 1), privacy concern is a categorical
variable (low, high) based on a medium split, the external reward is a categorical variable
(yes, no), and co-created value and customer engagement are numerical variables.
Estimation generates 95% percentile bootstrap confidence intervals based on 5,000
bootstrap samples for the conditional indirect effect of privacy concern on customer
 4 Customer
3.91 3.89 engagement
Customer engagement

3.61 3.57 3.62

3.5
External reward no
3.37 External reward yes

3
Low Medium High
Participation Level

3.78 3.79

3.59
3.5
3.43 External reward no Figure 2.
Interaction effect
External reward yes
of participation
and interaction
effect of privacy
concern×external
3 reward on
Low High
customer engagement
Privacy Concern

engagement through co-created value. The results of the regression analyses are
summarised in Table I.
As shown in Table I, the effects of privacy concern on both co-created value and
engagement were not significant (t ¼ −.1.57, p ¼ 0.118 and t ¼ 0.37, p ¼ 0.7126, respectively).
As expected, co-created value positively influences customer engagement (t ¼ 0.7156,
p ¼ 0.000).
The moderator in the model is an external reward (Figure 1). Table II also shows
that external reward does not significantly moderate the relationship between
privacy concern and engagement (t ¼ 1.24, p ¼ 0.22). Further examination of the
moderation effect was conducted to identify the conditional direct effect of privacy
concern on customer engagement. When the external reward was provided to online
participants, the direct effect of privacy concern on customer engagement was significant
(β ¼ 0.2213, t ¼ 0.22, p ¼ 0.0346). By contrast, when the external reward was not provided,
the effect of privacy concern on customer engagement was not significant (β ¼ 0.0384,
t ¼ 0.37, p ¼ 0.71). When conditional analyses were conducted for the indirect effect of
privacy concern on customer engagement through co-created value, the results show
insignificant results.
Following regression analyses, the moderating effect of external reward was also
examined by conducting a 2 (privacy concern: low, high) x 2 (external reward: (no, yes)
between-subject ANOVA. The results indicate that privacy concern does not have a
significant effect on customer engagement (F ¼ 0.408, p ¼ 0.524). External reward does not
have a significant effect on customer engagement (F ¼ 0.336, p ¼ 0.563). The interaction
effect privacy concern x external reward has a significant effect on customer engagement
(F ¼ 4.610, p ¼ 0.033). The interaction effect is illustrated in Figure 2.
MIP As shown in Figure 2, when privacy concern was low, participants who did not receive
an external reward (M ¼ 3.78, SD ¼ 0.62) was more likely to be engaged rather than when
external reward was provided (M ¼ 3.43, SD ¼ 0.93, F ¼ 3.78, p ¼ 0.054). When external
reward was provided, participants whose privacy concern was high (M ¼ 3.79, SD ¼ 0.94)
were more likely to be engaged than when privacy concern was low (M ¼ 3.43, SD ¼ 0.93,
F ¼ 3.87, p ¼ 0.051). The ANOVA results further illustrate the effect of external reward on
the relationship between privacy concern and customer engagement. Overall, the regression
analyses results (Table II) indicate that privacy concern does not directly or indirectly
influence customer engagement, therefore, not supporting H6 and H7 Instead, the
interaction between privacy concern and external reward has a significant impact on
customer engagement, supporting H9. Specifically, when online participants’ privacy
concern is high rather than low, provision of external reward positively influences
customer engagement.

5. Discussion and theoretical implications

5.1 Study 1
Consumer engagement is argued to assist in achieving superior corporate performance
(Brodie et al., 2013) and profitability (Sashi, 2012). Engaged consumers contribute directly to
firm value through making purchases (Gupta et al., 2004) and indirectly through customer
referrals and undertaking influential social media behaviours (Kumar, 2013). Across two
models, this study explores the relationship between co-created value and customer
engagement within the context of social media activities.
Specifically, Model 1 explores the impact of differing levels of customer participation in
social media activities on co-created value and customer engagement, and then further
develops this by considering the effect of offering consumers an external reward to
participate. Model 2 then extends this by investigating the impact of differing levels of
privacy concern on co-created value and customer engagement, and then subsequently
investigates the impact of offering consumers an external reward for participation.
The relationship between co-created value and customer engagement has previously
demonstrated to be significant and positive ( Jaakkola and Alexander, 2014), and this
finding is replicated in the current study. In this study, participants were asked to respond
to a brand’s social media page by undertaking a task with the level of customer
participation manipulated by increasing the task complexity. Overall, the results of this
study showed that as the level of customer participation increased, the level of co-created
value decreased. This finding is in keeping with the literature (e.g. Holbrook, 1999; Busser
and Shulga, 2018) in that as the participant was required to invest more resources in the
interaction by undertaking more complex tasks, the trade-off between sacrifice and benefits
became untenable.
However, it was also anticipated that as customer participation increased so too,
customer engagement would increase. In contrast to the arguments of others (Chen and
Raab, 2017), this was found not to be the case with no significant relationship found between
customer participation and customer engagement. Instead, this relationship was fully
mediated by co-created value. As such, a low level of participation results in a higher level of
co-created value and hence, a higher level of customer engagement. From the firm’s
perspective, it becomes important to carefully understand this relationship if seeking
increased levels of customer engagement.

5.2 Study 2
The study findings were then extended through Model 2, which investigates the impact of
differing levels of privacy concern on co-created value and customer engagement, and then
considers the impact of offering an external reward. Privacy concern was found not to Customer
impact either value co-creation or customer engagement, which initially appears to disagree engagement
with previous research in which negative reactions were observed (Martin et al., 2017). This
is not to say that customers were not concerned about a privacy breach. However, the
reasons for this difference in finding are unclear and require further investigation.
In support of previous privacy research (Smith et al., 2011) in which customers tend to
overrate the present over the future, this may indicate the presence of a privacy paradox
(Norberg et al., 2007). It may be that participants consider a privacy breach to be inevitable
and as such, they do not particularly attribute blame for a breach with a firm and are still
willing to participate and engage with the firm. Previous studies have shown that privacy
concerns are mitigated by the trust (Smith et al., 2011) and that firms can work to develop
customer trust through implementing practices such communication of privacy policy
(Andrade et al., 2002). In addition, it was found that the presence of an external reward can
increase the level of engagement of customers who have high privacy concerns. It may be
that despite concerns about privacy, customers are prepared to disclose personal
information in exchange for some benefits.

6. Implications
It is evident from this study that firms need to have a clear objective in mind when
designing and implementing social media activities. For example, if the objective is to
increase customer participation, then just giving customers more things to do will achieve
this objective. However, this does not necessarily increase customer engagement, which is a
more meaningful objective for the future success of a firm. In the social media environment,
it is all too easy for a firm to develop more activities encouraging greater customer
participation. However, it is likely that the quality rather than the quantity of participation
is important in customer engagement. Additionally, firms need to carefully consider the use
of an external motivation as this was found to have an impact on participation but not
engagement. In other words, it may be that customers are motivated by external motivation
rather than the brand and are prepared to increase participation in order to increase their
likelihood of achieving external motivation. Again, the relevance and potential success of
using some form of external motivation depend on whether the firm’s objective is to increase
participation or engagement.
For most of the participation conditions, customer engagement was at its highest when
an external reward was not offered, in other words, when customers were intrinsically
motivated. This is not surprising as Ryan and Deci (2000) have long argued that positive
outcomes tend to be associated more with internalised motivations. However, for extrinsic
motivation, customer engagement was at its highest when participation was at a medium
level, thus demonstrating the need for a firm to have a clear understanding of its customers.
In order to maximise results, firms need first to understand whether customers are
extrinsically or intrinsically motivated and then the level of participation customers
associate with a task.
As this level of customer understanding is possibly beyond the scope of many firms, one
option may be to aim for a medium level of participation if offering an external reward or to
aim towards a lower level of customer participation if not offering an external reward.
Unsurprisingly, the lowest level of customer engagement was seen for the combination of
extrinsic motivation and a high participation level. As customers possess the ability to
calculate the trade-off between external reward and participation (Holbrook, 1999; Busser
and Shulga, 2018) then once the required tasks become too onerous (high participation level)
the external incentive is insufficient to achieve a high level of customer engagement. One
strategy a firm may consider in this instance is to attempt to move extrinsically motivated
customers, particularly those who are externally regulated, towards intrinsic motivation.
MIP Implementing strategies to encourage connectedness with others are essential in this regard
(Kim and Drumwright, 2016; Ryan and Deci, 2000).
Additionally, when an external reward was not offered, there was no significant effect of
privacy concern on customer engagement. In this situation, as customer privacy concern
increased, there was a small (but non-significant) decline in customer engagement. This may
be because customers who participate without an external reward tend to be intrinsically
motivated and, as such, are more likely to already know and trust the organisation.
However, when an external reward was offered, a significant effect of privacy concern on
customer engagement was observed. In this situation, as privacy concern increased,
consumer engagement significantly increased. For firms, this suggests that when customer
privacy concerns are high, the provision of an external reward can increase customer
engagement. This may indicate the presence of a privacy paradox (Norberg et al., 2007) in
which despite the high level of privacy concerns customers are prepared to trade-off their
concerns in exchange for some benefits (external reward). Again, this demonstrates the need
for a firm to have a clear understanding of its customers. For customers who have high
privacy concerns, it becomes important for a firm to understand and manage the trade-off
value so that in the mind of the customer the reward offered is commensurate with the
personal information provided. In order for firms to exploit the benefits from large strategic
investments in social media marketing, a key challenge is to understand and manage
factors such as external reward and privacy concerns and their potential influence on
consumer engagement.

7. Conclusion, limitations and future research direction

The current study contributes to a better understanding of how to increase customer
engagement through co-created value and customer participation in firm-initiated activities
in social media. It also investigates the role of customer privacy concerns and customer
motivation in this process. The use of external rewards was found to moderate these
relationships. On a managerial level, the current study provides useful, actionable guidance
on how firms design their social media activities such as task complexity and the provision
of external incentives. Firms also need to learn about their customers’ intrinsic and extrinsic
motivations to stimulate consumers’ participation and engagement.
We acknowledge that our study is not without limitations. The absence of the expected
direct effects of privacy concern on co-created and customer engagement cannot be fully
explained by the current study. Future research could be done to investigate this further by
taking into consideration other potential factors, such as regulatory focus. Furthermore, as
this research is experimental with limited sample size, other researchers might be interested
in testing the generalisability of the findings across different industries and contexts.
Finally, a longitudinal study to test the dynamic of customer participation, value co-creation,
customer engagement and privacy concerns would be fruitful areas for research on social
media marketing.

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Corresponding author
Sara Quach can be contacted at: s.quach@griffith.edu.au

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