Corsaro - 2020 - Value Co-Destruction and Its Effects On Value Appropriation

Journal of Marketing Management
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Value co-destruction and its effects on value

appropriation
Daniela Corsaro
To cite this article: Daniela Corsaro (2020) Value co-destruction and its effects
on value appropriation, Journal of Marketing Management, 36:1-2, 100-127, DOI:
10.1080/0267257X.2019.1696876
To link to this article: https://doi.org/10.1080/0267257X.2019.1696876
Published online: 02 Dec 2019.
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JOURNAL OF MARKETING MANAGEMENT
2020, VOL. 36, NOS. 1–2, 100–127
https://doi.org/10.1080/0267257X.2019.1696876
Value co-destruction and its effects on value appropriation

Daniela Corsaro
Department of Business, Law, Economics and Consumer Behavior, Università IULM, Milano, Italy
ABSTRACT ARTICLE HISTORY

The importance of the fair appropriation of co-created value in busi- Received 14 December 2017
ness relationships has been widely emphasised in the literature. Accepted 10 October 2019
However, in business relationships, value can be both co-created KEYWORDS
and co-destructed, but what happens to value appropriation when Value co-creation; value
value is co-destructed? Previous studies have focused on what causes co-destruction; value
value co-destruction, rather than its effects. The question posed is appropriation; unfairness;
relevant because some actors experience higher diminutions in value business relationships
appropriation, generating perceptions of inequities, dissatisfaction,
and tensions. By analysing data from 39 qualitative interviews with
companies that have experienced value co-destruction, this paper
attempts to identify the reasons for the unbalanced relationship
between value co-destruction and value appropriation. Two higher-
level dimensions – awareness of value and awareness of context – are
identified and used to generate four clusters of reasons for dispro-
portionate value co-destruction effects. The paper also pinpoints
specific actions for managing unfairness from value co-destruction.
Introduction
Satisfaction in business relationships strongly depends on the ability of each party to fairly
recoup and benefit from the value that they have contributed to co-creating these
relationships (Ellegaard, Medlin, & Geersbro, 2014; Garcia-Castro & Aguilera, 2015;
Morgan, Anokhin, & Wincent, 2018). When parties appropriate co-created value in an
unfair way, tensions and conflicts can strongly undermine the development of business
relationships. The starting point of this study is that, just as co-created value can be
appropriated by parties in an unequal way, value co-destruction can have a similarly
disproportionate impact on the value appropriated by the actors.
Here, we define value co-destruction as the process through which relational parties
co-destroy the value they previously co-created, generating a diminution in the value
actors appropriated. The process can be initiated by events which are both internal and
external to the relational interaction. Meanwhile, value appropriation is the means by
which a party captures part of the co-created value (Jap, 2001). Therefore, whereas value
co-creation and value co-destruction are relational concepts that occur between the
parties, value appropriation takes place in the individual value sphere.
CONTACT Daniela Corsaro daniela.corsaro@iulm.it Department of Business, Law, Economics and Consumer
Behavior, Università IULM, Via Carlo Bò, 1, Milano 20143, Italy
© 2019 Westburn Publishers Ltd.
JOURNAL OF MARKETING MANAGEMENT 101
Past studies have largely discussed the antecedents of value co-destruction (Prior &
Marcos-Cuevas, 2016) while leaving out its effects on value appropriation. Seen from the
reverse perspective, value appropriation has primarily been investigated with respect to
co-creation, yet the link between value co-destruction and value appropriation remains
unexplored in the literature (Hallberg, 2018; Wagner, Eggert, & Lindemann, 2010).
The topic is relevant for two main reasons. First, we know that value being co-created
does not necessarily translate into party satisfaction, as actors do not always appropriate
co-created value in proportion to their individual efforts (Cox, 2004). Similarly, dissatisfac-
tion does not necessarily stem from value co-destruction itself; rather, it comes from the
extent to which an individual actor is affected in terms of the diminution of the value
appropriated. Therefore, there seems to be closely intermeshed interdependence
between value co-destruction and what happens in the individual (actor) value sphere
with regard to value appropriation, which could have important implications for relation-
ship evolution.
The second reason is that achieving a fair value appropriation is even more important
considering that many business models nowadays are based on ecosystems of multiple
inter-organisational relationships, especially due to the advent of digitalisation
(Håkansson & Waluszewski, 2018; Mouri, Bindroo, & Ganesh, 2015). In 2014, a study by
the Chief Marketing Officer Council revealed that 85% of marketing managers viewed
partnerships and collaborations as crucial to their businesses (CMO Council, 2014).
However, although such partnerships and collaborations were rated as highly important,
almost half of the respondents reported high failure rates (60% or more).
The goal of this paper is to explore the reasons why value co-destruction affects value
appropriation in an unbalanced way in business relationships. Empirically, this work consists
of a qualitative study, which included 39 interviews with managers operating in different
industries ranging from manufacturing to services and distribution.
This study contributes to theory by identifying four main sources of gaps between value
co-destruction and value appropriation in business relationships, which are based on
a combination of two higher level dimensions – awareness of value and awareness of
context. Each of the four situations reflects detailed reasons that have led certain actors to
experience higher diminution in value appropriation than others. Realising and managing
these reasons are important for building a better equilibrium between value co-destruction
and value appropriation, which in turn provides a basis for positive relationship develop-
ment. Furthermore, this study will contribute to establishing a better understanding of the
value-related process, like co-creation and co-destruction, and individual level processes like
value appropriation. Our findings will also support managerial practice by showing the need
for specific actions to manage the effects of value co-destruction on value appropriation,
based on the different situations highlighted.
The remainder of this document is organised as follows. The background for this study
includes a two-part literature review: first, literature on value co-creation and value
appropriation and, second, literature on the effects of co-destruction on value appropria-
tion. The paper follows with an explanation of the methodology of the research, the main
findings, and a discussion of the results. Conclusions and the implications of the research
for theory and practice end the paper.
102 D. CORSARO
Appropriating the value co-created in business relationships

Value co-creation refers to how actors combine their resources in an interactive context in
which both supplier and customer are actively involved (Emden, Calantone, & Droge, 2006).
The contemporary frontier in value research holds that value emerges as an outcome of
using goods and services, thereby becoming clearly manifested in consequences for
market participants of relational interactions (Ballantyne & Varey, 2006; Grönroos, 2011;
Vargo & Lusch, 2004). The degree of involvement of the supplier in value co-creation with
customers varies according to the intensity with which the supplier can affect the applica-
tion of its resources for the customer (Cova & Salle, 2008). Recently, to further stress the
interactional nature of value, Ramaswamy and Ozcan (2018) introduced the concept of
value-in-interactional creation as the enactment of interactional creation across interactive
system environments, entailing agency engagement and structuring organisations.
Although firms need to account for ‘the relational strategy’ that maximises the value
created in their collaborative relationships (Dyer & Singh, 1998), ‘they should simulta-
neously follow their own strategic, value appropriation objectives in order to remain
competitive as individual entities’ (Ritala & Tidström, 2014, p. 498).
Value appropriation refers to the portion of the value pie that each party can capture out
of the total co-created value (Bowman & Ambrosini, 2000; Jap, 2001; Möller, 2006); this total
value has been relabelled the ‘relationship value pie’ to emphasise that the realisation of
value occurs in a series of relationship interactions (Payne, Storbacka, & Frow, 2008; Tuli,
Kohli, & Bharadwaj, 2007; Wagner et al., 2010). Much of the research on value appropriation,
especially in the strategy field, has focused on analyses of value slippage, a phenomenon
that occurs ‘when the party creating the value does not retain all the value that is created’
(Lepak, Smith, & Taylor, 2007, p. 187), as a company must share a considerable portion of the
value with other stakeholders, such as competitors, suppliers, employees, society, and even
customers (Makadok & Coff, 2002). However, the co-created value may not be symmetrically
distributed between the parties; there is increasing evidence that companies are applying
excessively exploitative value appropriation methods (Ellegaard et al., 2014) as many
companies focus on competitive advantage through value appropriation rather than on
creating new growth opportunities in their networks (Mouzas, 2006).
In business relationships, fair value appropriation is even more difficult to achieve as
customers tend to experience value ambiguity and are often uncertain of the potential
value they will realise from prospective offerings. Without a clear understanding of the
potential value of a supplier’s offering, customers tend to make purchasing decisions
based on the lowest price (Anderson & Wynstra, 2010).
As business actors can be strongly dissatisfied when they are not able to fairly appro-
priate the value they contributed in the co-creation process, scholars have tried to
understand the possible sources and processes involved in disproportionate appropria-
tion. Strategy scholars have primarily identified these sources as the presence of direct
and indirect competition as well as isolating mechanisms that may limit the value-
creating task. Patents, customer-switching costs, physical or legal entry barriers, channel
power, and brand inertia are classic examples of isolating mechanisms that limit competi-
tion and maximise the bargaining relationship of a seller towards a buyer (Lepak et al.,
2007; Mizik & Jacobson, 2003).
In marketing, Pardo, Henneberg, Mouzas, and Naudé (2006) showed that value crea-
tion and value appropriation are directly linked to the functions of the supplier and
customer, respectively: ‘The extent of value appropriation is independent of the degree
of value creation and is driven by other facets of the relationship (power, negotiation
skills, etc.) that characterise the interaction patterns’ (p. 1368). Powerful customers tend to
appropriate a larger share of the created value by exploiting information asymmetries and
price negotiations or by extracting additional services after agreements have been signed
(Ellegaard et al., 2014). Power, in particular, has been considered an important source of
imbalance between value co-creation and appropriation as the capacity of the focal firm
to capture value is related to its bargaining power in the relationship portfolio (Balboni &
Terho, 2016; Bowman & Swart, 2007; De Propris, 2002; Lavie, 2007). Morgan et al. (2018)
indicated that, when information asymmetry between partners is low, firms will choose
partners with a strategic emphasis on value creation. Conversely, when information
asymmetry is high, firms tend to choose corporate partners that emphasise value appro-
priation. Connected to this idea, the presence of opportunism can incentivise parties to
maximise their relational rents by limiting the effort in value co-creation in an attempt to
benefit from relational investments made by others (Madhok, 2006; Mele, 2011).
Other scholars have found relationship quality (Wagner & Lindemann, 2008), pricing
structures, competitive behaviours (Matthyssens, Vandenbempt, & Weyns, 2009), firm
size, and environmental turbulence (Aspara & Tikkanen, 2013) to be important elements
for a proper equilibrium between value co-creation and value appropriation, increasing
the possibility for equality in the relationship. According to Henneberg, Pardo, Mouzas,
and Naudé (2009), this symmetry depends on the match or mismatch in the focus of
parties in terms of proprietary value, exchange value, or relational value, which can cause
buyer expectations not to be reciprocated by the seller.
As we will discuss further in the next section, although scholars have investigated the
reasons for an unfair value appropriation of value co-creation, the relationship between
value co-destruction and value appropriation is as yet unexplored.
Value co-destruction affecting value appropriation

Recent research clearly indicates that, in collaborations, value can be not only co-created
but also co-destructed (Wu & Cavusgil, 2006; Zahra, Yavuz, & Ucbasaran, 2006). Over time,
the strength of relationships can deteriorate, interest in relationships can decline, and
there may be a perceived loss of objectivity and rising expectations (Fang, Chang, & Peng,
2011; Hibbard, Hogan, & Smith, 2003; Woodruff & Flint, 2006). Relationships indeed can be
considered ambivalent. On one hand, they are a way to reach specific goals; on the other
hand, ‘they generate different problems and can easily turn into a burden for one or both
of the involved partners’ (Håkansson & Snehota, 1995, p. 523; Haytko, 2004), which often
translates into value co-destruction (Anderson & Jap, 2005; Chowdhury, Gruber, &
Zolkiewski, 2016; Pressey & Tzokas, 2004; Wathne & Heide, 2000).
Smith (2013) defined value co-destruction as a failure of the resource-integration
process to co-create expected value. This implies an unforeseen resource loss for custo-
mers, which would negatively affect their satisfaction. According to Prior and Marcos-
Cuevas (2016), value co-destruction manifests when the interaction between relational
parties is not successful due to incomplete or misinterpreted information. However,
104 D. CORSARO
Makkonen and Olkkonen (2017) defined value co-destruction as a decrease of value in

context, including situations in which there is no value creation, the outcome of which is
indifference in terms of value in context. Value co-destruction is not necessarily the
opposite of value co-creation: value co-creation does not preclude value co-destruction.
When actors enact practices incongruently, value co-destruction ensues, meaning that
value in use diminishes for the interacting parties (Echeverri & Skålén, 2011).
Notwithstanding the multiple definitions, there is agreement that value co-destruction
focuses on collective collaborations among actors – namely, a firm and a customer or third
parties – and that actors can suffer from different levels of value co-destruction that result
from interactional processes. Specifically, in this paper we define value co-destruction as
the process through which the value previously co-created by relational parties is
destroyed, generating a diminution in the value appropriated by the parties.
To date, most research on value co-destruction has focused on its causes, the initiators
of value co-destruction (Plé & Chumpitaz Cáceres, 2010). For instance, Järvi, Kähkönen,
and Torvinen (2018) highlighted antecedents that initiate value co-destruction, including
the absence of information, an insufficient level of trust, mistakes, the inability to serve
and change, the deficiency of clear expectations, customer misbehaviour, and the blam-
ing of one another. Prior and Marcos-Cuevas (2016) identified goal prevention and net
deficits as being responsible for the formations of actors’ perceptions of value co-
destruction. Vafeas, Hughes, and Hilton (2016) using the concept of value diminution,
identified and categorised the precursor of diminished value in business-to-business
exchanges into five higher-order dimensions: lack of trust, inadequate communication,
power/dependence imbalance, scant coordination, and insufficient human capital.
Although these studies have focused mostly on what causes value co-destruction
(Vafeas et al., 2016), to our knowledge none of them have specifically addressed the
effects of value co-destruction on value appropriation in business relationships. These
effects indeed include the diminution of appropriated value, which can occur when
previously co-created value is destroyed. This argument is significant because, when
value is co-destructed, business actors cannot assume that the value they appropriate
will diminish correspondingly. Thus, it is worth understanding why it happens.
The discussion of value co-creation and value appropriation in the previous section
demonstrated that parties can become very dissatisfied when they are not able to appro-
priate the value that they contributed to the co-creation process, generating perceptions of
inequity, tensions, misunderstandings, frustrations, and negative emotions (Laamanen &
Skålén, 2015). Similarly, they can be disappointed when value co-destruction affects their
value appropriation more than that of other parties. As Figure 1 illustrates, both value co-
creation and value co-destruction are interlinked with value appropriation, but although
a certain understanding exists of the reasons that influence value appropriation from value
co-creation, the same is not true for value co-destruction.
Therefore, a research gap emerges with respect to value co-destruction, where the atten-
tion of previous studies has been mostly devoted towards antecedents of value co-
destruction rather than its consequences. This research gap can be summarised in the
following question: What causes value co-destruction, generating unfair diminution in the
value appropriated by single actors? In other words, we assume that there are two distinct but
connected phenomena to be considered: value co-destruction and diminution in
Factors influencing the

individual appropiation
of value co-created
- Power
- Resource Misure
Collective - Opportunism Individual
Value co-creation - Uncertainty Value appropriation
- Brand inertia
- Negotiation skills
- Information asymmetry
- Actro’s focus
- ...
Factors influencing the

diminution in value
appropriated by
Determinants of value individual actors
co-destruction
- Absence of information
- Insufficient levels of trust
- Mistakes Diminution in
Collective
- Blaming Value co-destruction individual
- Inadequate communication Value appropriation
- Lacking coordination
- Unclear expectations
- Dependence imbalance
- ...
Figure 1. A framework for value co-destruction and value appropriation.
appropriated value. Almost all studies have focused on value co-destruction and only one on
the value diminution (Vafeas et al., 2016), but none have considered both.
Figure 1 also highlights that, although both value co-creation and value co-destruction
are interactional value processes that happen at the relationship level (Morgan et al.,
2018), value appropriation happens at the single actor level.
Methodology
Research approach and data collection
The research methodology of this study is based on a qualitative method, which allows for
a phenomenological and contextual approach to value co-destruction and value appro-
priation in the real-life contexts within which managers operate (Eisenhardt, 1989). It
facilitates rich, in-depth descriptions that are important, given the complex and multi-
faceted nature of the phenomenon in question (Dubois & Gadde, 2002).
According to Wagner et al. (2010), the ongoing and interactional nature of business
relationships makes studying value creation and value appropriation, as well as finding
a proper unit of analysis, quite challenging. Drawing from Echeverri and Skålén (2011), the
unit of analysis we adopted is the business relationship between customer and supplier in
industrial markets, in which third parties can also be involved.
The research followed an abductive process: data collection, analysis, and the search
for complementary theories constituted parallel iterative processes in which the
researcher moved back and forth between theoretical concepts and field observation,
106 D. CORSARO
seeking to enhance an understanding of both theory and data during that process
(Dubois & Gadde, 2002). Theoretical structures and empirical observations develop con-
comitantly and interactively in an abductive approach (Dubois & Gibbert, 2010).
As for data collection, we applied the critical incident technique (CIT), a qualitative
interview procedure that allows for the investigation of significant occurrences (events,
incidents, processes, or issues) identified by the respondent, the way they are managed,
and the outcomes in terms of perceived effects (Hughes, Williamson, & Lloyd, 2007). In
a business-to-business context, CIT is used to capture interactions or incidents that have
a significant effect on perceptions and relationships between a buyer and a seller
(Edvardsson, Kowalkowski, Strandvik, & Voima, 2014; Edvardsson & Strandvik, 2000).
We applied a theoretical sampling procedure to recruit managers across functions and
hierarchal levels in multiple industries (see Bendapudi & Leone, 2002). The qualitative study
consisted of 39 semi-structured interviews conducted with key representatives of Italian
companies operating in different industries, including mechanics, automation, consulting,
information and communication technology (ICT), distribution, consumer services, and
many others. Table 1 represents the companies interviewed; it is organised by the critical
incidents identified. Three interviews were eliminated as no critical incident emerged during
these interviews. Given that our study is explorative, we chose a cross-sectorial study to
achieve a richer picture of the phenomenon under investigation, thereby not limiting the
study to only one specific industry (see Järvi et al., 2018). Analysing the selected organisa-
tions made it possible to gather the viewpoints from different perspectives in different types
of relationships, which was important for the aim of this study.
We were most interested in the viewpoints of managers in focal firms (Ford, Gadde,
Håkansson, & Snehota, 2003) as they were key informants who could accurately and
independently describe their relationship dynamics, whether from the position of
a customer or supplier. Thus, respondents primarily held senior management roles with
significant responsibility for managing interactions with buyers/suppliers. We adopted
the perspective of a single actor in a business relationship, given the relevance of
perceptions of fairness in the actor’s decisions within business relationships (Mattsson,
Corsaro, & Ramos, 2015).
Interviews were conducted in person, with each lasting between 1 and 1.5 hours. To
gain high-quality and reliable information, all interviewed managers were pre-contacted
by the researchers. Data collection lasted 1.5 years, with a significant amount of time
spent gaining access to managers with relevant experience.
Collecting data when the object of analysis is value co-destruction rather than value co-
creation is difficult, as it is more appealing to describe successful stories than failures, and
companies are not always willing to discuss their problems. To mitigate this, we contacted
companies that had already been involved in the activities of the research centre and,
thus, trusted the researchers with the proper and transparent use of information.
Company names are anonymous.
Interview scheme
We used a semi-structured set of questions for the interviews. The content of the interview
scheme reflected the interpretative framework of the study. During interviews, we began by
asking respondents general questions about their most important relationships and what
Table 1. Key informants interviewed, organised by critical incident of value co-destruction.

Critical incident observed Companya Industry Key informants
Changing trade-exchange Varvo Mechanics, speed reducers CEO
conditions Randy High precision tools Country leader
Imitation Catt System Button producer Purchasing
manager
Gros Backed product manufacturer General manager
Repa Consulting Managing director
Institute
Scandal Fina Finance industry PR manager
AVA Provider of security services on demand Founder
Xana Construction industry Key account
manager
DI.RI. System integrators CEO
Melchi Distributor of electric material CIO
Veneta Producer of kitchen furniture Marketing
bearings manager
Maxirus Reseller of hardware and software solutions Channel manager
Iati Reseller of hardware and software solutions Country manager
Company failure Sax Food distributor Owner
MAPO Toy manufacturer Brand manager
Mati Software distributor Channel manager
Product/Service failure Matagril Multinational catering company Purchasing
manager
Altilia Management systems for big data Business developer
Teros Document management company and business Senior account
process outsourcing manager
Innovamec Energy Business developer
Cati Fintech Business developer
Tio Distributor Regional channel
manager
Liga Provider of security solutions logic Purchasing
manager
Low transparency Orasa Manufacturer – textile General manager
Isead Distributor ICT solutions Purchasing
manager
Krai Freight transport company General manager
DeSigo Eyewear manufacturer CEO
Generational change Timba Reseller of hardware and software solutions Owner
Topin Digital marketplace for products & service Channel manager
JapEat Digital marketplace, food delivery General director
New competitors Sigi Software development house Country manager
FNTI Association for Italian Industrial Distributors President
Violate channel’s rules Caddi Solutions lighting produce CEO
Lighting
Bitera & Consulting Owner
Partners
Giastia Vendor Country manager
Isead Distributor ICT solutions Purchasing
manager
Dysfunctional tender Timba ICT distributor General director
Aska Telco Tender manager
a
Pseudonyms have been used for privacy reasons.
they perceived to be the main difficulties and barriers in their attempts to co-create value with
other relational parties. These questions supported setting the context and helped transition
the interviews more smoothly to the issue of co-destruction, which is delicate in itself.
Second, we asked about critical situations and events they experienced in business
relationships over the past two years in which they thought that value had been co-
destroyed, resulting in a negative impact for them and their resources. The responses took
108 D. CORSARO
the mode of ‘story telling’ about the emergence and formation of these critical events while
trying to keep respondents flexible and open in their views (Hesse-Biber & Leavy, 2006).
Accordingly, we followed Halinen, Salmi, and Havila (1999, p. 786) in their definition of
a critical event as ‘an incident that triggers radical change in a business dyad and/or
network. They are events that at least one participant considers as problematic and
confusing’. Critical incidents in the network depend in part on the perceptions and
intentions of the actors (Schurr, Hedaa, & Geersbro, 2008). Consequently, when describing
the incidents, respondents do not aim at ‘telling the truth’ of what happened, but rather
reflect on their experiences as remembered and interpreted (Edvardsson et al., 2014).
In line with the application of CIT, according to which the outcomes of critical events
are processed in terms of perceived effects (Hughes et al., 2007), value co-destruction has
been studied as a perceived phenomenon rather than one based on performance
indicators (see also Prior & Marcos-Cuevas, 2016). The phenomena we analysed are,
thus, based on the perceptions of the participants about what is of value for them
(Palmer & Ponsonby, 2002).
The role of the interviewer in this phase was to avoid limiting the story to a description
of the critical event while moving forward in terms of the consequences it generated on
the value appropriated for the customer, supplier, or third parties involved in the business
relationship. The questions were carefully worded to elicit participant responses in a non-
directive manner and to avoid ‘active listening’ (McCracken, 1988).
Data analysis
Due to the abductive approach adopted, we moved between empirical findings and
theoretical insights. We formed categories for all the transcriptions, found insights from
the theory, and reflected these back on the empirical findings. We, thus, avoided forming
rigid, a priori views about value co-destruction from what we discovered about the
episodes that respondents judged to be value co-destruction events. Next, we matched
the theory with the phenomena observed during the data collection process and, when
we found differences, implemented further data analysis. This process continued in an
iterative fashion during the entire development of the research, as illustrated in Figure 2.
Respondents agreed to the audio recording of interviews, which enabled us to tran-
scribe their responses verbatim. Data analysis involved a detailed coding process, which
first involved selecting episodes of co-destruction that produced a diminution in value
appropriation and identified the major themes that address the research objectives of the
study. Overall, 25 episodes of co-destruction were identified, but only 11 reported a clear
diminution in value appropriation. This process uncovered two higher-level dimensions
that emerged as key determinants for value co-destruction causing a diminution in value
appropriation: awareness of value and awareness of context, as explained in the next
section. Selective coding was then followed and, by combining the two previously
mentioned dimensions, we identified four clusters of reasons that describe why certain
parties suffered more from co-destruction than other ones. We labelled them the
Conscious, the Farsighted, the Insecure, and the Short-sighted (see Figure 3).
All data analyses involved two independent researchers to increase and test reliability.
This process of ‘check coding’ improved reliability and definitional clarity (Miles &
Huberman, 1984, p. 64).
Pre-understanding of the
relationship between value Pre-understanding of the
co-creation and value value co-destruction
appropriation process
Attention has been on

what causes value
Observation of co-destruction and not on
incidents of value its effects
co-destruction
Realization that value

co-destruction and value
appropiation have not
Observation that been considered jointly yet
value co-destruction
can generate unfair
effects on the value
appropriated Identification of higher-
level dimensions which
emerged recurrent in
explaining such effects
Categorization of
effects based on
the two-higer
level dimensions
Figure 2. The research process.
To select participants’ insights and themes for discussion, we searched for ideas and
insights applicable beyond a specific industry as well as those mentioned by many
respondents (see Bendapudi & Leone, 2002). Therefore, ideas that were industry-specific
or mentioned by only one participant are not included in the discussion in the next section.
Following the approach used by other researchers in studying value co-destruction (see
Echeverri & Skålén, 2011; Vafeas et al., 2016), examples of narratives were used in the
empirical scenarios for descriptive and illustrative purposes to give insight into the respon-
dents’ views; reasoning and perceptions were used to provide a chain of evidence as well as
a sense of the context. Quotes showed a variety of relationship observations, and state-
ments referred to both specific events and more general observations by managers (see
Czarniawska, 2004; Hummel, 1991). Every narrative offered a plausible reason for a particular
outcome and the connected sequence of events, reducing equivocality (Weick, 1995).
Reasons for unbalanced value co-destruction effects on value appropriation

The analysis of our data led to the emergence of two higher-level dimensions – awareness
of value and awareness of context – the combination of which generated four different
typologies of reasons for imbalances between value co-destruction and value appropria-
tion in business relationships.
110 D. CORSARO
AWARENESS OF CONTEXT
SPACE TIME
THE CONSCIOUS THE FAR-SIGHTED
AWARENESS OF VALUE
• Power dependence • Future potentiality of resources
HIGH • Contractual agreement • Optimistic attitude towards the
• Altruistic attitude future
• Misaligned value desired
Collective • Social embeddedness
Value
co-destruction
THE SHORT-SIGHTED THE INSECURE
• Misperception of one’s own role in the • Risk aversion

LOW company • Long-term dysfunctional ties
• Dissimilar metrics of value co-destruction • Emotionally driven
• Wrong benchmarking • Inertia
• Ambiguous behaviours
Diminution in individual Value appropriation
Figure 3. Reasons for unbalanced value co-destruction effects on value appropriation.
Awareness of value (high; low) refers to the extent to which the relational party is aware
of the gap in value co-destruction and value appropriation. In other words, the business
actor could have a higher or lower acknowledgement that the diminution in value
appropriation was not proportional to its responsibility in the co-destruction. From the
interviews, it emerged that, in certain cases actors are unaware of value appropriation
being unfair; in other cases, they are aware, but this is a conscious choice, and in still other
cases the party is unaware of the imbalance and has not chosen it voluntarily.
Awareness of context (space; time) refers to the perception of the relational context in
which value co-destruction and value appropriation occur. The party’s awareness of the
context is important as it establishes the boundaries in which the processes happen in
terms of time and space. With respect to space, by adopting a relational view, the effects
of value co-destruction on value appropriation can occur at dyadic or network levels (see
Aarikka-Stenroos & Jaakkola, 2012; Håkansson & Snehota, 1995). Therefore, this can
influence the perception of the actors involved in the process.
Meanwhile, the time dimension includes the temporal aspects of value processes that
connect to the dynamic nature of relationships (Medlin, 2004). Time matters in analysing value
co-destruction and value appropriation jointly, given that a diminution in value appropriation
can be postponed or anticipated in time with respect to the moment the value has been co-
destructed.
Combining the awareness of value and the awareness of context, four clusters of
respondents emerged, representing different reasons that link value co-destruction with
value appropriation: The Conscious, the Farsighted, the Insecure, and the Short-sighted.
Therefore, awareness of value and awareness of context relate to the processual nature of
co-destruction as the way they combine it could explain why value co-destruction has
affected in a certain way the diminution of value appropriated by different actors.
The conscious
These informants are characterised by a high level of awareness about the impact of value
co-destruction on their value appropriation, and their attention is more focused on the
spatial dimensions of the interaction (i.e. about who appropriated the value). They include
five types of situations: power dependence, contractual agreement, altruism, misaligned
value desired, and social embeddedness.
Power dependence
Parties with misaligned power may have dissimilar access to relationships and resources
(Dwyer, Schurr, & Oh, 1987), thereby conditioning how firms behave in their interaction
and relationship management (Sibley & Michie, 1981).
The analysis of the interview data indicated that large companies are often accused of
prevaricating with smaller ones, despite declaring a collaborative attitude. For example,
the company Sax, which operates in the food distribution service industry, was involved in
a collaborative project with five other companies in the same industry aimed at devel-
oping a multi-brand loyalty card system. At a certain point, Sax started to convince the
other participants that the project presented a high risk of failure, as the advent of
digitalisation was revolutionising loyalty strategies. Yet the market leader Matagril pro-
moted the project, acting as a project champion and impeding its conclusion by threa-
tening that such an action would be interpreted as a sign of mistrust from its perspective.
In this way, the company limited the actions of the other companies. The project was not
successful, and Sax experienced the highest diminution in value appropriation as invest-
ing in this project destroyed resources that could no longer be invested in the digital
loyalty programme.
A similar situation was experienced by Aska, a company that participated collectively in
bidding on telecommunication infrastructure projects, due to a certain request for tender
requirements. The leading company often forces its subcontractors to keep the economic
value of their proposals very low, thereby winning the deal. However, with this practice
the returns are no longer profitable, and companies have to reduce the quality of the
materials and manpower used, generating value co-destruction, especially for the client.
This adverse mechanism is based on misleading information, which unfortunately is very
common in bids for public works. Subcontractors must then manage all customer
complaints, and often their margins reduce rapidly as they try to meet customer requests.
Contractual agreement
These companies have been more damaged by value co-destruction due to contractual
agreements that limit them. Contractual terms are often needed to ensure that parties act
in the best interests of the chain and as mechanisms for solving problems of opportunism
in exchanges (Luo, Liu, Yang, Maksimov, & Hou, 2015; Mouzas & Ford, 2012). However, if
credible contractual commitments, on the one hand, seem necessary for managing
opportunism, on the other hand, the value appropriation process itself is a process
subjected to a certain degree of variability and adaptability to the emergent circum-
stances, making it difficult to forecast its consequences; thus, they can only be partially
controlled, codified, and translated in contractual terms.
112 D. CORSARO
For instance, the company Xana, operating in the construction industry, outsourced its
administration department to an external service provider in order to focus on its core
business. However, after one year, the company realised that this external service was
costlier than expected, as it took much of its time to transfer existing practices, procedures,
and archives to the provider. Nevertheless, the intangible costs related to psychological
effort and time spent were not accounted for in the contractual agreement, generating
a sense of dissatisfaction, which in turn caused many tensions between the parties.
Altruistic attitude
Batson (1991) defined altruism as: ‘a motivational state with the ultimate goal of increas-
ing another’s welfare’ (p. 6). Altruism can occur not only in dyadic interactions, but also in
the wider social context of network interactions (Branas-Garza et al., 2010).
In the cases analysed, companies driven by altruistic motives decided, intentionally, to
be affected more by diminution in value appropriation than other players in order to
favour these other parties. For instance, the company Varvo experienced an increase in
the cost of certain materials and components needed to produce its speed velocity
reducers. This price increase was caused by certain inappropriate decisions about inter-
national trade agreements taken by a consortium in which both Varvo and its customers
took part. However, the company did not pass this increase on to its small sub-
contractors, avoiding dramatically reducing their margins and leading them to failure.
The company made this choice because it knew it could tolerate the effects of value co-
destruction better than the other players could, even if it could have easily substituted its
sub-contractors with other ones.
Companies with higher bargaining power could indeed decide not to use it to draw
a disproportionate advantage but rather to act as ‘brokers’ who fairly distribute value
according to the different efforts, resources, and interests of the parties involved.
Misaligned value desired

The collaborative nature of many projects and innovations increasingly poses the issue of
how actors confront each other, generating problems of misalignment (Steinman,
Deshpande, & Farley, 2000). At the theoretical level, some scholars affirm that misalignment
in business relationships can be positive by promoting flexibility and change (Kragh &
Andersen, 2009) and, therefore, future value co-creation (Cox, 2004). However, when goals
are incongruent and parties’ expectations from their relationship differ, it could negatively
affect their behaviour towards one another and make the relationship more acrimonious
(Kang & Jindal, 2015). This limits the performance of individuals, groups, and firms by
causing conflicts, scarce social integration, and reduced trust (Hambrick, Cho, & Chen, 1996).
The interviewed managers were aware that value appropriation is not always an issue
of defining the amount of value they want to appropriate from the value pie, and they
were cognisant that the type of value parties wish to capture also matters. Seen from the
opposite side, the destruction of certain typologies of value could be graver for one actor
than for another. For instance, over time companies started to invest less and less in the
Annual ICT Security exhibition due to the high costs for fair participants and the advent of
new communication modes to explore. This event became a negative for the software
company DI.RI., as it missed networking opportunities given that most of its customers
and prospective ones were very traditional in their approach. The situation was different
for Altilia, provider of smart data management platforms, which used the exhibition to
gain a whole picture of competitors and their offerings. Therefore, the fact that DI.RI. and
Altilia sought two different key benefits from attending the fair damaged Altilia more,
because while DI.RI. could do networking on the social selling level, there was no virtual
place that included all actors in the ICT security business.
Social embeddedness
The use of social connections also assists in acquiring the required resources to commu-
nicate and reduce uncertainty and risk (Hoang & Antoncic, 2003). At the same time,
however, personal involvement, which characterises business relationships, can force
economic action and lead actors to accept unfair value appropriation to avoid compro-
mising social relationships.
For example, in 2010, there was a generational change in the ownership of the company
DeSigo, a family business specialising in innovative jewellery. The direction of the company
moved from the father, who ran the company for 40 years, to his son. Yet some of its
business customers were so involved in their personal relationships with the father that they
did not give the son an opportunity to maintain the same high level of involvement in the
relationship, causing a value diminution for both DeSigo and the other players collaborating
with it. The companies more affected by value co-destruction were those that had only
direct relationships with DeSigo and thus were not involved in its network.
Even more frequent are situations in which buyers choose suppliers because they have
personal relationships with them rather than for the benefit of their organisations. Often,
this results in partnerships that make processes much longer and generate inefficiencies.
The Farsighted
This group is characterised by a high level of awareness about the impact of value co-
destruction on their value appropriation. Their attention is more on the effects of value
co-destruction over time than on the spatial network of those appropriating the value.
They include two types of situations: future potentiality of resources and optimistic attitude
towards the future.
Future potentiality of resources

According to information-processing theories, uncertainty leads to more intensive scanning
aimed at obtaining additional information, resulting in better information on cause-and-
effect relationships (Hough & White, 2004). Actors that assess actual and future resource
combinations are able to perceive themselves as being able to control causes as well as
cope with ambiguity and uncertainty and place greater focus on the positive aspects of
particular issues (Thomas & McDaniel, 1990). After an assessment of reciprocal resources and
potential future resource combinations, these parties are confident that – even if they have
been strongly affected by diminution in value appropriation – in the future they will be able
to appropriate the value co-created fairly or, conversely, be less damaged by negative
events that could lead to further value co-destruction.
An example of this diffusion is robo advisors, a class of financial advisors that, thanks to
sophisticated algorithms, provide financial advice and online portfolio management with
minimal human intervention. The traditional banking advisory model, based on direct
114 D. CORSARO
physical relationships between an advisor and a client, was shaken by the low transpar-
ency towards customers, which co-destroyed value. Many customers, especially in small
and medium companies, did not possess the knowledge to properly evaluate the risk level
of the portfolios suggested by the advisors, who tended to offer high-risk investments to
these customers as well. In the end, they lost trust in the bank Cati, which obtained an
immediate return but received an overall even greater loss in the long term. The intro-
duction of robo advisors as a mixed model of interaction between advisor and technology
has allowed some of these customers to return to the relationship with that bank as they
concluded that algorithms are more reliable than people and enable them to process
a higher amount of information on the financial situation of the company as well as
predict future scenarios.
Optimistic attitude towards the future

According to equity theory (Huppertz, Arenson, & Evans, 1978), the focal relationship
partner is more likely to reduce value-creation efforts during the collaboration if relational
equity is damaged and inequity is perceived in the appropriated value. However, we
noticed that, in some cases there exists a positive attitude that leads actors to tolerate
higher reduction in value appropriation thanks to the conviction that better times will
come. Even if it can sometimes be easier for a manager, as a person, to focus on the
negative side in any given situation, a positive attitude through bad times makes man-
agers stronger. Some companies realise that, without developing and keeping a positive
attitude, it will be very difficult to obtain consistent and long-lasting success (Ucbasaran,
Westhead, Wright, & Flores, 2010).
In the textiles industrial district of Prato, companies demonstrated awareness that
competition from Asian markets is becoming very dangerous. It is destroying economic
value as it puts pressure on business relationships; parties have to continuously renegoti-
ate conditions to keep up with the lower prices offered by competitors. Some parties,
especially sub-contractors, are more affected by that situation. However, thanks to their
positive attitude, they remain convinced that – because they overcame other crises in the
past – they can overcome them again.
Competition can also be seen through an optimistic lens and not necessarily as a source
of uncertainty or a problem regarding value appropriation. This was the case for JapEat, an
online food takeaway service, and Topin, a web platform for deals and coupons:
In theory, Topin is our competitor, but in reality, it paved the way for our business because it
has reduced uncertainty with respect to online purchases. Thanks to Topin, many restaurants
exposed themselves on the Internet’ (General Director, JapEat).
Initially, Topin’s entrance into the market destroyed the value for both JapEat and its
affiliated restaurants. In particular, smaller restaurants in the market, like pizzerias, experi-
enced value diminution. However, because they present a high awareness of the time
dimension of context, they were optimistic and did not dissolve their relationships with
JapEat. Ultimately, they were right as the market for them started to grow again later due
to the more diffused culture of ordering food delivery online.
The short-sighted
These companies are characterised by a low level of awareness about the impact of value
co-destruction on their value appropriation, and their views appear to be more connected
to a spatial dimension of interaction than to a temporal one. They include four types of
reasons: misperception of own role in the network, dissimilar metrics of co-destructed value,
wrong benchmarking, and opportunism.
Misperception of own role in the network

Misaligned perceptions of value appropriation can be caused by different images of the
relevant business surroundings and, thus, of those actors who contributed to value co-
creation (see Henneberg, Mouzas, & Naudé, 2006). The surrounding context, with actors
potentially appropriating value, can be seen differently by different managers. When
actors perceive and interpret the business context and environment in different ways, it
can hinder communications and knowledge transfer (Nahapiet & Ghoshal, 1998). In this
regard, we provide an example of three resellers operating in the ICT industry, each of
them seeing the role of Mati, a distribution company that failed in 2015, differently. The
first company, Maxirus, considered Mati a distributor:
Mati has been our partner for a long time; at a certain point our customers do not see it as our
partner but as a competitor generating confusion in value distribution and the loss of some of
these customers (Business developer, Maxirus).
The second company, Iati perceived Mati as a system integrator:

Mati scouted new products for us on the international market and selected those which
present the potential to be adapted to the local context. It added real value to our offering, so
when things started to go wrong the negative impact for us was substantial (Country
manager, Iati)
Timba presented a third position:

We have worked together with Mati as a value-added reseller on some projects in the past,
but in other situations we were mostly competitors, offering the same solution. Their failure
allowed us to increase our market coverage (Channel Manger, Timba).
In the end, a single player, Mati, was seen in four different ways: as a distributor, as a system
integrator, as a value-added reseller, and as both a partner and a competitor. In this way all
actors contributed to generate ambiguity in the network about the role of Mati which in the
long term generated the isolation of the company. Those actors that interpreted the company
to be not in competition with them were more damaged by the suspicions of other players.
Dissimilar metrics of co-destructed value

A particularly interesting case is when relational parties use dissimilar proxies for
value measurement. From the opposite perspective, if parties measure co-
destructed value differently, it can have a differential impact on the expected
reduction in the value appropriated.
In the late 1990s, the MAPO, a company leader in the toy industry, started to perceive
the first signals of alarm, experiencing its first deficit ever. The crisis progressively led the
group closer to bankruptcy in 2003. Many of its innovation efforts were unprofitable or
116 D. CORSARO
had failed outright. The time seemed right to revisit the company’s strategy, which
included a change from goals in terms of turnover (quantities sold) to consumer sales
(revenues). This change was very difficult to implement for distributors because the metric
that mattered for them was turnover; thus, when they started to experience a reduction in
volumes sold, they implemented heavy promotions and discounts, which were even more
aggressive in the period of the turnaround goal. For MAPO, instead, consumer sales
mattered as the perception of value embedded in their toys reflected huge investments
in the brand. Consequently, the company trained its salespeople on the shift from turn-
over to consumer sales goals, and the salespeople in turn trained distributors about the
need to increase the perceived value which consumers assign to toys as learning tools for
the proper growth of children.
In another case, a business relationship between a provider of big data analysis
services and a manufacturing company was terminated because the customer was
judged to be too demanding with respect to the initial commercial agreement and not
completely transparent; this, in the end, worsened the personal relationships among
the people involved. The provider considered this to have more greatly impacted its
side; some organisational problems in the customer company had been omitted in the
starting phase but, in the end, caused a huge effort in terms of time on the part of the
provider, who considered the customer disorganisation to be a barrier to service
provision.
Wrong benchmarking
Due to actors’ limited cognitive capacity (Weick, 1995) and issues around uncertainties,
ignorance, or incomplete understandings of the environment (Anderson, Håkansson, &
Johanson, 1994; Ford et al., 2003), managers tend to ‘bracket’ or ‘frame’ what they
choose to see in their surroundings. This could lead to certain players not selecting
proper benchmarking for evaluating the impact of value co-destruction on value
appropriation.
For instance, until recently, financial companies where not aware of their diminished
reputation among consumers and other stakeholders due to recent scandals as these
companies tended to be inward looking and confronted these issues amongst them-
selves. However, in 2016 the Repa Institute published a ranking of the top 50 Italian
companies with higher reputations, including financial, manufacturing, and service com-
panies. This confrontation allowed financial companies to realise an important gap
compared with other industries, and companies like Fina realised that their reputations
were also diminished even if they were not directly involved in any scandal.
Another example is represented by companies operating in the Italian freight trans-
port, which suffered from a tough reduction of 15% in turnover in 2015 (Istat, Assoporti
e ISPRA, n.d.). The involved parties reported that this negative downturn was caused
largely by the government imposing taxes calculated based on sectorial turnover pre-
sumption index rather than the real situation of each company.
Ambiguous behaviours
The interviews revealed that many of the problems here with value appropriation are due
to the roles of intermediaries and agents between suppliers and customers: ‘An agent that
works for the company is a person who is almost dangerous: it is always a balance
between working for the company and for himself’ (General Manager, Caddi Lighting).
Similarly, the manager of Randy, a customer company in the mechanical industry, stated:
The distributor disregarded the rules of the channel and dealt directly with us. But this is not
our problem; the channel model is sometimes imperfect. Also, when the distributor knows
the solution better than resellers, we can benefit from this kind of misbehaviour.
Although the distributor initially gained an increase in value, in the long term both the
customer and distributor faced delays in the delivery of the materials as, in the end, the
distributor was even more damaged by implementing activities that fell outside of its core
business expertise.
Sometimes, however, intermediaries are the victims of opportunistic behaviour by the
parties: ‘As a vendor, we are only interested in generating business. This is the reason why,
once we understand how the market works, we can decide to skip distributors and
resellers and deal directly with the final business customer’ (Country Manager, Giastia).
Although the customer company can benefit from this conduct, it is not the same for
intermediaries for whom value is destroyed; in particular, value diminution is experienced
by those who are upstream, as those downstream tend to have a relationship with final
business customers and are, thus, able to renegotiate conditions and maintain their
position in the chain.
The insecure
These companies are characterised by a low level of awareness about the impact of value
co-destruction on their value appropriation, and their behaviours are very much influ-
enced by the way they conceive time. They include four types of situations: risk aversion,
long-term dysfunctional ties, emotionally driven, and inertia.
Risk aversion
Environmental uncertainty refers to the forces in the environment over which relational
parties have little or no control, such as changes in end-user buying behaviour, competi-
tion, and technology (Mullin & Hogg, 1999). In a relational view, actors address uncertainty
in terms of the difficulty of predicting exactly what combinations of knowledge, skills,
know-how, and technologies will be needed (Atuahene-Gima & Li, 2004). Especially in
business-to-business situations, in which supplier–customer relationships are interactive
and there is a continuous evolution in the solutions applied, uncertainty and ambiguity
can arise more easily.
The perception of high uncertainty about the future has led some respondents to be
risk adverse and think that ‘a bird in the hand is worth two in the bush’, assuming that the
future could be even worse. In the case of Catt System a producer of buttons, the owner
left one of its distributors a sample of a very peculiar customised sample of a button. At
a certain point, he discovered that the distributor had provided that sample to Chinese
competitors to be copied, thereby enabling the distributor to purchase it at a lower price.
Nevertheless, Catt System decided to continue the business, as it preferred destroying
part of the co-created value rather than not gaining value at all.
118 D. CORSARO
Long-term dysfunctional ties

Many managers reported that their crucial relationships were well-aligned initially but
became less successful over time, which can also lead players to lose control of the
process of value appropriation. It can for instance occur that, in business relationships,
close personal relationships enable opportunism by increasing expectations between
exchange partners (Anderson & Jap, 2005). Even when consensus exists among relational
parties, the level of relational investment is difficult to maintain over the long run.
This phenomenon was expressed by the owner of Bitera & Partners in these terms: the
longer the relationship, the more likely a party will attempt to appropriate a higher
portion of value. For instance, a customer could try to capture more value in terms of
new services, a reduction in prices, or more favourable payment conditions, and the
supplier could do so in terms of long delivery times and more efforts to be dedicated to
the relationship. It may be possible that, over time, attitudes and behaviours associated
with strong, close relationships (that involve trust and commitment) become less impor-
tant whereas expectations increase (Moorman, Zaltman, & Deshpande, 1992):
In the consortium, they had not informed us about the internal problem they were facing. So, in
the end we all experienced problems in supplying the materials needed for production, but even
worse for us as they were our unique supplier. We have been damaged more than others because
we trusted them and never searched for alternative suppliers. (Senior Account Manager, Teros)
Managers also reported that value is often co-destructed when a business relationship is
set up by one manager and then passed off to another for ongoing execution and
nurturing. This can cause a breakdown in realistic expectations of success and an under-
standing of what the partner can and cannot offer, especially for those companies in
which decisions are very centralised in a single individual.
Emotionally driven
When actors behave with uncertainty, their capacity to elaborate upon situations is
limited (Kahneman & Tversky, 1979). However, this situation is common in the practice
of management, where decision-makers often have partial and limited information as well
as limited time to undertake choices. Consequently, decision-making is driven not only by
rationality, but also by emotions. Negative emotions are likely to increase conflicts as
a firm looks for ways to retaliate against an offending partner and restore equity in the
relationship (Kaufmann & Stern, 1988). Such feelings can have a decisive impact on
whether a firm wants to maintain a relationship or dissolve it.
For instance, the company Melchi, an industrial distributor of electric material, received
a business proposal by Liga related to the implementation of a digital customer experience
solution that would have allowed for an optimisation of the customer experience in the
online channel. The Melchi CIO was responsible for the budget and, thus, the one in charge
of the final decision about the purchase. However, in his decision-making process, he was
biased: he had worked at Liga for 20 years and felt emotional about the company.
Ultimately, Melchi went for Liga, but this decision proved problematic because it led to
a diminishment rather than an improvement of the users’ digital experiences and to value
co-destruction for all parties involved. Due to negative word of mouth, there has been
a decrease in sales for third-party distributors, even though they did not contribute to
causing it – a pure loss that has weakened their relationship with Melchi.
Inertia
We noticed that some respondents are bound to the status quo of things as a result of
routines generated over time, which leads them to remain anchored to what they already
know rather than encouraging them to explore new paths. In this regard, Sawyer (1990)
demonstrated that perceived uncertainty will motivate people to follow status-quo
resource allocation strategies, even when those strategies are clearly suboptimal.
In Italy, this is very much the case with industrial distributors, which have been judged by
their national association (FNTI) as being very old-fashioned and reluctant to implement
collaborative practices (Confindustria, 2019). Relationships among manufacturers, distribu-
tors, and customers are still mostly of a transactional nature, and the focus is more on the
monetary exchange instead of innovating existing practices. This has led to project failures
in the digital marketing area, from which customers have been particularly damaged. ‘We
offer suggestions to our customers, but we are not consultants. We don’t offer value-adding
services because we are not getting paid for this’ (Account Manager, Veneta Bearings).
However, it has emerged that the problem is caused not only by distributors, but also by the
passive attitude of customers and manufacturers, which does not boost change.
Figure 3 summarises the findings from the empirical research and completes Figure 1. It
shows the potential reasons for unbalanced effects of value co-destruction on value appro-
priation, which could change according to how actors’ awareness of value and awareness of
context combine.
Discussion
Existing literature has dedicated attention to the collaborative process that involves busi-
ness actors, above all co-creation and co-destruction. Scholars have raised the issue of how
to get a fair appropriation from value co-created in business relationships as inequity in
value appropriation is a damaging factor that has a negative effect on relationship perfor-
mance (Samaha, Palmatier, & Dant, 2011). We agree that value co-creation and value
appropriation processes need to be considered jointly, as their effects are linked (Pardo
et al., 2006). Nevertheless, many times collaborations fail and lead to value co-destruction.
Studies on value co-destruction have mostly focused on understanding the causes of value
co-destruction rather than its effects (see Plé & Chumpitaz Cáceres, 2010). In such a way, they
have assumed that the core process conditioning actors is co-destruction itself, while we have
demonstrated that its effects on the appropriated value play a key role in influencing parties’
perceptions and, thus, their decisions about the relationship. We have empirically illustrated
that being affected in an unbalanced way by value co-destruction can generate a perception
of unfairness as it causes a party to not be able to appropriate the value they contributed to
the co-creation process. In other words, a relational party can be dissatisfied because they
experienced a higher diminution in value appropriation compared to their responsibility for
that co-destruction. Paradoxically, even in a situation of value co-destruction, a party can feel
a sense of satisfaction because of being less affected than others.
Our study revealed that understanding a collective process like co-destruction is impor-
tant; but our study also disclosed that it should be considered along with what happens in
the individual value sphere (see Grönroos & Voima, 2013), which is a determinant of the
long-term development of business relationships.
120 D. CORSARO
Our data have shed light on the reasons for the difference between value co-destruction
and value appropriation. These reasons have been grouped according to two emerging
higher-level dimensions – specifically, awareness of value and awareness of context.
Awareness of value is about the extent to which actors realise the impact of value co-
destruction on their value appropriation. In situations of low awareness, parties have
shown to be much less effective in realising and, thus, managing the effects of value co-
destruction in their individual value sphere. Plé and Chumpitaz Cáceres (2010) described
value co-destruction as happening intentionally or accidentally through resource misuse;
we add that independently, by being intentional or accidental, it is important to under-
stand the level of actors’ awareness of its effects. For instance, in the case of dissimilar
metrics of value co-destruction, having a low level of acknowledgement could cause
actors to interpret higher diminution in value as opportunistic events rather than as the
effect of heterogeneous measurements models.
The second dimension, awareness of context, reflects the extent to which parties
realise the context in which these processes take place in terms of space (that is, who is
contributing to co-destruction and who should experience a diminution in value appro-
priation) and time (the temporal dimension in which value co-destruction and value
appropriation take place). Awareness of context is important for evaluating the conse-
quences of value co-destruction as the context matters not only for value co-creation
(Edvardsson, Tronvoll, & Gruber, 2011; Vargo & Lusch, 2011), but also for value co-
destruction, particularly in its perceptual dimension.
The combination of the awareness of value and the awareness of context gave rise to
four qualitative clusters that include different typologies of reasons for unbalanced value
co-destruction and value appropriation. By analysing them, we could observe that these
reasons are not always negative, but can also be positive, such as with the dimensions of
altruism, optimistic attitudes towards the future, and evaluations of future potentiality of
resources. This evidence is partly in contrast with equity theory (Huppertz et al., 1978),
which establishes that parties tend to limit their investment in value co-creation when
equity is not reached. In the case we mentioned, efforts remained high over time.
Connected to this point, it is then interesting to observe that fewer causes for imbalances
between value co-destruction and value appropriation can be seen in the ‘farsighted’
cluster, which indicates that these actors care much about the space dimension – that is,
who is appropriating the value or experiencing a diminution in value appropriation; in
other words they tend to see the bigger picture. However, they are also concerned about
the timeframe of such processes. This might be a further clue to the importance of being
very forward-looking when a co-destruction process is involved.
Other dimensions, such as ambiguous behaviours, long-term dysfunctional ties, power
dependence, and missing value measurement, can be traced back mostly to the role of
opportunism, which we showed is very present in business relationships (Ertimur &
Venkatesh, 2010). Opportunism in business relationships has been widely discussed, espe-
cially with respect to value appropriation; our study confirms that opportunism is recurrent
in business relationships, even in long-term and close ones (Brown, Chekitan, & Lee, 2000;
Ritter & Gemünden, 2003).
Observations of real-life situations show that in instances of co-destruction trust is
often only a façade. To quote Gioachino Rossini’s lyric opera, ‘Opportunity Makes a Thief’;
this emphasises the key role of contextual conditions in determining the incentive for
opportunistic behaviour. We use this metaphor with respect to manager too, in order to
stress that, even more in value co-destruction, relationship parties can try to safeguard
their value appropriation in an opportunistic manner.
In our case, we also noticed that when the space dimension prevails over time, the
attitude is to see value as a ‘pie’ with clear boundaries, such as in the case of contractual
agreements where the boundary of the pie is defined by the contract, or in the case of
wrong benchmarking where the benchmark used influences the size of the pie. When
conversely the time dimension is the most important in actors’ perception, it generates
a stronger collaborative attitude that leads parties to invest in the future to overcome
value co-destruction and evaluate more the importance of the type of value that suffers
from the diminution rather than only its amount.
Moreover, as previous scholars have identified power as one of the main determinants
of actors capturing a higher portion of co-created value (Balboni & Terho, 2016; Bowman
& Swart, 2007; De Propris, 2002; Lavie, 2007), its importance is confirmed even in the case
of co-destruction. Yet there seems to be a slight difference in the case of co-destruction:
the practice of power to influence diminution in value appropriation looks more severe
than the attempt to appropriate a higher slice of co-created value. These preliminary cues
should be further investigated in future studies.
Managerial implications
Madhok (2006) stated that, although the value-creating role of managers is of immense
strategic importance, management has tended to focus restrictively on value co-
destruction. Indeed, unfair diminishment in value appropriation caused by value co-
destruction can be the origin of conflicts and problems between parties (Mele, 2011);
disputes about value appropriation can destabilise social relationships and destroy value
(Hsieh, Lee, & Ho, 2012). Developing a better knowledge of more effective mechanisms for
value appropriation could have an important impact on relationship development. Our
study emphasises that managers should take into serious consideration the possibility of
value co-destruction and, by identifying possible reasons that can lead actors to suffer
from unbalanced diminution in value appropriation, they should evaluate appropriation
processes along with not only value co-creation (Lavie, 2007) but also value co-
destruction. The evidence suggests that managers have an inadequate understanding
of value related mechanisms in the case of value co-destruction.
From our findings, we can assert that managers should develop specific actions to
mitigate these effects with respect to each cluster of reasons:
● In the case of the Conscious, given their high level of awareness of value and
realisation of the spatial context, planning can be very useful for achieving better
equilibrium in value appropriation. A simulation model can also be very useful; given
that uncertainty in their case is low, these models can provide indications that
adhere well to reality.
● In the case of the Farsighted, whose attention is more on the time dimension of
interaction, developing future scenarios of value co-destruction and their impact on
value appropriation can be particularly beneficial. For them, forecasting is very
important and, therefore, could be valuable for predictive analytics.
122 D. CORSARO
● The Short-sighted should invest more in communication practices aimed at increas-

ing their level of awareness and, given their low attention to the spatial context,
develop practices that allow for more confrontation inside and outside the company.
This would allow for expanding their views and consciousness of the dynamic of
value co-destruction and value appropriation in the network. The use of visualisa-
tions in how managers perceive the external network could be helpful for agreeing
on a common vision.
● For the Insecure, it may be appropriate to sign contracts that regulate value appro-
priation in the case of value co-destruction, such as with network contracts that
create a stronger parity among relational parties. In their case, prescriptive analytics,
which suggest actions to be implemented, can support them in managing uncer-
tainty too.
Furthermore, ICT for digital intelligence could particularly help the Short-sighted and the
Insecure in detecting value co-destruction threats before they produce negative effects
on their value appropriation.
More generally, managerial actions should be aimed at implementing activities to
reach a better equilibrium among value co-creation, value co-destruction, and value
appropriation processes.
Conclusions and future research

Value co-destruction can have unbalanced effects on the diminution of the value appro-
priated by the relational parties. Our study suggests the importance of looking ahead at
value co-destruction, which, in itself, does not definitively determine party satisfaction or
dissatisfaction, but leads to clearer expectations and perceptions in terms of the diminu-
tion of the portion of the value the party can appropriate.
The scope of this study was far from a generalisation of findings; thus, it is not intended
to be exhaustive. Rather, we wanted to shed light on issues that deserve more attention in
the future.
The study also faces some limitations. First, recent global economic crises could have
exacerbated certain opinions by managers. Consequently, longitudinal studies would be
of interest for understanding how changing contextual conditions influence value pro-
cesses over time. Second, we investigated only the perspective of a focal company. The
data we collected are based on the actors’ perceptions of co-destruction, while value co-
destruction determinations should include evaluation by all parties involved in an
exchange relationship.
Future research should also move for an objective measure of value co-destruction that
includes multiple perspectives and deepens how value co-creation in certain relationships
leads to value destruction elsewhere in the network and the implications for parties’ value
appropriation. In our view, the context for value co-creation, value co-destruction, and
value appropriation would need to be investigated jointly to better understand their
connections. This could also be a means for finding proxies for each process and pursuing
quantitative testing.
The study also showed that some reasons for unbalanced value appropriation strongly
connect to other value processes (see Corsaro, 2019). For instance, information scanning,
misaligned value desired, the underestimation of one’s own role, and emotionally driven
approaches connect to value communication practices, while dissimilar metrics for measur-
ing co-destructed value and wrong benchmarking can be referred to value measurement
(see Lambert & Enz, 2012). Thus, such interlinks would also need further investigation for
a more holistic view of relationship value processes and their management.
Third further research should be dedicated to understanding the role of opportunism
in the relationship with collective value co-creation and collective value co-destruction, as
its dynamics and effects could differ.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes on contributor
Daniela Corsaro is Associate Professor of Marketing at Università IULM. She has published several
articles in international journals including Industrial Marketing Management, Journal of Business
Research, Marketing Theory, Service Industries Journal and European Management Journal. Her main
research areas include relationship value processes, sales transformation and service innovation.
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ISSN: 0267-257X (Print) 1472-1376 (Online) Journal homepage: https://www.tandfonline.com/loi/rjmm20

Value co-destruction and its effects on value

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Value co-destruction and its eﬀects on value appropriation

ABSTRACT ARTICLE HISTORY

Appropriating the value co-created in business relationships

Value co-destruction aﬀecting value appropriation

Makkonen and Olkkonen (2017) deﬁned value co-destruction as a decrease of value in

Factors influencing the

Factors influencing the

Figure 1. A framework for value co-destruction and value appropriation.

Table 1. Key informants interviewed, organised by critical incident of value co-destruction.

Attention has been on

Realization that value

Figure 2. The research process.

Reasons for unbalanced value co-destruction eﬀects on value appropriation

THE CONSCIOUS THE FAR-SIGHTED

• Misperception of one’s own role in the • Risk aversion

Diminution in individual Value appropriation

Figure 3. Reasons for unbalanced value co-destruction eﬀects on value appropriation.

Misaligned value desired

Future potentiality of resources

Optimistic attitude towards the future

Misperception of own role in the network

The second company, Iati perceived Mati as a system integrator:

Timba presented a third position:

Dissimilar metrics of co-destructed value

Long-term dysfunctional ties

● The Short-sighted should invest more in communication practices aimed at increas-

Conclusions and future research

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