Involving customers to co-create value is an important strategy for businesses competing to satisfy personalized demands and to gain competitive advantages. However, the research in the area is still in an early stage. In a search for this new competitive strategy, the literature on value co-creation largely overlooked the examination of system mechanism. Using survey data collected in China, this study provides an empirical examination into the mechanism of the co-creation system and makes the contribution in the following three aspects. First, this study developed and assessed the constructs in a value co-creation system. The measures satisfy key measurement criteria including unidimensionality, convergent validity, discriminant validity and reliability. Second, this study identified and empirically examined the two primary principles of value co-creation system with customers. The emphasis of co-creation with customers may not only positively impact on customerization capabilities, but also directly impact on service capability. These capabilities are significantly different from those generated from traditionally isolated value creation system. Third, the results show that service capability has positive impacts on firm's customerization capability. The study helps deepen the understanding of value co-creation system with customer and facilitates managers to look the new strategy through new lens. © 2008 Elsevier B.V. All rights reserved.
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