Value co-creation between SME suppliers and large customers in the UK organic food sector.

Abstract

As the distinction in roles of production by suppliers and consumption by customers become blurred, concomitantly there is increasing interest to understand the process of how value is co-created through interaction in business relationships. In this connection and in the context of larger customers and small and medium-sized suppliers’ (SMEs) dyad, this study identifies the areas of collaboration, how value is co-created and the respective co-created value. This is based on five in-depth case studies (business relationships) drawn from the UK organic food sector. Theoretically, the investigation is grounded on the Industrial Marketing and Purchasing (IMP) group’s interaction approach, given its assumptions. The larger customers and SME suppliers were found to collaborate in a wide range of areas including innovation, corporate social responsibility, inter-linked technical systems, planning, co-evaluation and interactive learning. Considering the value co-creation practices as representing how value is co-created, this occurred respectively in the form of, for example: exchanging ideas on product development; facilitating and sponsoring school children to visit farms; joint technical systems; consultations in the development of business plans; co-evaluating processes and staff; and internships. The collaboration led to co-creation of monetary and non-monetary values such as revenue and reputation respectively. Different collaborative areas led to the co-creation of various types of value and this underscores the potential of larger customer-SME supplier relationships and also has implications in resource allocation. The identified value cocreation phenomenon reveals the need to extend the IMP interaction approach by entrenching the concept of value co-creation such that the framework not only shows exchange but also value co-creation.