Service logic view on technologies enabling value-in-use
The term ‘customer value’ (CV) has been used to refer to both what a supplier gets from a customer (i.e., customer lifetime value) and what a customer gets from a supplier (i.e., value for the customer) (Woodall, 2003). The latter type, value for the customer (Woodall, 2003), has been framed and used in different ways. For example, as a sum of benefits and sacrifices (e.g., Hansen et al., 2008; Khalifa, 2004; Narayandas, 2005), through different ‘service-oriented’ logics Grönroos, 2008, 2011; Grönroos & Voima, 2013; Lusch & Vargo, 2014), from the customer point of view (Heinonen et al., 2010; Heinonen & Strandvik, 2015), economically and non-economically (Grönroos & Helle, 2010; Narayandas, 2005), and from both the supplier’s and the customer’s perspective (e.g., Songailiene et al., 2011). However, the term ‘value’ is too often used to mean something vague that should be pursued, which is done without providing evidence that any real value has been created or even explaining the mechanisms of the value creation. There lays still an important question about the nature of CV that service logic (SL) tries to answer: who actually creates value and who benefits from it (e.g., Grönroos 2008; 2011; 2019; Grönroos & Voima, 2013; Lusch & Vargo, 2014).
To understand these questions in the B2G context, following the logic of SL (Grönroos, 2008, 2011; Grönroos & Voima, 2013), this paper takes a step forward from assuming that CV is just something embedded as part of technology. Instead, it considers CV as something that is actively created by the customers by using the technology. One of the premises of SL is that ‘the customer is the creator of value’ (Grönroos, 2011; Grönroos & Voima, 2013), and their role is at least as significant in enabling VIU as is the supplier’s role as value facilitator (Grönroos & Voima, 2013). Instead of the supplier creating CV, the customer can allow the supplier to participate in their value creation process (Grönroos, 2011). This customer orientation of SL also states that the customer creates value with or without the supplier; if the customer allows the supplier to interact with them, the supplier might be able to influence how the customer creates value, enabling VIU to emerge (Grönroos & Voima, 2013). As such, this perspective views the change in how the customer acts when a technology, product, or service disrupts action as a key to the emergence of VIU. Since value is created by the customer it must be ‘uniquely experientially and contextually perceived and determined by the customer (Grönroos & Voima, 2013, p. 146). The provider’s role should not be undermined either, since not only can they make value propositions and define value-in-exchange, but they can also facilitate, understand, deliver, and support the creation of value as value co-creators (Grönroos & Voima, 2013). However, value can only be co-created when the supplier and the customer interact, a notion which separates the value creation into three spheres: provider, customer, and the joint sphere, as illustrated in Fig. 1 (Grönroos & Voima, 2013). This interaction does not occur only at the point of transaction; instead, historical, and future factors influence meaning creation within the communication of providers and customers (Finne & Grönroos, 2009).
There is also a temporal dimension to customer value, as it emerges as VIU and accumulates throughout the use of the technology (Grönroos & Voima, 2013). In simple terms, before the customer starts using the offering, the customer value can only be (proactively) proposed and expected. After implementation, the customer begins to realise the (factual) value as value-in-use (Grönroos, 2011). Earlier literature proposes three temporal phases, ex-ante, transaction, and ex-post customer value (Woodall, 2003), all of which include some level of interaction, whether direct or indirect, and as such, different forms of value co-creation (Grönroos & Voima, 2013). Especially with new technologies, there is limited information about the possibilities enabled by the technology and whether they are factual or not. Thus, the supplier and the customer must reach a consensus, even with limited information clouded by complexity, for there to be a purchase decision.
Grönroos (2019) also makes a distinction between what is provided and how it is provided, a perspective which holds much potential in the public sector, which is often criticised for limited consideration to how service is being provided. Since the paper considers the customer’s action as the basis for the creation of VIU, it is only natural to investigate how the customer acts, how they could act, and how they should act to achieve the potential VIU of new healthcare technologies. A healthcare context also implies the challenge of balancing health outcomes (i.e., what) and joint productivity gains (i.e., how) as types of VIU (Grönroos & Helle, 2010). As such, SL provides an approach to understanding the roles of different actors in enabling the creation of CV and emergence of VIU, but it does not explain what kind of action is required to create CV and if that action is in the interests of the actors (Lee, 2018). Therefore, the paper utilises PC to analyse how the customers can act based on the new possibilities proposed by the suppliers and if this action is in accordance with the customers’ values and facts (e.g., Nørreklit 2017a, b).
Pragmatic constructivism in public health care
PC has been used in various management accounting studies to explain actors’ behaviour. The contexts of these studies vary from strategic management (Mitchell et al., 2013) to operational management (Laine et al., 2016), decision-making (e.g., Saukkonen et al., 2018) and organising (Korhonen et al., 2020). These issues are more related to various kinds of organisational life skills than accounting even if PC studies have been particularly active in accounting research. In the marketing literature, scholars have also attempted to understand the behaviour of customers, whether consumers, businesses, or public governmental institutions, and it has been suggested that technology can influence marketing activities from the PC perspective as well (Mattimoe & Seal, 2011). However, there is an inadequate understanding of how this occurs, especially in complex healthcare networks. Studies using PC have not yet thoroughly examined how actor-based viewpoints could support marketing literature to understand value creation. And yet, PC is an approach that focuses on the actor’s reality construction and hence could support marketing literature in its quest to understand the foundations of service performance (Wilden et al., 2017). Therefore, there is a clear purpose to exploring PC as a method theory (Lukka & Vinnari, 2014) in the marketing context: to understand how technologies can digitalize healthcare by changing the drivers for customer’s action and the resulting VIU.
PC explains that an actor’s reality construction includes facts, possibilities, values, and communication (Jakobsen et al., 2011; Nørreklit, 2017a, b; Nørreklit et al., 2006, 2010). Whereas past events are a source of facts, the future offers us possibilities. In the present moment, we can make choices regarding which possibilities to pursue based on our values and then communicate with other actors to start realising those possibilities (Nørreklit, 2017a, b). The pragmatic constructivist approach for reality construction is illustrated in Fig. 2.
According to PC, actors integrate facts, possibilities, values, and communications to construct reality. Nørreklit (2017a, b) explains that first, there must be factual basis for action, or otherwise there is no reason to assume that the action will work as expected. Second, there must be a possibility, a purpose for action, or otherwise there is no reason for the actor to act. Third, for the actor to act, they must want to act, and the possibility must be in line with their values. Fourth and finally, the actors exist with other actors; their facts, values and possibilities overlap with the facts, values, and possibilities of others. For successful construction of a common reality, actors must communicate with each other to integrate their facts, values, and possibilities. (Nørreklit, 2017a, b)
In the B2G healthcare context, PC offers a lens through which to understand the different values that guide organisational action. Prior studies that utilise PC in the public sector have addressed the ambiguity (Cinquini et al., 2017) and illusory realities (Mauro et al., 2019) caused by a complex environment with often conflicting values. In such environments, actors manage uncertainty and complexity by their actor-world relations (Heinzelmann, 2016). In the healthcare sector, studies have examined the use of non-financial performance measures (Guven-Uslu, 2017) and the differing realities among clinical and managerial actors (Guven-Uslu & Seal, 2019). In addition, implementation of technology in public organizations has challenges, such as change resistance and the rigidity of public procurement practices (Landaeta et al., 2008; Lindholm et al., 2019; Nilsen et al., 2016), which might hinder the possibilities for public healthcare providers from the perspective of creating value. Grönroos (2019, p.) highlights “that value creation and the creation of public value and service delivery are themes that seem to draw a growing interest among researchers”. As this is of key importance (Lindholm et al., 2019), there is a need for further knowledge concerning value creation in the public sector. In this paper, we intend to create such knowledge, especially concerning the digital age, and to understand how technology builds a basis for the foundations of value to emerge and ultimately for VIU to be acquired.
Pragmatic constructivist view on value-in-use
Pragmatic constructivism has a number of striking similarities or compatibilities with service logic, and vice versa, but the approaches also have their differences. First, both investigate subject at the same level, typically that of an individual or an organisation. However, while PC often focuses on single actors that interact through communication to realise values that are meaningful for those actors’ lives, e.g., happiness, wellbeing, even finances (Nørreklit, 2017a, b), service logic builds on this communication as series of interactions that more straightforwardly enable suppliers to co-create utilitarian value (e.g., Grönroos 2011). Interestingly, the values in PC do not directly correlate with (utilitarian) customer value or VIU. Instead, it is related to the motivation of actors as values impact and influence their intentionalities for action. For PC, utility can subjectively be a value for an actor, but it is not intrinsically valuable; rather, the values in PC are something more profound (Nørreklit, 2017a, b), e.g., love, happiness, friendship, or conservation of nature. While the customer must perceive value that is in accordance with their values to be motivated towards completing a transaction with a supplier (e.g., Khalifa 2004), CV and VIU need are often communicated as possibilities and facts.
Second, both PC and SL highlight the customer’s role, as an actor, in creating value within their own process through action. However, SL is not as focused on actors’ intentions (Lee, 2018) and behaviours (Nørreklit, 2017a, b) but rather on the nature of VIU and the role of provider and customer in facilitation, co-creation, and creation of value (Grönroos & Voima, 2013). Third, both approaches have a temporal aspect: they acknowledge that the past, present, and future are windows to understanding human action (Finne & Grönroos, 2009; Finne & Grönroos, 2017; Nørreklit, 2017a, b). Before one verifies a fact through evidence or observation, it is only an assumption: future conditions are only proactively true (assumptions) before they are realised as pragmatically true facts (Nørreklit, 2017a, b). In all, though the approaches have their differences, the striking similarities (a focus on values and actors, temporality) will enable a combination of the two approaches. To draw on the similarities between these two viewpoints, the paper presents a combined framework that is illustrated in Fig. 3.
When combining SL with PC, it is worth elaborating on how the four elements of PC (facts, possibilities, values, and communication) can be seen from the SL point of view. First, without interaction that builds a factual basis, the provider only produces resources that have potential (i.e., possibility) to be used for value creation. As such, the provider can only facilitate the creation of value (Grönroos & Voima, 2013. The value foundation of the technology must be based on factual resources and both the supply (provider sphere) and demand (customer sphere) must be factual. Thus, the provider can provide factual resources (i.e., the value foundation referred to earlier by Grönroos 2008) and the supplier must have factual conditions. As Nørreklit (2017a, b) puts it:
There must be a factual basis for the actions. If there is no factual basis to act upon, then there is a risk that actions do not work. If the basis is fictitious, a guess, a hope or a dream or belief, then the actor cannot expect activities to function. The actor needs to know her factual resources, the factual conditions, and her abilities to act successfully. (p. 32)
Second, while the technology provider can propose possibilities enabled by the technology, VIU remains as possibility unless the customer is willing to change their value creation process according to these new possibilities (if they are factual). Examination of this VIU as a possibility that drives the creation of value is largely missing from the SL literature. Moreover, the value proposition by the technology provider must be possible, or as Nørreklit (2017a, b, p. 32) states: ‘What the actor tries to do and accomplish must be possible. She cannot realise the impossible […] If the possibilities are factual, then the action can be realised with success’.
Thus, third, definition of the process of value propositions not as ‘a feature’ to be communicated to the customer but as a process of exchanging facts and possibilities that is driven by the values of the actors is critical in enabling the transaction. During this process, the actors exchange evidence to construct facts with the aim of identifying if the proposed value, the possibility, is factual.
Fourth, to act, it is not enough that there is a factual possibility. The actor must also have an intention (willingness) to act. She must get something from it. If the possibility is realised, she will then realise the value proposition as VIU. Both actors, the technology provider and the customer, need to get value to be willing to act. From PC point of view, this means that ‘The mere fact that it is possible to do things is not a guarantee that they will be actually done. The actor must want to do it. But if doing something realises her values, then she will do it’ Nørreklit 2017a, b, p. 33).
These intentions are conveyed among actors through communication, the interaction that begins from the first contact with the customer, that ends after the ‘value delivery’ is completed and that is the domain of value co-creation. Thus, the joint sphere of value co-creation can expand depending on the depth of business relationship. It can be quite short in the case of transactional business relationships; however, it can be continuous in joint ventures or business collaborations. The firm can both offer value propositions and directly support the value creation of the customer through interaction (Grönroos, 2011):
Cooperation is organized through communication that functions as the glue that connects people. For communication to function and enable practice it must convey the integrated fact-possibility-value structure of the participating actors and enable them to form a common narrative as the basis of a common reality construction which realises the values of the actors involved. Nørreklit 2017a, b, p. 33)
Value propositions are promises of possibilities (Mouritsen & Kreiner, 2016; Nørreklit 2017a, b), and thus, they lack factual basis. One might postulate that the provider could try to increase the factual basis of the possibility, but it will remain a possibility until the customer acts and transforms it (i.e., the value proposition) into a fact (i.e., VIU). Vice versa, for the provider, a deal with the customer is only a possibility until the deal is made, after which the possibility becomes a fact.
The actors need to act (both make the purchase and implement the technology as intended) for the possibilities (value proposition) to be realised as facts (VIU). To accomplish this, they need to integrate facts, possibilities, values, and communication to perform (act) and succeed. If they still fail, there is either a lack of motivation (values), impossible possibilities, or the factual conditions and resources were illusions. To investigate this value-driven exchange of facts and possibilities, this paper investigates two cases where healthcare technology providers and their customer organizations are trying to understand potential VIU.