Abstract
PurposeThis paper aims to develop a conceptual framework for further understanding the risks embedded in co-creation services in high-contact service transactions. It delineates behavioral and economic perspectives focusing on agency costs, risk behavior, compensation structure and provides a context in which information is processed.Design/methodology/approachFollowing an extensive review of the literature, propositions are advanced that relate an agent’s risk behavior to information processing, compensation and the propensity to engage in co-creation. These propositions provide a complementary context for understanding risks in the co-creation process.FindingsThe propositions detail how a service agent’s information processing can be enhanced if the customer’s expected utility from transactions is maximized by managing the agent’s risk behavior and earnings potential. A compensation structure that balances fixed base and variable pay can motivate risk-taking and the agent’s propensity to engage in co-creation.Originality/valueThis paper extends the understanding of agency risks in the co-creation of hospitality services that integrates economic and behavioral perspectives with information processing. Theoretical implications include a broader context of the risks underlying co-creation. Practical implications relate to how earnings potential could be maximized by considering the agent’s risk behavior and the expected utility arising from such transactions.
Published Version
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