How Social-Media-Enabled Co-Creation between Customers and the Firm Drives Business Value? The Perspective of Organizational Learning and Social Capital

Abstract Contemporary business organizations are increasingly turning their attention to value co-creation using social media between individual customers and business organizations in the process of new product development (NPD). However, little is known about the mechanisms underlying social-media-based customer-firm co-creation and their implications for business value in NPD. To address this knowledge gap, this study develops a model from the perspective of organizational learning and social capital to examine how the social-media-based customer-firm co-creation mechanism conceptualized as the structural, cognitive, and relational dimension of social capital influences the first-order knowledge outcome (knowledge transfer effectiveness) and second-order dynamic capability outcome (absorptive capacity), and how these co-creation outcomes ultimately influence organizational performance. The model is tested using survey data from 149 Chinese mobile application developers. The results indicate that social-media-based structural, cognitive, and relational linkage, in particular the structural linkage, is an important co-creation mechanism to improve organizational performance. Knowledge transfer effectiveness and absorptive capacity have significant mediating effects in this co-creation mechanism-outcomes-performance framework. Further, the moderating effects of social media use level on the relationships between co-creation mechanism and outcomes are largely supported. The study contributes to theory and practice by shedding light on the social-media-based customer-firm co-creation in NPD at a process level.