Value co-creation with customers and its impact on capabilities

Value co-creation with customers is a new source to gain competitive advantage. However, the research in this area is still in its early stage. The link between co-creation activities and firm’s capabilities is not clear. Using empirical study, this paper presents a new mechanism of value co-creation with customers. Such mechanism is governed by two principles: (1) Customers are the integral part of such a co-creation system; (2) through value co-creation with customers, firms may not only gain new capability, but also enhance traditional capabilities.