The Dynamic of Value Co-Creation and its interrelationship with employer branding: a study on the hotel industry in Oman
Zahra Sultan Al Habsi
Brunel University London, UK
Ray Hackney
Brunel University London, UK
Bidit Dey
Brunel University London, UK
Abstract
The paper aims to assess the value co-creation associated with employer branding in corporate citizenship context in the hotel industry for internal stakeholders within the corporate. A qualitative interview (semi-structured) method was conducted during a six-month period of fieldwork conducted in three Hotels in Oman to obtain stronger findings. This paper analyses and explains the dynamics of value co-creation and examines the interrelationship with CC and employer branding. In doing so this paper elaborates on the factors that constitute the value co-creation and how and to what extent the co-creation of value influences employer branding.
Introduction
Corporate citizenship (CC) is considered to be an outcome of socially responsible corporate culture and practices and, hence, holds significant managerial and research implications (Carroll, 1999; Sheehan 2013; Zayas-Ortiz,Rosario, Marquez, & Colón Gruñeiro2015). In recent times, CC has been investigated in a number of different sectors, including both the tobacco and energy industries (Palazzo and Richter, 2005; Ahmad, Rezaei, Tavasszy, & Brito, 2016) and in education (Raineri and Paillé, 2015), indicating its growing importance in across the spectrum. Hence, it is noticed that the interrelationship between CC and corporate social responsibility (CSR), and its impact on organisation’s internal and external stakeholders, has attracted significant research interest(Maignan and Ferrell, 2001; Lock and Seele, 2016).
Nevertheless, although CC and CSR are recognised as being integral to an organisation’s dynamics and the way in which it interacts with internal and external stakeholders, there is currently a limited understanding of how these factors influence the way in which an organisationengages with internal stakeholders – i.e its employees (Drumwright, 1994; Brown and Dacin, 1997; Menon and Menon, 1997). It is suggested that internal stakeholders’ satisfaction and performance are key to developing a sustainable organisational image (Epstein and Roy, 2001) and employer branding (Foster, Punjaisri and Cheng, 2010). Furthermore, employees, along with other internal and external stakeholders, contribute to the value co-creation process (Payne, Storbacka, Frow, 2014). Current literature on value co-creation (Ramaswamy, 2008; Dey, Newman, Prendergast, 2011; Jamali, El Dirani and Harwood, 2014) and internal marketing/branding (Gummesson, 1997; Näppä, Farshid and Foster, 2014; Moon, Lee and Oh, 2015) indicates to the importance of employees’ roles in value creation for both the organisation and its internal and external stakeholders. Whilst research on organisationalendeavours, in terms of their contribution to employees’ satisfaction and personal development, has enriched the current management literature (Business Wire, 2005; Kang, Lee and Huh, 2010), there is a paucity of scholarly works on how an organization’s undertaking of CSR, and its emergence as a responsible corporate citizen, impact on employees’ perceptions of, and influence on, the value co-creation process. This also contributes to the existing literature of value co-creation (Ravald and Grönroos, 1996; Prahalad and Ramaswamy, 2004; Ramaswamy, 2008; Dey,Newman, Prendergast, 2011) and employer branding (Balmer, 2001, Petkovic, 2008). In particular, the dynamics related to CC, CSR and value co-creation need further examination, as there is limited empirical evidence of this in the current literature. Whilst a partial understanding in this regard can be obtained from the tourism and hospitality literature (Gil, Jiménez and Lorente, 2001; Waddock & Mclntosh, 2009; Matten & Crane, 2005),this does not fully capture the interrelationship between CSR and value co-creation (Logsdon and Wood, 2002; Davies, 2003; Aguilera, Rupp, Williams, & Ganapathi, 2007; Galbreath, 2009).
This paper seeks to address this research gap by assessing how, and to what extent, organisational behaviour with regards to CC and CSR towards the external community will enhance employees’ satisfaction and performance, leading to sustainable employer branding. In doing so, the research aims to develop a more holistic understanding of value co-creation within the organisation with respect to the hotel industry of Oman. The tourism sector in the Sultanate of Oman has been identified as one of priority sectors for economic diversification and employment creation. Moreover, tourism has received growing interest from the government in their strategic plan of 2016 – 2020, as well as in the national vision 2040 ("Diversification Is Long-Term Strategic Plan Of Oman's Ninth Five Year Plan").The development of a sustainable tourist industry is crucial is also crucial for the socio-economic development of Oman. As such, the success and sustainability of the tourism industry and its operations would depend on how Oman’s fragile and unique environment is managed (Subramoniam, Al-Essai, Al-Marashadi & Al-Kindi, 2015).
Literature Review
Corporate Citizenship (CC)
According to Logsdon and Wood (2002), the term CC was first introduced and used in 1980s by American businessmen. Traditionally, CC was considered to be one of the operational elements of CSR (Carroll, 1999). However, the concept of CC has expanded over the last decade, which has resulted in a different understanding of CC. Therefore, it is very important for businesses to position themselves within society.Hence, a different understanding of CC exists within the business environment; Backhaus (2002) stated that it is important that CC has a clear role in the business strategy. He continued that this can be achieved by the corporates by using their own expertise to show their contribution and progress towards society and the environment, and benefits the business itself. Although the marketing literature focuses more on customers as they are the key stakeholders (Fry and Polonsky, 2004), this does not reflect the needs and demands of all stakeholders (Miller and Lewis, 1991; Maiagnan, Ferrell & Ferrell2005). Due to this, Ferrell (2004) stated that organizations must also pay attention to other stakeholders’ groups, not only customers on their marketing strategy. The Marketing Association (2004) stated that marketing is an organizational function and process for creating, communicating and delivering value to their customers and for managing long lasting relationships which benefit both the organization and its stakeholders. To gain a better understanding of how CC embedded in corporate CRS strategy can lead to value co-creation for internal and external stakeholders. The following section is focusing on the value co-creation literature.
Value Co-Creation
Prahalad and Ramaswamy (2004) challenge the traditional value chain concept of Porter (1985), as it does not explicitly consider customers’ role in the value creation process. They argue that all parties involved in the production and consumption processes exchange resources and ideas to create value and hence value creation is not the result of producers’ endeavour alone. This is also argued by Vargo and Lusch (2008) who suggest that customers, are involved in the value creation process, whereas (Grace and Lo Iacono, 2015) argued that internal and external customers both have the same fundamental of value agenda involved in the value co-creation.
Although one of the fundamental assumptions of SD (Service Domain) logic (Vargo and Lusch, 2006) is based on the co-creation of value, more recent scholarly works (Ponikowski, Voors, Anker, Bueno, Cleland, Coats Jessup,2015; Heinonen,Strandvik & Voima, 2013) have criticised the notion due to a lack of emphasis given on consumer led value creation. Value-co-creation should be characterized through the roles of the customer and the firm and recognition of the value spheres that include the firm and the customer (Grönroos and Voima, 2013). Nevertheless, value co-creation still remains an elusive concept. While scholars in this field hold different opinions regarding the nature and modality of value co-creation, existing models (e.g Prahalad and Ramaswamy, 2004; Chen and Nath, 2004; Anderson and Rosenqvist, 2007) offer a wide range of perspectives on this process.
Value can also be co-destructed. Due to contextual limitations, resource constraints (both operant and operand) at the customer end, or inappropriate design/marketing strategies by the producers, the value-in-use of a product may be diminished (Plé and Cáceres, 2010; Smith, 2013). For instance, lack of technical knowledge and financial constraints have been identified as the major impediments to ICT use at the BoP (Dey, Newman& Prendergast, 2011). The value of the intangible asset, the brand, is made up on many components, one of them being employees (Farmer, McCabe, Lord, Tutt, Johnson, Richardson, & Martin,2005). Subsequently, this paper is aiming to understand and explore the value associated with employer branding in CC & CSR context for the internal stakeholders of the organisation.
Employer Branding
Employer branding falls within the broader school of study surrounding strategic human resource management (Panczuk and Point 2008), it is a deeply sought after solution to talent management systems within human resource marketing and is used within communications strategies that aim to attract candidates that fit into an organization’s culture, as well as perform well within the organizational setting. According to the Stakeholder theory value delivered to various stakeholder groups does not always need to be economic value; socio-economic value can also be exchanged between stakeholders (Freeman &Hasnaoui,2011). When value is not taken to solely be economic value, it is important to understand the wants or goals of each particular stakeholder in order to determine how value can be delivered to these stakeholders in ways that are not only through the delivery of economic value (Bruni and Zamangni; 2007). Recognition from numerous studies has also shown that CSR has a positive effect on employee motivation and attitudes towards their work place. Studies by Turban and Greening (1997); Brammer, Millington, & Rayton (2007); Galbreath, (2010); Lin, Chen & Peng(2012) have all indicated that the CSR activities undertaken by a business have become an important criteria in employee job selection. Similar studies conducted by Brammer, Millington, & Rayton (2007) have found a positive relationship between CSR and employee commitment, while bettering the organizational brand image.
Research Method
Pilot interviews were conducted. This helped in refining and improving the interview protocol. Before conducting interviews, the researcher has chosen to experience the hospitality services of all the three hotels. A total of 35 interviews were conducted with three different levels of participants in Oman. By doing this and getting closer to the service provider, it helped to get a thorough understanding of how hotels operate in Oman and 'how' and 'why' they adopt CC to create value for stakeholders. With regards to data analysis, after the data collection was completed, each interview transcript was analysed in a thematic way of coding. Concerning data management and ensuring good research quality, the researcher has recorded all interviews to store all the participants’ points and feedback. With regards to data analysis, the researcher has adopted NVivo since the data is more subjective and is gathered through interviews.
Findings
The hotel industry in Oman has experienced remarkable progress for the last five years, and it just started to grow and to contribute to the local economy of Oman. Interviews have indeed shown the demands of the hotels in Oman as the tourism rate is increasing every year. Based on the findings, three major categories associated with CC and CSR were identified; employee, employer branding and value co-creation.
Employees, Satisfaction, Performance and Loyalty
Intangibility is one of the inherent characteristics of service concerns (Blankson and Kalafatis, 1999). While service organisations inherently suffer from the intangible nature of their product offerings, the context and nature of internal marketing within an organisation is also characterised by processes and intangible outcomes, which further complicates employee engagement and service delivery. In this research, the problems surrounding intangibility of service processes and employee-employer engagement and their subsequent outcome have been noticed. When it comes to exploring the impact of adopting CC and CSR on employees’ satisfaction, performance and loyalty, it becomes apparent that employees are not in full control over the issues and often they are unable to comprehend what they can achieve. They also do not find such measures directly making tangible impacts on their promotion/remuneration. As one of the respondents explains “that is the passion that I have, not to get financial rewards but to see others getting the benefits”
When they were asked: Do you feel you are directly or indirectly involved in promoting environmentally friendly policies within your job role? How? What are the key areas?
As stated by participant (P 4)“I think it makes you respect, and be more thankful for what you have, as it helps you to understand the challenges and the difficulties what society is going through. Not only us as a human being, but also what the producers have to go through, farmers and breeders, and what animals had to go through. For certain things, it's not very pleasant. So it brings you to a better understanding of nature and to respect all stakeholders within this environment”.
Thus, this reflects that the employees are being informed and advised by the management and in a way, it expresses how they are getting value indirectly as the actions the organisations are doing towards the environment is respecting all stakeholders within the environment. The above statement which, by and large, reflects the opinions of the employees underscore the fact that there is general appreciation for hotel’s CSR and CC initiatives. In parallel to the above, regarding creating awareness and concerning about the quantity of raw material required by the hotels as well as using hotel resources participant (P 11)“To make sure what we spend, what we buy is dedicated to the right products. Is also one of the organisational cultures that employees are doing it with passion as they know the why they are doing that and happy to be involved.” Also, the awareness was shown while ordering the raw material, as well as using resources according to Participant (P 4) “We order basically what we need. And we ensure as best as we can, that we bought is used appropriately and not wasted” and “It's a change that helped to change the bad behaviour towards environment”
From the above statements, it can be understood that the awareness helps to motivate the employees to implement sustainable approaches and appreciate the value that they are getting out of it. Therefore, this led to creating self-satisfaction for the employees, as the hotel is welcoming the ideas that result in contributing to the sustainability in different ways, starting from minimising the use of resources to helping society and protecting all stakeholders.
Value creation can take numerous forms and, as mentioned earlier, value creation in this paper aims at value created within a profit and non-profit sense. Value creation can have broader societal implications, such as environmental or social benefits that may not directly profit the business, but will benefit the society as a whole. The creation of value will always need to remain sustainable, (e.g. Hart and Milstein, 2003) argue that sustainable value creation must take into account value created for the broader society that benefits external stakeholders of the business. And this was apparent from the data collected, although some of the participants think this is a barrier to achieving their tasks.
Employer Branding
Employer branding is believed to allow businesses to develop more sustainable workforces through decreased staff turnover rates and increased staff retention level (Backhaus and Tikoo, 2004). The ways in which companies can create successful employer branding strategies are when they are generated to appeal to the sort of staff being sought. The use of employer branding as an HR strategy is not uncommon (Mosley, 2007). However, employer branding has increasingly taken up a role as a marketing activity as well. As stated by the participant (P 3), who is at top management level in case A “Although hotels operation may be complicated still, their primary concern is to show and prove their engagements to all stakeholders”…..
Thus such message reflects the knowledge and the brand image about the importance of sustainability. Likewise,(P 21) “Giving back to the community is what gives the return”. And “events and social activities is one of the priorities that hotels involve the employee in.”
The initiatives they are taking are mainly trying to make awareness among internal stakeholders as well as external stakeholders. The concept of CSR and CC are both widely used but under different names and activities ([1]). This has led to the creation of a suitable brand image for the employer, although there are still some activities that may not be clear to audience that it is as a sustainable within the hotel but in its contents helped at least minimising the negative impact towards the environment as well as society in playing a significant role in protecting the environment. As mentioned by participant (P 35)“Such product and services that are not sustainable is that the packing of the products. However, this was difficult to change due to the brand image, but the change was within the content and the ingredients of the product, which are more organic, as well as fewer chemicals, and the wrapping was with recycled or fabric”, which isenvironmentally friendly characteristics or features.