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Marketing Places and Spaces

Conceptualizing the Value Co-Creation Challenge for Tourist Destinations: A Supply-


Side Perspective
Giuseppe Melis Scott McCabe Giacomo Del Chiappa
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CONCEPTUALIZING THE VALUE
CO-CREATION CHALLENGE FOR
TOURIST DESTINATIONS: A
SUPPLY-SIDE PERSPECTIVE
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Giuseppe Melis, Scott McCabe and


Giacomo Del Chiappa

ABSTRACT

To date, most studies on value co-creation processes in tourism have thus


far focused on the companycustomer relationship. Tourism experiences
are produced by a number of firms and organizations collaboratively.
Hence, there is a need to further develop knowledge about co-creation
issues also adopting the perspective of the network of relationships
between local stakeholders (both public and private) which are involved
in tourism development within a certain tourist destination. This concep-
tual study applies the theoretical approaches of Prahalad and
Ramaswamy (2004a) and Ramaswamy and Gouillart (2010) in an
attempt to identify a set of constructs that could influence the way local
stakeholders can co-create the tourism offer. Specifically, the contribu-
tion of this chapter is placed on the development of a possible empirical
application of the DART model to analyse the co-creation paradigm by

Marketing Places and Spaces


Advances in Culture, Tourism and Hospitality Research, Volume 10, 7589
Copyright r 2015 by Emerald Group Publishing Limited
All rights of reproduction in any form reserved
ISSN: 1871-3173/doi:10.1108/S1871-317320150000010006
75
76 GIUSEPPE MELIS ET AL.

adopting a supply-side perspective, which is still a quite non-common


approach in tourism literature.
Keywords: Tourist destination; co-creation; supply-side perspective;
DART model; network analysis

INTRODUCTION
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The global marketing environment faces one of the most profound and
important upheavals as technology development and adoption coupled
with a dynamic consumer market have shifted the balance of power from
producers to consumers. These transitional states have been equated to a
paradigm shift by marketing theorists (e.g. Vargo & Lusch, 2004). Firms
and academicians have attempted to redefine what amounts to a radical
reinterpretation of our understanding of the fundamental basis of value
exchange in consumer markets (Prahalad & Ramaswamy, 2004a). This
paradigm shift has led to an understanding that in order to establish com-
petitive advantage, firms must collaborate with consumers to produce
meaningful services (Frow, Brodie, Little, & Payne, 2010; Pels, Polese, &
Brodie, 2012; Verhoef, Reinartz, & Krafft, 2010).
As a multi-faceted and complex service sector, tourism has recently
begun to explore the concept that tourist experience value is intrinsically
co-created between firms and customers synchronously, contextually and
collaboratively (Shaw, Bailey, & Williams, 2011). To date, most studies on
value co-creation processes in tourism have thus far focused on the
companycustomer relationship and on how individual companies can
gain competitive advantage by implementing activities to engage customers
in more proactive ways (Grissemann & Stokburger-Sauer, 2012; Hoyer,
Chandy, Dorotic, Ktafft, & Singh, 2010).
However, tourism experiences are most frequently produced by a num-
ber of firms and organizations collaboratively, and there is a need to
further develop knowledge about co-creation issues from the perspective of
the network of relationships between individual organizations, both public
and private, which are all, more or less directly or indirectly, involved in
the development of the tourist supply system, in its reference markets.
More specifically, the purpose of this chapter is to lay the foundation
for thinking about how the logic of co-creation can be investigated and
Conceptualizing the Value Co-Creation Challenge 77

applied, adopting a supply-side perspective consistent and compatible with


other theoretical contributions that are relevant to the dynamic tourism
market, such as the experience economy (Pine & Gilmore, 1999), total rela-
tionship marketing (Gummesson, 1999) and network analysis (Scott, 2013;
Wasserman & Faust, 2009). To achieve this aim, our focus will be on the
complex network of relationships that is created, or which would be useful
to create between companies and stakeholders (public and private) in var-
ious capacities in order to encourage customer collaboration in the devel-
opment of innovative value propositions, as is precisely the case of tourist
destinations (Baggio, Scott, & Cooper, 2010; Del Chiappa & Presenza,
2013).
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Relying on these general considerations, the present work is organized


around two main research questions: QR1. Is it possible to extend the value
co-creation theory by adopting a macro perspective (tourism destination)
instead of a micro perspective (single stakeholders)? QR2. If the answer is
positive, is it possible to devise a conceptual model to assess the degree of
co-creation of value for a destination?
To date, regarding the first question, there have been few attempts
that have explored the possibility of extending co-creation theory to more
complex systems than single enterprises, such as tourism destinations
(Sfandla & Bjork, 2013; Tussyadiah & Zach, 2013).
Tourism destinations are characterized by a multitude of actors, often
very different from each other both for nature and size, bound together not
by hierarchical, but only through competitive and/or cooperative relation-
ships. The complexity of tourism destinations is interesting because (a) the
tourist experience is the result of the action of a plurality of actors working
in a specific destination and (b) because the actors are independent entities,
often very different, both in nature and size, free to adopt strategies and
actions that are not necessarily mutually consistent, even within the same
territorial context in which they operate (inter-independence perspective).
These entities, in other words, are not linked by hierarchical relations
but only through competitive and/or cooperative relationships; sometimes
these relationships are simultaneously characterized by cooperation and
competition giving rise to the so-called ‘coopetition’ (Hamel, Doz, &
Prahalad, 1989). Similarly, the ways in which relationships between com-
plex networks of actors are managed warrant further attention because of
the possible effects on the emergence of co-creative capacities. For example,
Banks and Humphreys (2008, p. 407) argued that ‘emerging co-creators
cannot be managed and directed as employees, since ‘imposing’ control
over them may risk losing their creative participation’.
78 GIUSEPPE MELIS ET AL.

In view of the destination, the challenge to improve competitiveness is


embodied in the combination of the appropriate mix of decisions and
actions so that all the actors operate together to coordinate their activities
and having as their objectives customer satisfaction, winning the loyalty of
tourists and, possibly, of their benevolence in terms of judgement on the
reputation of the destination. This chapter presents a discussion of the con-
ceptual issues relating to co-creation theory and tourism experience value.
Through a review of the theoretical issues surrounding value co-creation, it
aims to develop a conceptual model that explains how co-creation might be
applied to complex organizational systems.
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LITERATURE REVIEW

The Value Co-Creation Theory

The basic idea of the value co-creation theory is based on the active invol-
vement of the customer who is no longer considered an external business
process of design, production and distribution of the product-service, but is
increasingly a referee (Priem, 2007) and active, central player in the crea-
tion of value in consumer experience (Prahalad & Ramaswamy, 2004a,
2004b; Ramaswamy & Gouillart, 2010; Vargo & Lusch, 2008a, 2004). In
fact, while ‘in the conventional value creation process, companies and consu-
mers had distinct roles of production and consumption’ and ‘products and ser-
vices contained value, and markets exchanged this value, from the producer to
the consumer … as we move toward co-creation this distinction disappears’
(Prahalad & Ramaswamy, 2004a, p. 10).
According to Prahalad and Ramaswamy (2004b, p. 5), ‘increasingly, con-
sumers engage in the processes of both defining and creating value’. To sum
up, it can be argued that while in the traditional perspective value creation
occurred outside markets, in the co-creative approach, the experience of
the consumer becomes the very basis of value (Prahalad & Ramaswamy,
2004a). At the same time, Vargo and Lusch (2008b) were arguing that mar-
keting faces such structural challenges, that in the future, competition
would be determined by those companies who could reorient their offers
towards a new Service Dominant Logic. Specifically, they argued ‘the locus
of value creation … moves from the “producer” to a collaborative process of
co-creation between parties’ (Vargo & Lusch, 2008b).
In particular, they emphasize the fact that the service is based on the
concept of ‘value in use’, in contrast to the traditional view based on the
Conceptualizing the Value Co-Creation Challenge 79

‘exchange value’. In other words, they suggested that the attention of the
business entity that wants to create value, therefore, must not be focused
on the product (operand resources) and its construction, but the process
leading to its design, development and distribution; it should no longer
focus on the exchange between producers and buyers, but on the relation-
ships between the actors and the knowledge and skills they invest in con-
sumption experiences (operant resources) (Etgar, 2008; Grönroos, 1997,
2008; Payne, Storbacka, & Frow, 2008). Systems, therefore, should then be
able to access and integrate these resources together to create value through
knowledge (Vargo & Lusch, 2004, 2008b).
In other words, the process of value creation starts to take form
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only when a customer consumes or uses the product or service rather than
when it is built (Grissemann & Stokburger-Sauer, 2012; Payne et al., 2008;
Vargo & Lusch, 2004, 2008a).
Yet as a foundational principle, Vargo and Lusch (2008a, p. 3) underline
that ‘all social and economic actors are resource integrators’. According to
this thinking, each actor can be a beneficiary of the economic relationship
and each beneficiary is always a resource integrator but, as they noted, they
are ‘all of the external service providers, each creating its own service-
providing resources through its own resource-integrating activities’ (Vargo &
Lusch, 2011, p. 184).
A consequence of this approach is that ‘S-D logic points towards a need
to think about value creation taking place in and central to the emergence of
service ecosystems’ (Vargo & Lusch, 2011, p. 185). A service eco-system ‘is
a spontaneously sensing and responding spatial and temporal structure of
largely loosely coupled, value-proposing social and economic actors interact-
ing through institutions, technology and language to (1) co-produce service
offering, (2) engage in mutual service provision, and (3) co-create value’
(Vargo & Lusch, 2011, p. 185).
Tussyadiah and Zach (2013) summarize the main issues succinctly when
they argue that firms and organizations need to look beyond the immediate
boundaries of the value chain to actively engage in collaborative exchanges
and integrate resources in order to maximize competitive advantage.

Applications in Tourism Destinations

In the tourism literature it is widely recognized that destination competi-


tiveness demands an effective collaborative and cooperative behaviour
among the different local stakeholders (both public and private) delivering
80 GIUSEPPE MELIS ET AL.

products and services to tourists (Del Chiappa & Presenza, 2013). All these
theories focus the attention on the cooperative behaviour of the different
actors of the destination.
Cooperation may be defined as ‘a process of joint decision making
among autonomous, key stakeholders of an inter-organizational, community
tourism domain to resolve planning problems of the domain and/or to man-
age issues related to the planning and development of the domain’ (Jamal &
Getz, 1995, p. 188). This process is expressed on several levels: between
institutions/administrations, between companies/organizations and within
communities. It is so important to recognize that cooperation in a compe-
titive environment germinates only if certain basic conditions are fulfilled.
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Alter and Hage (1993, p. 86) argue that cooperation can be identified as
‘the quality of the relationships between human actors in a system of mutual
understanding, shared goals and values, capacity to work together on a com-
mon task’. Elbe (2002) identifies three levels of cooperation: (a) limited,
when it is characterized by a very low contribution of resources  in terms
of time and money invested  and a poor mutual adaptation of operational
activities among stakeholders; (b) moderate, when it is restricted to one or
limited aspects of the business, with some commitment in terms of resource
allocation, but a simple, surface-level adaptation of operational activities;
(c) large, when the cooperation is of a long-term, strategic nature and is for
the stakeholders at the heart of business growth.
The cooperation can be activated from each of the three levels, but the
reality is developed primarily through a step by step process that starts
from limited forms to reach the most complex. To ensure that the process
develops properly, the role of ‘coordinator’ needs to be recognized and
legitimized (Elbe, Hallen, & Axelsson, 2009, p. 287).
Collaboration and cooperation can be based on formal relationships
(mainly based on contracts) or informal relationships between members
(mainly based on personal and social relationships). In attempting to apply
these theoretical considerations to the case of tourist destinations, Beritelli
(2011) argues that both configurations can be detected. The presence of one
or another depends mainly on the specific nature of the agreements and the
particular circumstances in which they were established.
Firstly, a recognition that ‘cooperative behaviour among actors and stake-
holder groups in tourism destinations is an interpersonal business’ (Beritelli,
2011, p. 623). Secondly, the greater discrimination between different desti-
nations is not represented by formal rules, but rather by the presence of spe-
cific key players and their past experiences, which directly influence future
behaviour. Thirdly, Beritelli argued that the simple exchange of information
Conceptualizing the Value Co-Creation Challenge 81

does not directly necessarily lead to a reciprocal understanding among sta-


keholders and to an effective collaboration among them. The reason is that
‘cooperation processes require reciprocal sympathy’ (Beritelli, 2011, p.624).
As part of the literature on collaborative marketing applied to tourism,
another important contribution is provided by D’Angella and Go (2009),
which developed a model for assessing the orientation to the tourist mar-
ket, applying stakeholder theory. These authors analyse the relationships
between DMOs (Destination Management Organization) and tourism
enterprises. In particular, they address two important questions: what are
the intentions and the interrelationships of the DMO in the complex reali-
ties of tourism in which they appear? To what extent are tourism compa-
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nies satisfied by the actions implemented by the DMO?


D’Angella and Go (2009, p. 429) define a tourism destination as ‘an
open-social system of multiple and interdependent stakeholders’, with this
interdependence being a response to certain critical elements. Among these,
they referred to the shortage of resources (mostly financial) of the destina-
tions, to the risk of disastrous events that could harm the reputation of the
entire territory, and to the fragmented nature of the tourist offer. The need
to overcome these difficulties leads to the conclusion that coordinating
organizations in tourism (i.e. the DMO), should take a more proactive role
in driving the relationships within the network and to generate systematic
and on-going feedback about their work from stakeholders involved.
In order to innovate, the DMO should facilitate formal institutional net-
work collaboration between individual actors and organizations, and a
level of participation that is bounded by the agreed lines in which the stake-
holders can act (D’Angella & Go, 2009, p. 430). Based on an extensive lit-
erature review, Bregoli and Del Chiappa (2013) identified the following:
social norms, communication, interlocking directorates, common staff,
planning control systems, incentive and selection systems and information
systems.
For the purpose of our study, a very significant contribution in the field
of tourism is provided by Sfandla and Bjork (2013). This chapter aims to
create a new framework that explores the co-creation of tourist experiences.
The authors note a change of orientation of the tourist literature of recent
years: from a competitive approach to a systemic approach, identifying the
potential benefits in reorienting thinking about the roles of individual busi-
nesses as parts of a larger network. In this sense, tourism businesses are
understood as involved in a challenge to jointly create tourist experiences
between firms, despite the innate resistance brought on by the nature of
competition.
82 GIUSEPPE MELIS ET AL.

The focus of modern tourism marketing must therefore be reoriented


towards for whom and how it creates value by adopting a new mind-set
that sees ‘the actors as facilitators of experiences and consumers-tourists as
active contributors’ involved in the management of services (Sfandla &
Bjork, 2013, p. 496). When they introduce the concept of ‘facilitators of
experiences’ the authors refer to people or firms who are able to transform
the value of tourist services and capture the experiences in a systematic way
(Sfandla & Bjork, 2013, p. 498).
Based on these considerations, they note that the traditional models of
tourism network are inadequate because they generally exclude consumers
from their structures. The new model proposed transfers basic aspects of
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SD logic to the marketing of tourist services in a framework based on the


creation of experiences.
This model, referred to as TEN (Tourism Experience Network) shows
some similarities, albeit with some differences, with the so-called ESC
(Experience Supply Chain). In fact, the ESC, according to the authors, is
concerned only with linear relationships and takes into account tourists as
mere members, but remaining under the control of the network. The TEN,
however, also promotes non-linear relationships between the actors and, in
particular, those that guide both horizontal and vertical movements of the
value (Sfandla & Bjork, 2013, p. 496). In essence, tourists are no longer
mere consumers of package holidays offered by tourism industry network
stakeholders, but they are involved and wish to be even more actively so, in
the process of co-creation of experiences.
Sfandla and Bjork (2013) recognize the importance of the contribution
of Porter to the notion of value, but in agreement with Vargo and Lusch
(2004), they integrate these ideas in two value configurations: the ‘value-
in-exchange’ (relevant for enterprises in the process of co-creation) and
‘value-in-use’ (vital for tourists to create their own value) after Prahalad
and Ramaswamy (2004a). Today’s tourists are not content to play the
role as of a passive source of exchange value. They also stress the need
for the presence of one or more ‘facilitators’ who are able to understand
how to engage tourists in experience co-creation from a logic based on
value.
Specifically they argue that ‘firms, in their facilitations processes, are
inter-linked through adding and exchanging value to support the co-creation
of experiences with tourists, whereas tourists, in their processes, are inter-
linked in using firms’ resources, performances and experiential components
for achieving positive experiences. The co-creation of experiences here arises
during exchanges, usage and interactions between facilitators and tourists in
Conceptualizing the Value Co-Creation Challenge 83

relational processes supported by value notions and value-in-conceptions’


(Sfandla & Bjork, 2013, p. 502).
Finally, more recent research has tried to assess the organizational capa-
city for co-creation at the level of the DMO (Tussyadiah & Zach, 2013).
Particularly, the first goal of this study was to ‘conceptualize and measure
destinations’ capacity for co-creation’ and due to the development in infor-
mation and communication technology (Tussyadiah & Zach, 2013, p. 243),
including the influence of social media strategies on destinations’ capacity
for consumer co-creation.
As many scholars have argued (Bronner & De Hoog, 2010; Litvin,
Goldsmith, & Pan, 2008), consumers are even more committed in using
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social media, before, during and after their trip, to search for information
and opinions of other consumers for trip planning and to post their own
experiences online thus contributing to co-create tourism experiences.
Because of this, ICTs, information systems and social media could be con-
sidered as important coordination mechanisms and platforms that allow
information to flow more easily across the destination and through the sta-
keholders facilitating processes such as consensus-based tourism planning,
knowledge sharing and co-creation (Baggio & Del Chiappa, 2014; Micera,
Presenza, Splendiani, & Del Chiappa, 2013).
Despite this, Tussyadiah and Zach (2013) applied the theory of absorp-
tive capacity to assess whether destinations had the knowledge, skills and
capacity to transfer information in a co-creative sense, and they found that
there was limited scope for knowledge acquisition and transfer amongst
DMOs. Overall, these findings underline a need for further research aimed
at analysing how the interrelationships among local stakeholders can be
managed and enhanced in an attempt to increase the co-creation of value
at a tourism destination level.

A FRAMEWORK PROPOSAL: THE CO-CREATION


THEATRE AND ITS DETERMINANTS
One could interpret the co-creation theory in tourism destinations by
adopting a systemic perspective that integrates elements of ‘collectivism’
and ‘individualism’ together (Hofstede, 1983). Any measure of the degree
of co-creation implies an effort to understand how in reality these two
apparently contradictory ‘forces’ are implemented. The orientation towards
either collectivism or individualism may not be determined solely by
84 GIUSEPPE MELIS ET AL.

national cultural traits. Inversely, we argue that such leanings can be loca-
lized and partly determined by key actors within destinations and their
influence in shaping the way network actors engage with destination devel-
opment and marketing.
In other words, we need to understand not simply whether co-creation
exists within a destination, or if the destination has the resources and capa-
city to integrate co-creation value logic into its development and marketing
programmes. There is also a need to understand much more about the
dynamics between network stakeholders to assess how a destination can
move from a value creation perspective towards a value co-creation
perspective.
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In today’s world, a destination that is able to respond positively to the


challenges of the market is one that has a high capacity to be ‘experience-
centric’ (Prahalad & Ramaswamy, 2004a). This idea appears to be highly
congruent with the DART model proposed by Prahalad and Ramaswamy
(2004a). This model suggests that when co-creation is considered the fol-
lowing facilitators should take place: dialogue, access, transparency and
risk assessment (from these the acronym DART was coined). As the
authors argued, ‘dialogue means interactivity, engagement, and a propen-
sity to act  on both sides. Dialogue is more than listening to customers: it
implies shared learning and communication between two equal problem
solvers. Dialogue creates and maintains a loyal community’ (Prahalad &
Ramaswamy, 2004a).
Consequently, they define access as the possibility to have both available
proper information and tools, while risk assessment refers to the fact that if
consumers are well informed and they increasingly participate in many of
the firm’s processes, they should assume the responsibility of their choices
together with companies. So that customers ‘will insist that businesses
inform them fully about risks, providing not just data but appropriate meth-
odologies for assessing the personal and societal risk associated with products
and services’ (Prahalad & Ramaswamy, 2004c, p. 7).
Finally, transparency concerns a relationship between companies and
customers based on reciprocity. This is because the conventional asymme-
try is rapidly disappearing: firms can no longer assume opaqueness of
prices, costs and profit margins. And as information about products, tech-
nologies and business systems becomes more accessible, creating new levels
of transparency becomes increasingly desirable and important.
Based on such a strand of research, Ramaswamy and Gouillart (2010)
later focus their attention on the preconditions that allow companies to put
in use the value co-creation approach and suggested to consider the
Conceptualizing the Value Co-Creation Challenge 85

following: context of interactions, engagement platform, experience mind-


set and network relationships.
Based on these two conceptual models, we propose to consider what we
call ‘the co-creation theatre’ (Fig. 1); a theoretical model to be used as a
basis to measure and to assess the co-creation phenomenon within a com-
plex network system, such as a tourist destination.
The variables of the model as well as a context of interactions (CI)
between the different actors within the area are, respectively:

− A network of formal and informal relationships (NR) between the local


stakeholders;
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− An engagement platform (EP) where both the stakeholders and consu-


mers can share knowledge that can be useful to co-create the tourism
experiences to be delivered to the market;
− A systemic consciousness and experience mind-set (EM) that is based on
social values driving single stakeholders towards more collaborative and
cooperative actions;
− A constant and continuous dialogue (D) between the different actors
involved in the design, construction and implementation of the value
proposition of the destination;
− An easy accessibility (A) for all the relevant actors to the main informa-
tion (i.e. marketing plans, marketing reports, etc.) needed to evaluate the
performance of the DMO and to those that allow them to have a better

Fig. 1. The Co-Creation Theatre. Source: Our elaboration from Prahalad and
Ramaswamy (2004a) and Ramaswamy and Gouillart (2010).
86 GIUSEPPE MELIS ET AL.

knowledge about the different stakeholders working within the


destination;
− Transparency (T) of information and documents that can allow each
actor to be able to feel ‘safe’ with respect to the work of others;
− The evaluation of the benefits and costs arising from the support (R)
given to run the macro-marketing activities at the destination level.
The co-creation phenomena in a tourism destination (Co-C) can be con-
sidered as being a function of the variables considered in Prahalad &
Ramaswamy (2004a) and Ramaswamy and Gouillart (2010), thus resulting
in the following expression:
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Co-C = f ðD; A; R; T; EM; EP; NR; CIÞ

Further research is needed to define for each of these variables/


constructs a specific set of items to be used to carry out empirical research
aimed at testing the conceptual framework among local stakeholders
working within specific tourism destinations.

CONCLUSION AND IMPLICATIONS

This conceptual discussion applies the theoretical approaches of Prahalad


and Ramaswamy (2004a) and Ramaswamy and Gouillart (2010) in an
attempt to identify a set of constructs that could influence the way local
stakeholders can co-create the tourism offer that the destination as a whole
is able to offer to its market target. In this way, the contribution of this
chapter is placed on the development of a possible empirical application of
the DART to analyse the co-creation paradigm by adopting a supply-side
perspective, which is still a quite non-common approach in tourism
literature.
Once empirically tested, our model could suggest relevant managerial
implications. Indeed, based on that policy makers and destination market-
ers could identify what are the main constructs that the local stakeholders
are considering as being more important to enhance the co-creation and
co-innovation ability at the destination as a whole.
As a consequence, policy makers and destination marketers could better
understand if the resources invested for the tourism development chan-
nelled correctly and/or if they should differently prioritize in an attempt to
increase the destination competitiveness. Perhaps more investment needs to
Conceptualizing the Value Co-Creation Challenge 87

be placed on developing awareness of and encouraging cooperation, colla-


boration and dialogue among the various systemic actors, rather than
directing attention to the construction of adequate and appropriate ‘plat-
forms of contact’ between them. Or, perhaps more attention needs to be
given to the reorganization of processes to encourage better and more
effective and transparent flow of relevant information, or even on adequate
information campaigns aimed to change the perception of risk on the part
of individuals to induce them to be more cooperative in the construction
and implementation of the strategies defined by the DMO.
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