Value Co-Creation With IoT in Retail

JOURNAL OF MARKETING MANAGEMENT, 2017
VOL. 33, NOS. 1–2, 7–31

http://dx.doi.org/10.1080/0267257X.2016.1217914
Value co-creation with Internet of things technology in the

retail industry
M. S. Balajia and Sanjit Kumar Royb
a
Marketing, Nottingham University Business School China, University of Nottingham Ningbo China,
Ningbo, China; bUWA Business School, The University of Western Australia, Perth, Australia
ABSTRACT ARTICLE HISTORY

Internet of things (IoT) is a novel paradigm that aims to bridge the Received 14 February 2016
digital world with the real world. With the rapid advancements in Accepted 17 July 2016
Internet and communication technology, we are witnessing the KEYWORDS
dawn of a new era of the IoT in various industries. The retail Internet of things; value
industry is at the forefront in embracing the IoT, which is expected co-creation; service-
to change the way customers experience shopping. Drawing on dominant logic; retail;
the service-dominant logic, this study proposes that customer continuance intentions; PLS
interaction with IoT retail technology results in value co-creation. path modelling
Responses are collected from 289 users of IoT technology in the
retail setting. Results of partial least square (PLS) structural equa-
tion modelling reveals that ease of use, superior functionality,
aesthetic appeal and presence are key determinants of value
co-creation for IoT retail technology. Results also show that value
co-creation influences customers’ continuance intentions and
word-of-mouth intentions. The findings of this study have key
implications for retailers in delivering superior customer experi-
ence. The limitations and future research directions are discussed.
1. Introduction
With the rapid advancements in information technology (IT) in the last decade, the Internet of
things (IoT) is becoming increasingly conspicuous in our daily life. While the definition of IoT is
still in its formation stages, it is generally agreed that IoT is a paradigm where everyday things
or objects are embedded with technology that equips them with sensing, identifying,
networking and processing capabilities which enable them to communicate with other
devices and services over the Internet to accomplish objectives (Whitmore, Agarwal, & Xu,
2015). It is not a single novel technology, but rather a set of several complementary
technologies with capabilities that bridge the gap between the real and the virtual world
(Hoffman & Novak, 2015). IoT is identified as one of the top strategic technology trends that
are expected to shape business opportunities through 2020 (Gartner, 2015). Similarly,
McKinsey predict that there will be 30 million IoT objects by 2020, which will have a
potential impact of US$11 trillion per year by 2025 (Manyika & Chui, 2015). Given the
potential of IoT to open up new opportunities and business perspectives, it is receiving
CONTACT Sanjit Kumar Roy sanjit.roy@uwa.edu.au Department of Marketing, The University of Western
Australia, 35 Stirling Highway, Crawley, Perth 6009, Australia
© 2016 Westburn Publishers Ltd.
8 M. S. BALAJI AND S. K. ROY
wide attention from researchers, practitioners, the mainstream media and the public in the
recent past.
While the fields of application for IoT technology are numerous, one of the most
prominent areas of its application includes the retail industry (Pantano & Timmermans,
2014). The concept of IoT in the retail setting consists of smart networked objects that
are tagged with unique object identifiers such as Radio-frequency Identification (RFID) or
Quick Response codes that can identify and provide information through smart devices.
For instance, Dohle (the German grocery retailer) uses smart shopping carts that can
provide information related to products in the store. It can retrieve and store
information in real time, answer queries and enable checkout without waiting in the
line. A jewellery retailer, BaubleBar, uses interactive displays with sensors and unique
identifiers to provide additional information about its products. Thus, retailers can
develop a vastly improved retail ecosystem with IoT technology that allows for real-
time and bidirectional interaction with customers. Moreover, IoT retail technology can
assist consumers in the decision-making process and contribute to their overall
shopping experience (Chen, 2014; Gregory, 2015). A recent report by Juniper Research
predicts that much of the investments in the IoT retail setting will be directed at catering
to the needs and preferences of individual customers (Girish, 2016). Despite this, limited
empirical work has addressed customer evaluation of IoT technology in general,
specifically in the retail context. For example, Gao and Bai (2014) contend that little
research has been conducted to understand customer perception of IoT technology.
Madhani (2015) highlights the dearth of literature regarding the customers’ perception
of IoT technology in the retail industry. Finally, Evanschitzky, Iyer, Pillai, Kenning and
Schütte (2015) report that further research is needed to understand the factors that
determine customer acceptance of IoT technology.
The S-D logic (Vargo & Lusch, 2008) suggests that value is co-created with customers and
this co-creation determines how they experience the service. Given the highly interactive
nature of IoT technology, the S-D logic can be more appropriate than traditional perspectives
in assessing the customer experience with the IoT retail technology. Value co-creation takes
place when customers interact with IoT technology during retail shopping, which can
motivate its adoption and continued use (Vargo & Lusch, 2016). Extant research on the IoT
retail technology has largely ignored this phenomenon. For example, Al-Kassab, Blome,
Wolfram, Thiesse, and Fleisch (2011) present a case study on the potential of RFID
technology for retail companies in improving category management, store layout and
inventory control. Pantano and Timmermans (2014) discuss the features of IoT technology
in the retail context. Other researchers have used technology acceptance models to identify
the factors that determine customer acceptance of IoT retail technology (Huang & Liao, 2014;
Pantano & Servidio, 2012; Tsai, Lee, & Wu, 2010). While the above research works provide
some understanding of IoT adoption drivers, IoT architecture and IoT business model, there is
a need for a systematic research on IoT retail technology from the customers’ perspective
(Huang & Liao, 2014; Pantano & Servidio, 2012). Moreover, given the increasingly important
role of technology in facilitating value co-creation, several researchers have suggested
examination of customer value from a technology viewpoint (Breidbach & Maglio, 2016).
Thus, the present study contributes to the theoretical body of knowledge in marketing and
retail management by investigating IoT retail technology from the customers’ perspective.
More specifically, this study addresses an important literature gap by developing a
JOURNAL OF MARKETING MANAGEMENT 9
parsimonious model that explains the antecedents and consequences of value co-creation
with IoT retail technology in the business-to-consumer (B2C) context based on the S-D logic.
Consequently, this study aims to address the following research objectives:
(1) Examine the concept of customer value co-creation with IoT retail technology;
(2) examine the antecedents and consequences of value co-creation with IoT retail
technology in B2C context.
While IoT technology offers retailers opportunities in three critical areas, namely supply
chain and logistics, new channels and revenue management and customer experience
(Gregory, 2015), much focus has been on the first two areas (Dai & Gao, 2014; Ding, 2013;
Farooq, Waseem, Mazhar, Khairi, & Kamal, 2015), with little attention paid to the customer
experience with IoT technology. This study draws on the S-D logic to explore customer
interaction and value co-creation with IoT retail technology in the B2C context. Furthermore,
this study addresses the recent call for research on understanding interactive technology in
retail strategy (Varadarajan et al., 2010). For retail managers, this empirical study provides a
more thorough understanding of the customer perception of IoT technology and could help
them to learn more about how IoT technology creates value for customers. This could also
aid them in developing effective strategies to attract new customers and encourage current
shoppers to continue using IoT retail technologies.
The rest of the article is structured as follows. The paper first assesses the current
literature on IoT technology in the retail industry and on S-D logic. Next, the research
model and related hypotheses are presented, followed by the methodology and results.
Finally, we highlight several theoretical and managerial implications and discuss
limitations and suggestions for future research.
2. Theoretical background
2.1. The IoT
IoT, projected as the foundation of Industry 4.0., is a sophisticated network of objects and
things connected through the Internet. It allows ‘interconnectedness among devices –
anytime, anywhere on the planet – providing the Internet’s advantages in all aspects of
daily life’ (Want, Schilit, & Jenson, 2015, p. 28). Some of the key characteristics of IoT
technology include self-awareness, control, flexibility, transformability, synergy, individuality,
self-decisiveness, interconnectivity and strategic behaviour (Atzori, Iera, & Morabito, 2010;
Gubbi, Buyya, Marusic, & Palaniswami, 2013). In other words, IoT is characterised by being
Internet-oriented, object-oriented and semantic-oriented (Yang, Yang, & Plotnick, 2013). The
autonomous communications between the IoT devices or things are expected to result in
higher efficiency, privacy, convenience, security and high-quality decision-making (Weinberg,
Milne, Andonova, & Hajjat, 2015). IoT system can capture real-time data through the use of
digital objects or devices, integration of the data and allowing stakeholders to make better
operational decisions.
Adopting the ubiquitous interconnectivity offered by IoT is essential to achieving
competitive advantage in almost all of the sectors of the modern economy (Iansiti &
Lakhani, 2014). Höjer and Wangel (2015) argue that ‘the novelty is thus not so much the
individual technologies, products or services but the interconnection and the

synchronization of these and the systems they include, so that they work in concerted
action (p.4)’. With IoT technology, retailers can acquire new capabilities in terms of
monitoring, control, optimisation and autonomy. The data generated from IoT system
can be used to gain newer insights into value creation, better positioning and more
effective communication strategies (Porter & Heppelmann, 2014). It also allows retailers
to evolve their business models and create seamless shopping experiences at each of
the customer touchpoints (Brynjolfsson, Hu, & Rahman, 2013). Thus, retailers can
redefine their value proposition and create superior value for customers. Moreover, it
helps retailers to form new and better relationships with their customers and adopt new
marketing strategies and competencies.
On the customers’ side, IoT will have a tremendous impact on the ways in which
they experience products or services. It expands the opportunities for multiple
interactions between customers and products and services from which customers’
experience emerge (Hoffman & Novak, 2015). IoT can anticipate customer needs
and provide a more comprehensive and specific information tailored to their needs.
By connecting and integrating with other devices and networks, IoT allows
convergence and connectedness which lead to a more seamless and personalised
retail shopping experience for customers (Neuhofer, Buhalis, & Ladkin, 2015). Thus,
IoT can have a profound effect on the two tenets of a business model, i.e. value
proposition and value capture (Iansiti & Lakhani, 2014). It enables firms and
customers to reinvent and reinforce their role in the new service economy by
improving the quality of customers’ overall shopping experience (Pantano &
Timmermans, 2014).
2.2. S-D logic and value co-creation

The S-D logic presented by Vargo and Lusch (2004) offers a new paradigm on markets
and exchange. The S-D logic described by 11 main foundational premises (FP) recognise
that more value can be created by engaging customers through communication and
experiences, rather than only offering a product (Vargo & Lusch, 2016). According to S-D
logic (Grönroos, 2008; Vargo & Lusch, 2008), service is the fundamental basis of
exchange (FP1) and customers are creators or co-creators of value (FP6). By deploying
and integrating resources, firms can support customer interaction resulting in value co-
creation (Vargo & Lusch, 2016). Thus, value co-creation is the value created by the joint
activities of parties involved in direct interaction.
Unlike the premise of goods-dominant logic that value is perceived as the end point of
value chain where goods are changed into money (value-in-exchange) (Ramaswamy,
2009), S-D logic contends that value extends the value chain to include the product or
service usage. Thus, value is perceived as value-in-use since value is no longer determined
by the firm alone but rather customers and firms collaborate or participate in creating value
(FP6). In other words, the value creation process involves an interactive and collaborative
effort between multiple actors and always involving the customer. Vargo and Lusch (2008)
contend that co-created value is determined by customer experiences and interactions
with the firm and others. Many studies have focused on S-D logic and highlight that value
co-creation should be the basis of all marketing activities (Edvardsson, Tronvoll, & Gruber,
2011; Ranjan & Read, 2016; Tynan, McKechnie, & Hartley, 2014). These studies indicate that
customer interaction with the firm and others is the locus of value creation which leads to
customer satisfaction (Grissemann & Stokburger-Sauer, 2012).
In this study, we extend S-D logic and propose that customers co-create value through
their interaction with the IoT technology in the retail setting. Such interactions are available
only for customers shopping with the retailer. Thus, IoT retail technology offers
opportunities for resource integration and this facilitates value co-creation. Specifically,
customers can use IoT technology at the retailer and accept the superior functions offered
by it. This leads to a personalised interaction and enhanced shopping experience. In this
context, IoT retail technology enables customers to actively engage with the retail firm and
participate in independent actions that are favourable for the creation of value-in-use. As
customers typically assess value by comparing the service experience with the
consumption parameter (Strandvik, Holmlund, & Edvardsson, 2012), IoT retail technology
offers the resources that are necessary for customers to co-create value. For example,
customers co-create value through their interactions with the smart shopping carts at retail
stores. As smart shopping carts offer real-time information update, information on product
location in the store and information on related products, the level of customer
participation determines the value created and these results in a more personalised
shopping experience. In this way, IoT retail technology has a direct influence on the way
in which value is created and contributes to the process of value co-creation.
3. Conceptual framework and research hypotheses

Figure 1 depicts the conceptual framework of our study. The framework is based on the
premise that customers co-create value by interacting with IoT retail technology.
Accordingly, the focal element of the research model is PVC. Prior research suggests that
customer experience is the key in generating value perceptions (Grewal, Levy, & Kumar,
2009). Following this, customer experience with IoT retail technology reflected in terms of
ease of use (EU) (Evanschitzky et al., 2015; Gao & Bai, 2014; Pantano & Servidio, 2012),
superior functionality (Huang & Liao, 2014; Tsai et al., 2010), aesthetic appeal (AA) (Bardaki,
Kourouthanassis, & Pramatari, 2012; Lee, Chung, & Jung, 2015) and presence (PR) (Atzori,
Iera, & Morabito, 2010; Huang & Liao, 2014) are considered as determinants of value co-
creation. Moreover, as customer experience is manifested as cognitive, emotional, social and
sensory responses (Bolton, Gustafsson, McColl-Kennedy, Sirianni, & Tse, 2014), the current
study considers the above four factors as antecedents of PVC with IoT retail technology.
Regarding the outcomes, this study examines the influence of PVC on CI and word-of-
mouth intentions (WM) (Evanschitzky et al., 2015). As successful implementation and
realisation of benefits associated with IoT technology depend on its continued use, this
study considers CI and WM as outcomes of PVC. Moreover, as IoT evolves rapidly over
time, there is a need to shift focus from initial adoption to continued use.
As shown in Figure 1, we hypothesise that superior functionality, AA, perceived EU
and PR have a direct effect on PVC. Regarding the outcomes, we hypothesise that PVC
impacts word-of-mouth, both directly and indirectly through CI. In addition, based on
the technology acceptance model (Davis, 1989) and prior literature on IT CI (Hernandez-
Ortega, Serrano-Cinca, & Gomez-Meneses, 2014; Stone & Baker-Eveleth, 2013), perceived
EU is hypothesised to have a direct effect on superior functionality and the latter to have
Antecedents Process Consequences

Superior H2 Continuance
Functionality H1 Intentions
H7
Aesthetic H3
H4 Appeal Perceived
H9
Value
Co-creation
Ease of Use H5
H8 Word-of-
Mouth
H6
Presence Intentions
Control variables
Age, Gender, Education, IoT type, IoT use percentage,
Need for personal interactions, and Technology anxiety
Figure 1. Conceptual framework of the study.
a direct effect on the CI. In the following section, we present a brief literature review to
illustrate the proposed relationships and the research model of this study.
3.1. Antecedents of PVC

Superior functionality is defined as the extent to which IoT technology offers relatively
advanced features and functions and additional benefits over the existing formats of retail
technologies. Based on the previous studies, the advanced functions of IoT technology
include (1) greater accessibility, (2) ubiquitous connectedness, (3) interactivity, (4)
integration into the physical environment, (5) real-time synchronisation, (6) localised and
personalised information using context-awareness, (7) increased support and (8) greater
monitoring (Hoffman & Novak, 2015; Neuhofer et al., 2015; Wünderlich, Wangenheim, &
Bitner, 2013). It is expected that the relative advantage offered by IoT technology with its
advanced functions provides unique and superior customer experience and offers
substantial efficiency and cost gains for customers. Furthermore, the superior functions
and benefits of IoT offer political and economic legitimacy to its adoption. The diffusion of
innovation theory (Rogers, 2003) suggests that the relative advantage of a new technology
is related to the customers’ belief that it offers greater benefits and value. When shoppers
evaluate IoT technology as offering superior performance, they are more likely to trust it and
perceive it as offering high-quality services. This leads to a favourable evaluation and
adoption of IoT retail technology.
Tsai et al. (2010) show that relative advantage positively influences customers’
adoption intentions of RFID technology in retail stores. So and Sun (2010) propose that
relative advantage is one of the positive factors affecting RFID technology adoption in the
retail context. Similarly, Ferreira, da Rocha, and da Silva (2014) show that the relative
advantage offered by electronic book readers affects customers’ perception of its
usefulness and their attitude towards its adoption. More recently, Lu, Tzeng, Cheng, and
Hsu (2014) found that relative advantage determines the behavioural intentions and
actual usage of mobile banking services. Thus, we propose that superior functionality
represents an attractive attribute of IoT retail technology, and customer interaction with it
is likely to create a superior customer value determining their CI. In the light of the above
discussion, the following hypotheses are developed:
H1. Perceived superior functionality of IoT positively influences perceived value

co-creation using the IoT.
H2. Perceived superior functionality of IoT positively influences continuance intentions

of IoT.
AA refers to the overall impressiveness of IoT technology and is closely related to the
emotional aspect of customer experience. It is defined as the extent to which customers
interpret IoT technology as attractive and appealing (Harris & Goode, 2010). Prior
research suggests that customers respond to products based on their visual appeal
and aesthetics. Extant literature indicates that visual attributes attract customers and
motivate them to buy the product (Moon, Park, & Kim, 2015; Truong, Klink, Fort-Rioche,
& Athaide, 2014). Product aesthetics plays a critical role in product success (Liu, 2003). In
addition, the AA of products can influence customers’ perception of innovativeness
which leads to favourable psychological and behavioural responses towards products.
In the context of new technology adoption, Al-Qeisi, Dennis, Alamanos, and
Jayawardhena (2014) show that aesthetic quality enhances customers’ perception of
website quality and favourably affects their behavioural intention. Sauer and Sonderegger
(2011) find that customers perceive greater usability for products with high levels of AA.
Similarly, Sheng and Teo (2012) find that aesthetics has the greatest impact on customer
experience with mobile services. In the retail context, Lee et al. (2015) find that the aesthetic
quality of IoT technology (augmented reality) has a significant impact on customers’
acceptance and behavioural intentions. Thus, we propose that AA might motivate
customers to respond more positively towards IoT technology. This favourable response
may manifest in terms of customers viewing the IoT as more valuable and appealing. This
results in greater inclination to interact with IoT and thus co-create value. Based on the above
discussion, the following hypothesis is proposed:
H3: Perceived aesthetic appeal of IoT positively influences perceived value co-creation
using the IoT.
The technology acceptance model (Davis, 1989) suggests that EU influences acceptance of
new technology. EU refers to the extent to which a person believes that the use of new
technology is easy and free from effort (Davis, 1989). Thus, we define EU as the degree of
customers’ subjective belief that IoT technology would not require significant physical and
psychological effort. Prior research suggests that customer motivation to try new things
depends on the output/input ratio (Chiu, Lin, Sun, & Hsu, 2009). In other words, if the
expected effort towards using a technology is compensated by the extended gains from
it, then customers are motivated to use the new technology. Furthermore, perceived EU
enhances comprehension and this leads to greater confidence in the usability of a new
product (Molina-Castillo, Lopez-Nicolas, & Soto-Acosta, 2012). Therefore, new technology
that is easy to use and less complex is likely to be perceived as high in functionality and
this is likely to translate into greater intentions to try and adopt the new product.
In the context of new technology acceptance, several empirical studies have found a
significant effect of perceived EU on perceived usefulness and attitude towards new
technology. For instance, Venkatesh and Davis (2000) show that perceived EU has a
positive impact on perceived usefulness and intention to use the new system. Porter
and Donthu (2006) tested an extended model of technology acceptance and found that
consumer demographics, age and education positively influence perceived EU, and this
in turn affects perceived usefulness and attitude towards the Internet. In the retail
context, Evanschitzky et al. (2015) shows that perceived ease of using IoT retail
technology has a significant impact on customers’ intentions to use it in future. Thus,
we propose that when customers perceive IoT technology as easy to use and less
complex, they are more likely to interact with it, explore the benefits it offers and
thus co-create value. Thus, the following hypotheses are proposed:
H4: Perceived ease of use of IoT positively influences customers’ perception of the
superior functionality of IoT.
H5: Perceived ease of use of IoT positively influences perceived value co-creation using
the IoT.
PR is defined as the ability of IoT to engage or involve customers in the technology

environment. In other words, customers get immersed and become a part of the
experience itself. Customers might perceive IoT technology as impersonal and
anonymous and view them as lacking warmth and sociability. This may adversely
affect their intentions to adopt and interact with IoT. On the contrary, customers’
perception of PR might engage customers both cognitively and socially and this may
lead to increased trust and acceptance. For instance, Gefen and Straub (2003) show that
PR positively influences trust and intentions to purchase. Similarly, Hassanein and Head
(2007) find that perceived social PR enhances trust, enjoyment and usefulness and this
leads to a positive attitude towards the website. More recently, Ogonowski, Montandon,
Botha, and Reyneke (2014) show that the perceived social PR increases initial trust in
new online stores. These studies indicate that PR increases customer trust in IoT which
increases customers’ likelihood to interact and co-create value. Thus, we propose that
H6: Perceived presence positively influences perceived value co-creation using the IoT.
3.2. Consequences of PVC

The extent to which customers engage with IoT retail technology has implications for
value-in-use. Payne, Storbacka, Frow, and Knox (2009) contend that the value co-creation
process allows customers to gain a better understanding of the services offered by the
firm. Based on this, we argue that customers engage with IoT as a result of their learning
process and their construal of the value co-creation process. Moreover, customers develop
a sense of empowerment which influences their intentions to use the IoT (Zwass, 2010).
This is consistent with propositions in the marketing literature which state that customer’s
perception of value will have a positive relationship with their intention to use the service
in future (Mencarelli & Rivière, 2014; Parasuraman & Grewal, 2000). Prior literature suggests
that perceived value of co-creation leads to repeat purchase behaviour and behavioural
intentions (Grissemann & Stokburger-Sauer, 2012; Sweeney, Danaher, & McColl-Kennedy,
2015). In the context of IoT technology, it is argued that customers have immense
opportunities for value co-creation which is proposed to have a positive association
with customer’s behavioural responses (See-To & Ho, 2014; Wünderlich et al., 2013).
Word-of-mouth has been extensively studied in marketing research and remains a
topic of continued research interests (Chawdhary & Dall’Olmo Riley, 2015; Cheema &
Kaikati, 2010). There is a general agreement that if customers feel comfortable in their
relationships with the service firms, they are expected to engage in word-of-mouth
activity (Shin, Song, & Biswas, 2014). It is argued that customers engage in word-of-
mouth activity related to their interaction with IoT if their construal of the PVC is
positive. Based on the above discussion and empirical findings we advance the
following hypotheses:
H7: Perceived value co-creation using the IoT positively influences customers’ continu-
ance intentions for IoT.
H8: Perceived value co-creation using IoT positively influences customers’ word-of-
mouth intentions for IoT.
H9: Continuance intentions of IoT positively influence customers’ word-of-mouth

intentions for IoT.
Past studies suggest that certain demographic, behavioural and psychographic characteristics
of customers can impact key constructs in our study and may confound the relationships we
investigate. Hence, to allow for better delineation of the relationship proposed in our model
and to provide a more rigorous test of the theoretical linkages, we included demographic
variables, such as age, gender, education; behavioural variables, such as percentage of IoT
technology use in retail stores in last 6 months (IoT use percentage); type of IoT retail
technology used and psychographic variables, such as need for personal interaction (NP),
and technology anxiety, as control variables.
4. Research methods
4.1. Measurement instrument
The constructs in this study are measured using validated items from previous studies (see
Appendix). For example, PVC is measured with three items adapted from Gupta and Kim
(2010) that reflect the customer perception of value co-created with IoT retail technology
as ‘worthwhile’, ‘value’ and ‘good deal’. All scales are anchored in seven points, ranging
from 1 = ‘strongly disagree’ to 7 = ‘strongly agree’. The survey instrument also included a
behavioural section, with items reflecting the type of IoT retail technology used, the
percentage of the number of times the respondent has used IoT technology in his
shopping trips in the last 6 months, frequency of shopping and type of retail store most
frequently visited. The questionnaire concluded with a demographic section which
included items such as gender, age and education.
4.2. Instrument administration

A pilot test is conducted with a sample of 30 students who provided feedback on
readability and clarity as well as ease of completion of the questionnaire. Based on
suggestions, the survey instrument was refined to capture accurately the context of IoT
technology in the retail setting along with its associated value co-creation. Upon the
pilot testing, a web-based survey using the data collection software Qualtrics was used
to collect responses from actual retail shoppers in Australia. Because IoT technology in
retail stores is not widespread at the current stage, this study collected data on a wide
range of IoT retail technologies rather than a specific type of IoT technology. A
consumer panel company administered the survey to actual retail shoppers who had
prior experience with IoT retail technology in the last 6 months. Eventually, the sample
consists of 348 respondents, out of which 289 responses are complete and usable. Based
on Soper (2014) sample size calculator, the total number of responses required for
model structure is found to be sufficient (the minimum sample recommended for
structural equation modelling [SEM] with 9 latent variables, 30 observed variables, p-
value of 0.05 and anticipated size effect 0.3 is 156).
4.3. Sample profile

The sample respondents consist of 48.1% males and 51.9% females. Regarding age, 58%
of the sample belongs to the age group of 21–35. Fifty-four per cent had a bachelor’s
degree and 66% of the respondents reported using IoT technology in more than 50% of
their shopping trips in the last 6 months. The respondents are instructed to respond to
the questionnaire based on their most recent experience with an IoT retail technology.
The IoT retail technologies reported by the respondents included point-of-sale smart
displays, smart carts, augmented reality, near field communication systems and smart
checkouts.
4.4. Common method bias

As the data were collected from a single source, common method bias could affect the
relationships between the constructs (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003). The
common method bias was tested using Harman’s one-factor test. The exploratory factor
analysis of all measurement items extracted eight factors explaining 70% of the total
variance. However, the first factor explained only 32% of the total variance. Thus,
common method bias is not a major concern in this study (Podsakoff et al., 2003).
5. Results
SEM using partial least squares (PLS) is used to test the research hypotheses. PLS is a
popular statistical SEM technique used to validate the constructs and measure the
structural relationships among the constructs (Chin, 1998). PLS is better suited for theory
development and requires less stringent sample distribution assumptions. Further, its
premises are less limiting and the sample size requirements are relatively small (Hair,
Sarstedt, Ringle, & Mena, 2012). Because of these reasons, this study uses PLS-SEM with
SmartPLS 3.0 to test the causal relationships proposed in the research model.
5.1. Measurement model

The psychometric properties for the constructs are assessed by examining the convergent
and discriminant validity. As recommended by Fornell and Larcker (1981) and Chin (1998),
factor loadings, composite reliability and average variance extracted (AVE) are used to
examine the convergent validity. For satisfactory convergent validity of a measurement
model, the factor loading of indicators should be statistically significant and exceed 0.7, the
composite reliability of each construct should exceed 0.7, and AVE from each construct
should exceed 0.5 (Bagozzi & Yi, 1988; Chin, 1998). As shown in Table 1, the factor loadings
of the measurement items for each construct exceeded 0.7 (except for NP1 on need for
personal interaction) and are significant at p < 0.01. The composite reliabilities of each
construct exceeded 0.7, with the values ranging from 0.82 for need for personal interaction
to 0.93 for superior functionality. The AVE exceeded 0.5, with the values ranging from 0.60
to 0.82. This indicates that the proposed measurement model demonstrated adequate
internal consistency as the aforementioned criteria for convergent validity are met. The
Cronbach’s alpha for each construct exceeded the recommended level 0.70 (Nunnally,
1978), with the value ranging from 0.72 to 0.90. This demonstrates that each construct in
the measurement model exhibited strong internal reliability.
For discriminant validity, the indicators should load more strongly on the underlying
construct than others in the research model. Discriminant validity is established when
the square root of the AVE of each construct is larger than the correlation it shares with
other constructs in the research model (Fornell & Larcker, 1981). As shown in Table 2, the
requirements are met by all constructs, and this indicates adequate discriminant validity
for the constructs.
5.2. Structural model

The structural model is assessed by examining the path coefficients, t-value and variance
explained (R2). Bootstrap resampling with 298 cases and 5000 resamples (Hair, Ringle, &
Sarstedt, 2011) is used to determine the path significances.
The R2 value of the perceived value of co-creation (0.42) shows the amount of
variance explained by superior functionality, AA, EU and PR in PVC with IoT retail
technology. In addition, the R2 value for CI (0.67) reveals the variance explained by
PVC and superior functionality, and the R2 value for WM (0.34) reveals the variance
explained by PVC and CI. The R2 values for PVC, CI and WM exceeded the recommended
cut-off value of 0.30 (Gefen & Straub, 2005), which indicates good explanatory power of
the model.
The results of the structural model for hypotheses testing are presented in Figure 2.
As shown in Table 3, both psychographic variables needed for personal interaction
(β = −0.08, p < 0.10) and technology anxiety (β = −0.15, p < 0.01) have significant
Table 1. Measurement model results.

Construct and Cronbach’s Composite Average variance
items Factor loading t-Value alpha reliability extracted
PVC
PVC1 0.84 26.42
PVC2 0.88 45.33 0.83 0.89 0.68
PVC3 0.89 59.32
SF
SF1 0.71 13.99
SF2 0.89 57.42 0.90 0.93 0.77
SF3 0.89 57.23
SF4 0.87 45.66
AA
AA1 0.92 60.18
AA2 0.91 51.75 0.89 0.93 0.82
AA3 0.89 48.14
EU
EU1 0.83 28.01
EU2 0.91 54.62 0.90 0.93 0.76
EU3 0.89 42.71
EU4 0.87 46.73
PR
PR1 0.70 9.97
PR2 0.86 29.10 0.72 0.84 0.63
PR3 0.82 21.18
CI
CI1 0.77 24.87
CI2 0.88 51.73 0.89 0.92 0.75
CI3 0.90 47.22
CI4 0.92 73.26
WM
WM1 0.85 41.81
WM2 0.73 15.66 0.77 0.86 0.67
WM3 0.87 34.29
NP
NP1 0.63 7.16
NP2 0.93 34.67 0.73 0.82 0.60
NP3 0.75 9.56
TA
TA1 0.82 19.96
TA2 0.78 17.43 0.75 0.85 0.66
TA3 0.84 26.94
PVC: perceived value co-creation; SF: superior functionality; AA: aesthetic appeal; EU: ease of use; PR: presence;
CI: continuance intentions; WM: word-of-mouth intentions; NP: need for personal interaction; TA: technology anxiety.
impact on CI. The demographic variables of age (β = 0.02, p = 0.98), gender (β = 0.01,
p = 0.99), behavioural variable of IoT use (β = −0.04, p = 0.28) and IoT type (β = 0.01,
p = 0.82) did not significantly influence CI. Education (β = 0.09, p < 0.05) was observed to
have a direct positive effect on CI.
The path coefficients from superior functionality to PVC (β = 0.24, p < 0.01) and from
superior functionality to CI (β = 0.67, p < 0.01) are significant, which supports H1 and H2.
Supporting H3, the path from AA to PVC (β = 0.13, p < 0.05) is significant. H4 and H5 are
supported as EU has a significant influence on superior functionality (β = 0.50, p < 0.01)
and PVC (β = 0.36, p < 0.01). H6 is supported as PR has a significant positive impact on
PVC (β = 0.15, p < 0.01). The path from PVC to CI (β = 0.13, p < 0.01) is significant,
providing support for H7. H8 is not supported as the path from the PVC and WM is not
Table 2. Discriminant validity results.
Age GEN EDU IoT type IoT use NP TA PVC SF AA EU PR CI WM
Age 1.00
GEN 0.06 1.00
EDU 0.43** 0.12* 1.00
IoT type 0.19** −0.02 −0.06 1.00
IoT use 0.06 0.01 −0.02 0.05 1.00
NP 0.07 −0.10 0.08 −0.01 −0.25** 0.78
TA 0.04 −0.11 0.04 0.04 −0.15* 0.09 0.81
PVC 0.01 0.00 0.04 −0.01 0.28** −0.21** −0.36** 0.87
SF 0.03 0.04 −0.08 −0.04 0.48** −0.30** −0.28** 0.46** 0.82
AA 0.01 0.19** 0.06 −0.02 0.10 −0.09 −0.36** 0.34** 0.28** 0.91
EU −0.01 −0.01 −0.05 −0.09 0.21** −0.26** −0.18** 0.52** 0.41** 0.13* 0.87
PR 0.03 0.07 0.10 0.04 0.15** −0.11* −0.36** 0.37** 0.35** 0.60** 0.15* 0.80
CI 0.08 0.07 0.03 −0.03 0.36** −0.30** −0.39** 0.54** 0.72** 0.44** 0.34** 0.47** 0.87
WM 0.11 0.01 0.11 −0.05 0.14* −0.16** −0.28** 0.34** 0.40** 0.28** 0.35** 0.38** 0.52** 0.82
MN 62.25 4.41 3.00 4.84 5.48 4.63 5.46 4.23 5.25 4.46
SD 23.58 1.07 0.83 1.11 1.02 1.12 1.01 1.04 1.04 1.08
GEN: Gender; EDU: education level; IoT use: percent of IoT technology used in shopping trips in last 6 months; IoT type: type of IoT retail technology used; NP: need for personal interaction;
TA: technology anxiety; PVC: perceived value co-creation; SF: superior functionality; AA: aesthetic appeal; EU: ease of use; PR: presence; CU: intentions to continue use; WM: word-of-mouth
intentions; MN: mean; SD: standard deviation.
Diagonal values in bold represent square root of AVE.
*p < 0.05, **p < 0.01.
JOURNAL OF MARKETING MANAGEMENT
19
R2=0.25 R2=0.67
Superior 0.67**
Functionality Continuance
0.
0.50**
Intentions
24
**
Aesthetic
*
0.
13
13 R2=0.42
Appeal
0.
*
0.53**
Perceived
0.36** Value
Ease of Use Co-creation 0.
* 08
15
0. ns Word-of-
Presence mouth
Intentions
R2=0.34
Figure 2. Structural model results (*p < 0.05, **p < 0.01, ns – not significant).
Table 3. Results of hypotheses testing.

Hypotheses Relationship Path coefficient t-Value p Value Validation
Control variables
Age → CI 0.02 0.46 0.98
Gender → CI 0.01 0.02 0.99
Education → CI 0.09 2.02 <0.05
IoT use → CI −0.04 1.09 0.28
IoT type → CI 0.01 0.23 0.82
NP → CI −0.08 1.85 <0.10
TA → CI −0.15 3.14 <0.01
Hypothesised relationships
H1 SF → PVC 0.24 4.19 <0.01 Supported
H2 SF → CI 0.67 12.39 <0.01 Supported
H3 AA → PVC 0.13 1.97 <0.05 Supported
H4 EU → SF 0.50 9.48 <0.01 Supported
H5 EU → PVC 0.36 6.15 <0.01 Supported
H6 PR → PVC 0.15 2.74 <0.01 Supported
H7 PVC → CI 0.13 2.30 <0.05 Supported
H8 PVC → WM 0.08 1.28 0.20 Not supported
H9 CI → WM 0.53 10.17 <0.01 Supported
significant. However, H9 is supported as the path from CI has a significant impact on WM

(β = 0.53, p < 0.01).
Table 4 illustrates the contribution of R2 value by each exogenous variable in
predicting PVC using IoT (Tenenhaus, Vinzi, Chatelin, & Lauro, 2005). For perceived
value of co-creation, ease of use is the most important variable (47.11%), followed by
superior functionality (27.78%). Presence and aesthetic value contribute 13.99% and
11.12%, respectively, in predicting PVC.
The blindfolding results are presented in Table 5. The cross-validated communalities
2
(H ) for all constructs are higher than the threshold level of 0 (Fornell & Cha, 1994). The
cross-validated redundancies (F2) for perceived value of co-creation, CI and WM have
relatively high values. This suggests the model’s sufficiency in predicting the exogenous
variables. Further, the research model had a goodness of fit (GoF) index of 0.45, which
exceeded the threshold value of 0.36 (Wetzels, Odekerken-Schröder, & Van Oppen,
2009). This indicates a good fit and an accepted level of predictive relevance.
Table 4. Explanation of perceived value co-creation.

Construct Path coefficient Correlation Contribution to R2 (%)
Superior functionality 0.24** 0.46** 27.78
Aesthetic appeal 0.13* 0.34** 11.12
Ease of use 0.36** 0.52** 47.11
Presence 0.15** 0.37** 13.99
*p < 0.05, **p < 0.01.
Table 5. Redundancy, communality and GOF results.

R2 CV- communality (H2) CV redundancy (F2)
PVC 0.42 0.50 0.30
SF 0.25 0.47 0.19
AA 0.62
EU 0.59
PR 0.27
CI 0.67 0.58 0.50
WM 0.34 0.34 0.20
Average 0.42 0.48 0.30
GOF 0.45
CV: Cross validated; PVC: perceived value co-creation; SF: superior functionality;
AA: aesthetic appeal; EU: ease of use; PR: presence; CI: continuance intentions;
WM: word-of-mouth intentions.
5.3. Mediation analysis

Post-hoc analysis was carried out to examine the mediating role of PVC and CI. We used
Preacher and Hayes (2008) method to test mediation. Results show that PVC partially
mediates the relationship between AA and CI (AA → CI: β = 0.23, p < 0.01;
AA → PVC → CI: indirect effect = 0.07, bias corrected intervals = 0.03, 0.13). With
regard to perceived EU, the results show that PVC fully mediates the ease-of-use effect
on CI (EU → CI: β = 0.04, p = 0.50; AA → PVC → CI: indirect effect = 0.16, bias corrected
intervals = 0.09, 0.25).
Superior functionality partially mediates the relationship between perceived EU and
PVC (EU → CI: β = 0.42, p < 0.01; AA → PVC → CI: indirect effect = 0.06, bias corrected
intervals = 0.02, 0.13). Similarly, PVC was found to partially mediate the relationship
between PR and CI (PR → CI: β = 0.26, p < 0.01; PR → PVC → CI: indirect effect = 0.07,
bias corrected intervals = 0.03, 0.12). Finally, CI fully mediate the relationship between
PVC and WM (PCV → WM: β = 0.09, p = 0.13; PCV → intentions to continue use → WM:
indirect effect = 0.25, bias corrected intervals = 0.17, 0.33).
6. Discussion and conclusion

This study aims to develop and validate a conceptual model explaining the
antecedents and consequences of PVC for IoT retail technology. Drawing on the
S-D logic, this study develops and empirically tests a research model that explains
the role of customer experience attributes of superior functionality, AA, EU and PR as
predictors of PVC. Further, the effects of value co-creation on CI and word-of-mouth
are explored.
6.1. Summary of results

The results show that the proposed research model exhibits a good explanatory power
to predict PVC, CI and WM. The study findings provide a strong support for the proposed
causal relationships except for H8, i.e. the relationship between PVC and WM.
Firstly, the four experience characteristics are found to be significant in predicting PVC.
Specifically, EU (47.11%) is found to be more important in predicting PVC, followed by
superior functionality (27.78%), PR (13.99%) and AA (11.12%). One possible explanation is
the increasing frustration and difficulty customers face in understanding, comprehending
and coping with IoT technologies (Bhattacharya, 2015). A report on retail customer
experience reveals that 93% of customers are frustrated with retail technologies
(Boccaccio, 2014). Another report finds that 84% of customers needed staff assistance
using new technologies in retail stores (Gaglirodi, 2013). This finding corroborates with
above reports and suggests that the greater the ease with which customers can use an IoT
technology for shopping tasks, the more positive value they can co-create with it.
Similarly, superior functionality is found to be a significant predictor of PVC and CI. This
finding underscores the importance of delivering superior value proposition to customers
in successful adoption and continuance of IoT in retail stores. That is, the degree to which
IoT technologies offer added value of a service compared to existing retail technologies
allows customers to have a superior shopping experience. This leads to greater perceived
level of usefulness, which in turn creates customer value and influence CI. The significant
effect of AA of IoT on PVC is remarkably meaningful as prior research suggests that
aesthetic experience can induce positive beliefs towards the technology (Li & Yeh, 2010).
Findings of this study show that the visual appeal and entertainment aspects of IoT allow
greater immersion and participation of customers in the enhanced retail environment. This
differentiated aesthetic experience through IoT offers superior customer value.
Second, PVC has a significant impact on CI (β = 0.13) but not on WM (β = 0.08).
However, post-hoc analysis reveals that CI mediate the relationship between PVC and WM.
Therefore, a possible explanation is that customers’ future use is important in fostering
trust and connection to IoT. This, in turn, motivates customers to engage in word-of-
mouth communication about IoT to others. Finally, regarding the control variables, both
psychographic variables needed for personal interaction and technology anxiety are
negatively associated with CI. This finding indicates that customers with a higher need
for personal interaction and technology anxiety are less likely to use IoT in the future.
Similarly, education was found to be the significant demographic predictor of CI.
Customers reporting higher levels of education reported greater CI with IoT in the future.
6.2. Implications for theory

The results from this study contribute to the body of knowledge in several ways. First, this
study departs from the previous studies on IoT technology, which are predominantly
conceptual (Gubbi et al., 2013; Kortuem, Kawsar, Fitton, & Sundramoorthy, 2010) and
qualitative (Balta-Ozkan, Davidson, Bicket, & Whitmarsh, 2013) in nature. Despite its
increasing popularity, empirical inquiry into IoT is still in its infancy. Even though there
are research studies dealing with IoT architecture, security and privacy, few of them
regarded IoT from a comprehensive perspective of customers. Therefore, the present
study addresses this gap in the literature by empirically examining the customer
perception of IoT retail technology. Moreover, it answers the call for further studies
exploring IoT retail technology.
Second, this study develops and validates a research model of customer value co-
creation with IoT retail technology. To our knowledge, our study is one of the first to
apply the S-D logic to understand customers’ PVC with IoT retail technology. This study
extends and validates empirically a parsimonious, yet comprehensive, model that
illustrates how experience characteristics – EU, superior functionality, PR and AA –
influence value co-creation. Thus, this study provides a novel perspective that
addresses customers’ interaction with IoT technology during retail shopping. As such,
this research addressed a critical gap in the current body of knowledge – that of lack of
empirical research in value co-creation for IoT technology.
Third, the investigation of technology acceptance and information systems continuance
has a long history. This study addresses a key theoretical gap in the marketing and
information systems literature by examining the customers’ CI of IoT retail technology.
Even though an increasing number of IoT technologies have been introduced in retail
stores in the recent past (Wuenderlich et al., 2015; Wünderlich et al., 2013), empirical
research on IoT is, to some extent, limited. Few studies that have been reported in the
literature have either been conceptual in nature (Bhattacharya, 2015) or they examined the
initial trail or acceptance (Hwang & Good, 2014; Renko & Druzijanic, 2014). As IoT, an
emerging technology, is expected to have a wider penetration in future, there is a
pressing need to understand the impact of IoT technology on consumers’ decision-
making (Lin, Wu, & Cheng, 2015). Thus, the investigation of CI can provide insights for
managers on how to accelerate consumers’ adoption and continuance decisions of IoT retail
technology. Moreover, prior literature suggests that factors contributing to initial adoption
are distinct from those determining CI (Evanschitzky et al., 2015). Thus, the present study
attempts to fill these research gaps by developing and empirically examining a research
model of CI of IoT retail technology.
Fourth, this study focused on the relationships among IoT experience, value co-creation,
CI and WM. By examining the role of value co-creation in linking experience characteristics
with CI, this study offers insights into the process by which IoT forms the basis of customer
value. Fifth, this research extends prior literature through examination of relevant, yet
unexplored antecedents of PVC. For example, superior functionality, though pertinent to
technology acceptance and CI, has not attracted much attention in IoT technology
(Choudhury & Karahanna, 2008; Kim & Shin, 2015). Similarly, while AA and PR have been
proposed as important for understanding customer experience with IoT technologies (Shin,
2012; Wünderlich et al., 2013), these constructs have not received explicit focus in
understanding value co-creation and CI for IoT. Finally, researchers call for greater
attention to the understanding of service innovations (Toivonen & Tuominen, 2009; Witell
et al., 2015). In summary, the study results would help retailers develop effective strategies
to enhance value and encourage continuous use of IoT retail technology.
6.3. Managerial implications

Technological advances have allowed retail firms to use new ways of interaction with
customers in the promotion and enhancement of value in order to engage with them
continuously. This research has examined the factors that determine value co-creation and
CI for IoT retail technology. More importantly, as technology allows traditional retailers to
level their playing field with online retailers, IoT can offer superior shopping experience
and contribute to greater customer value. Further, it has been shown that IoT creates
value for customers and that such enhanced value contributes to CI. When it comes to
value co-creation for IoT, consumers’ perception of EU has the greatest effect. Thus, retail
stores should pay attention to adopting IoT technologies that are user-friendly and easy-
to-use. IoT technologies that are simple and possess practical features can reduce
customer frustration and discomfort as well as improve their functionality to efficiently
meet the needs of retail shoppers. The findings of this study also show that superior
functionality plays a key role in creating value for IoT retail technology. Specifically, the IoT
technologies should be able to improve customers’ shopping effectiveness. Development
of such IoT technologies requires increased focus on customer testing and on aligning the
performance of IoT technologies with customer expectations. Regarding AA and PR, the
study findings show that retailers can gratify customers’ senses and immersion with IoT
and thereby enhance the value offered to the customers.
6.4. Limitations and future research

The present study has some limitations. First, the study sample consisted of active users
of IoT retail technology. This could lead to self-selection bias. Retail consumers who have
stopped using IoT technology may have different perceptions of value co-creation. Thus,
the present study should be interpreted as only explaining the value co-creation for
current IoT users. Second, this study was conducted in only one country. For this reason,
future research should replicate this study in other contexts to test the applicability of
the research model in other countries. Third, this study adopted the quantitative
research strategy to examine value co-creation and CI of IoT retail technology. Future
research could use focus groups and other qualitative strategies to identify additional
factors that influence consumer value co-creation and CI. Fourth, Wuenderlich et al.
(2015) argues that perceived embeddedness and control are key factors determining
customers’ perception of smart technology. Thus, future research could extend our
research model by examining the role of perceived embeddedness and control in
influencing value co-creation and CI of IoT retail technology. Finally, the present study
controlled for the effects of consumer demographics, behavioural and psychographic
variables in understanding value co-creation and CI for IoT retail technology. Since
individual traits and psychological factors may influence technology adoption (Kim &
Shin, 2015; Pramatari & Theotokis, 2009), future research could examine their role in
value co-creation for IoT.
In conclusion, this research contributes to both marketing researchers and
practitioners by improving the understanding of value co-creation and CI for IoT retail
technology. The findings show that EU, superior functionality, AA and PR determine
customers’ value co-creation, which in turn impacts their CI and WM.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes on contributors
Dr M. S. Balaji is Assistant Professor of Marketing at Nottingham University Business School China.
His research interests include Services Marketing, Relationship Marketing and Social Media. He has
published in Journal of Business Research, Information & Management, Journal of Services Marketing,
Journal of Strategic Marketing, International Journal of Hospitality Management, Service Business,
International Journal of Bank Marketing and Asia Pacific Journal of Marketing and Logistics. He was a
Visiting Research Scholar at Whitman School of Management, Syracuse University, USA.
Dr Sanjit Kumar Roy is Assistant Professor of Marketing, The University of Western Australia, Perth,
Australia. His research interests include Services Marketing and Consumer-Brand Relationships. He
has guest edited a special issue on India for International Journal of Bank Marketing. He has also
co-edited Marketing Cases for Emerging Markets. He has published in a wide range of journals
including European Journal of Marketing, Journal of Business Research, Journal of Marketing
Management, Journal of Strategic Marketing, Journal of Services Marketing, Journal of Brand
Management, International Journal of Bank Marketing, Journal of Global Marketing and Managing
Service Quality. He was a Visiting Research Scholar at Bentley University, USA and Visiting Research
Fellow at Middlesex University, UK.
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Appendix
Perceived value co-creation (PVC) (Gupta & Kim, 2010)

● PVC1. Using [IoT retail technology] for shopping is worthwhile
● PVC2. Using [IoT retail technology] for shopping offers value
● PVC3: Using [IoT retail technology] for shopping is a good deal
Superior functionality (SF) (developed from Orel & Kara, 2014; Wünderlich et al., 2013)
● SF1. [IoT retail technology] offers superior and interactive shopping features
● SF2. [IoT retail technology] is aware and responds to its environment
● SF3. [IoT retail technology] offers real-time product and purchase information
● SF4. [IoT retail technology] allows me to get my shopping done in a short time
Aesthetic appeal (AA) (O’Brien & Cairns, 2015)

● AA1. I think the [IoT retail technology] appeals to my visual senses
● AA2. I think interaction with the [IoT retail technology] is aesthetically appealing
● AA3. Using [IoT retail technology] is visually pleasing
Ease of use (EU) (Venkatesh & Davis, 2000)

● EU1. Interacting with the [IoT retail technology] does not require a lot of my mental effortR
● EU2. I find the [IoT retail technology] to be easy to use
● EU3. My interaction with [IoT retail technology] is clear and understandable
● EU4. It is easy to get the [IoT retail technology] to do what I want it to do.
Presence (PR) (Tang, Biocca, & Lim, 2004)

● PR1. I felt involved when interacting with the [IoT retail technology]
● PR2. I was really drawn into when using the [IoT retail technology]
● PR3. My experience was strong when using the [IoT retail technology]
Continuance intentions (CI) (Gao & Bai, 2014)

● CI1. Given the chance, I intent to continue using the [IoT retail technology] in the future
● CI2. My intentions are to use the [IoT retail technology] in the near future
● CI3. If I could, I would like to continue using [IoT retail technology] in the future
Word-of-mouth intentions (WM) (Chiu, Cheng, Huang, & Chen, 2013)

● WM1. I would like to introduce the [IoT retail technology] to others
● WM2. I will speak favorably about the [IoT retail technology] to others
● WM3. I will tell others positive things about the [IoT retail technology]
Need for personal interaction (NP) (Lee & Yang, 2013)

● NP1. I like interacting with the person who provides the service
● NP2. It bothers me to use machine when I could talk with a person instead
● NP3. Personal attention by the service employee is not very important to meR
● NP4. Human contact in providing services makes the process enjoyable for me
Technology anxiety (TA) (Kokkinou & Cranage, 2015)

● TA1. Technical terms sound like confusing jargon to me
● TA2. I hesitate to use most forms of technology for fear of making a mistake that I cannot correct
● TA3. I use a lot of technologically based products and servicesR
Notes: R: Reverse coded
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Value co-creation with Internet of things technology in the

ABSTRACT ARTICLE HISTORY

individual technologies, products or services but the interconnection and the

2.2. S-D logic and value co-creation

3. Conceptual framework and research hypotheses

Antecedents Process Consequences

Figure 1. Conceptual framework of the study.

3.1. Antecedents of PVC

H1. Perceived superior functionality of IoT positively inﬂuences perceived value

H2. Perceived superior functionality of IoT positively inﬂuences continuance intentions

PR is deﬁned as the ability of IoT to engage or involve customers in the technology

3.2. Consequences of PVC

H9: Continuance intentions of IoT positively inﬂuence customers’ word-of-mouth

4.2. Instrument administration

4.3. Sample proﬁle

4.4. Common method bias

5.1. Measurement model

5.2. Structural model

Table 1. Measurement model results.

Table 3. Results of hypotheses testing.

signiﬁcant. However, H9 is supported as the path from CI has a signiﬁcant impact on WM

Table 4. Explanation of perceived value co-creation.

Table 5. Redundancy, communality and GOF results.

5.3. Mediation analysis

6. Discussion and conclusion

6.1. Summary of results

6.2. Implications for theory

6.3. Managerial implications

6.4. Limitations and future research

Perceived value co-creation (PVC) (Gupta & Kim, 2010)

Aesthetic appeal (AA) (O’Brien & Cairns, 2015)

Ease of use (EU) (Venkatesh & Davis, 2000)

Presence (PR) (Tang, Biocca, & Lim, 2004)

Continuance intentions (CI) (Gao & Bai, 2014)

Word-of-mouth intentions (WM) (Chiu, Cheng, Huang, & Chen, 2013)

Need for personal interaction (NP) (Lee & Yang, 2013)

Technology anxiety (TA) (Kokkinou & Cranage, 2015)

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