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Introduction
A social enterprise is a company whose primary purpose is to alleviate or solve a social problem, and reinvests most of its profits in achieving this goal; thus, economic value represents a means to achieve the greatest possible social impact (Dees & Anderson, 2006; Florin & Schmidt, 2011). The appearance of social enterprises has increased in several emerging economies, including those in Latin America (Cavazos-Arroyo & Puente-Diaz, 2019; Scarlato, 2013). In this region, some of these organizations serve the basic needs of disadvantaged populations and others offer products or services aligned with sustainable development, fair trade and circular economy, focusing on market niches (Nielsen & Carranza, 2012; Renard, 2015). Also, for decades, identifying the aspects that determine customer satisfaction and loyalty have been relevant topics in research because they affect the performance and competitive advantage of various types of organizations (Islam et al., 2021). Although social enterprises focus on satisfying human needs (Defourny & Nyssens, 2013) and creating social value (Dees, 1998; Lashitew et al., 2021); they also need to pay attention to aspects such as customer value, satisfaction and loyalty (Cavazos-Arroyo, & Puente-Díaz, 2021; Liu, Takeda, & Ko, 2014).
Unfortunately, not all organizations achieve customer value creation [CVC] (Mahmoud, Hinson & Anim, 2018). It occurs when clients and companies create value jointly (Prahalad & Ramaswamy, 2004), with the expected positive outcome of clients intending to continue their relationship with the firm. Therefore, it is relevant for the theory and management of social enterprises to explore some antecedents and consequences of CVC. However, CVC research is still incipient (Mahmoud et al., 2018), especially in the field of social firms (Kullak, Baker, & Woratschek, 2021). Zainuddin and Gordon (2020) presented a research agenda recommending assessing value in social marketing services in different contexts, in order to expand our knowledge base. Extending this call to the field of social enterprises, this study has two research objectives. First, we explore the effect of purpose in life on CVC. Second, we examine the influence of CVC on satisfaction and loyalty of customers of social firms that operate in the service industry in Mexico. The findings from this investigation can contribute by increasing our understanding of how social firms operating in the service industry are perceived and how they can generate greater value for the community they serve.
Literature Review
Viktor Frankl (1 959) suggested that having a purpose in life helps promote well-being. Now, it is considered a component of psychological well-being that involves the creation of meaning (Robbins & Francis, 2000) and a higher purpose in life (Sheth, 2017). Purpose comes from within and arises when an individual finds and engages to pursue a meaningful personal goal (Bronk, 2014). This purpose represents a pursuit of a stable goal and a long-range motivating commitment (Damon, 2008). When people are motivated by a purpose in life, they modify their conduct, adjust their resources and focus their efforts to advance in the achievement of the objective(s) with personal meaning (Bronk, 2014; McKnight, & Kash dan, 2009).
Even though consumption in itself can be a purpose in life and could lead to materialism (Duan, 2020; Firat, 1999), having a purpose in life is associated to voluntary simplicity (Gregg, 2003; Zavestoski, 2002) and frugality in consumption (Pepper, Jackson, & Uzzell, 2009). Similarly, consumers who have a purpose in life may want to contribute to broader issues (Bronk, 2014), valuing brands with social meaning, connecting with products and services that address local social problems (Sheth, 2017), and that contribute to sustainability (Kraisornsuthasinee & Swierczek, 2018). One of the reasons for preferring one brand over others may be due to the personal philosophical or emotional connection with what a brand represents (Smith & Wheeler, 2002). Therefore, if consumers discover that their experiences with the brand have a consistent meaning, that promotes their beliefs and that it is in accordance with their purpose in life, the value consumers give to the brand will intensify (Jabnoun & Khalifa,2005; Khalifa, 2004).
CVC is recognized as a multi-dimensional concept of service marketing (Chi & Kilduff, 2011; Pandey & Kuman, 2021). CVC implies the capability of an organization to facilitate client involvement in routines and practices (Korkman, 2006); therefore, value is co-created from the joint interaction in the production of a service (Prahalad & Ramaswamy, 2004; Vargo & Lusch, 2008; Weerawardena et al., 2021). The value perceived by customers has an important purpose in purchasing decisions and several researchers have contributed to its understanding. For instance, Zeithaml (1988) posited that perceived value is consumers' general estimation of how useful a product or service is based on their perceived benefits received versus what they sacrifice or decline. Sheth, Newman and Gross (1991) recognized the following dimensions of perceived value: social, emotional, functional, epistemic, and conditional. From this seminal work, other researchers have developed different scales of this construct (Mahmoud et al., 2018; Sweeney,& Soutar, 2001).
In addition, conceptual developments suggest that social companies need to work on the perceived value of their clients as a key aspect of building a competitive advantage (Mendoza-Abarca & Mellema, 2016). Like other social marketing research (Butler et al., 2016), the present investigation considers the same dimension of customer perceived value: functional, economic, emotional, social, and ecological. Functional value refers to perceived utility. Perceived utility comes from perceptions of the capabilities that products and services have to deliver quality value reliably (Sheth et al., 1991; Williams & Soutar, 2009; Zeithaml, 1988).
Economic value is understood as the utility derived from the financial-benefit, the cost-benefit and the perceived price value (Sweeney & Soutar, 2001; Zainuddin & Gordon, 2020). Butler et al. (2016) posit that this value is important among low-income consumers due to their need for access to essential products and services. Emotional value comes from the product or service ability to trigger positive feelings in consumers from the act of consuming the product or service (Kato, 2021; Sheth et al., 1991). Social value is conceptualized by Sweeney and Soutar (2001, p. 211) as "the utility derived from the product's ability to enhance social self-concept". Even though this value is intrinsically motivated, its development comes from the association with relevant social groups and social influence (Caniéls et al., 2021; Sheth et al., 1991). Lastly, ecological value has been included as an additional dimension, due to the growing extrinsic concern of consumers for purchasing environmentally friendly products and services, and because of an intrinsic expression of self-concept (Koller, Floh, & Zauner, 2011). Ecological value is sustained by the concern and efforts of an organization caring for the environment (Li et al., 2020). Although social companies tend to prioritize social over ecological impact (Spieth, Schneider, Claufi, & Eichenberg, 2019), the influence of ecological value is increasing among consumers concerned about protecting the environment (do Paço, Shiel, & Alves, 2019).
Purpose in life can affect customer value co-creating behaviors (Huang & Lin 2020). When customers have a service experience consistent with their life purpose, their perceived value and attributes are likely to be enhanced (Khalifa, 2004). The relationship between psychological well-being and the creation of value in services in social enterprises could benefit both the organization and the community (McColl-Kennedy et al., 2012). Therefore, we propose that:
H1. Purpose in life positively affects customer value creation.
Overall customer satisfaction refers to a general evaluation of the company based on the experience (Anderson, Hakansson, & Johanson, 1994; Bitner & Hubbert, 1994). As customers perceive the value created in their service experience, it affects satisfaction (Sharma, Conduit, & Hill, 2017) and loyalty with the service provider (Koller et al., 2011). The effect of CVC on customer satisfaction has been empirically supported in the service sector (Vega-Vazquez, Revilla-Camacho, & Cossío-Silva, 2013; Mahmoud et al., 2018). Although consumers of social companies may have different profiles from those who purchase from commercial companies (Choi & Kim, 2013), their experience with products or services and their perceived value have a direct influence on their satisfaction or dissatisfaction in the post-purchase stage (Choi & Kim, 2013; Sweeney & Soutar, 2001). Therefore, we posit that:
H2. Customer value creation positively affects overall customer satisfaction.
Customer loyalty refers to the repeated and consistent preferential, attitudinal and behavioral purchasing process towards a brand over a period of time (Kandampully & Suhartanto, 2000; Yang & Peterson, 2004). From the attitudinal perspective, loyalty implies the client's desire to maintain the relationship for a longer time with the provider of a service or product (Yang & Peterson, 2004) and word of mouth recommendation to third parties (Cossío-Silva et al., 2016). Regarding the behavioral component, it denotes the repeated purchase of the product or service from the same brand (Wu et al., 2022; Yang & Peterson, 2004). In complex contexts where social enterprises operate, it can be difficult to achieve loyalty, therefore, it becomes a key strategic resource, since many clients tend to depend on informal economy and live in poverty (Ciambotti & Pedrini, 2019). Consequently, most relationships are based on worth of mouth and community bonds (Atiase et al., 2018; Ciambotti & Pedrini, 2019). Value is a key aspect of what consumers expect to get from the exchange (Fehrenbach & Herrando,2021; Lai, Griffin, & Babin, 2009). This is afunction performed jointly through supplier and customer actions with imprecise limits (Cossío-Silva et al., 2016), in which customer value influences loyalty to the firm (Cossío-Silva et al., 2016; Flint, Blocker, & Boutin, 2011; Lai et al., 2009). Therefore, it is proposed that:
H3: Customer value creation positively affects customer loyalty.
Customer satisfaction involves a psychological response about the perception of the performance of a product or service, after it satisfies customers' demands (Oliver, Rust, & Varki, 1997). Weijun et al. (2020) argue that a client of a social company is satisfied when the product or service provided meets their expectations, generating psychological happiness and content. Thus, given that previous empirical research has found that customer satisfaction affects loyalty (Gong & Yi, 2018; Ladhari, Brun, & Morales, 2008; Lam et al., 2004), it is possible to propose that:
H4: Overall customer satisfaction positively affects customer loyalty
In sum, the aim of this research is twofold. First, we would explore the effect of life purpose on CVC. Second, we would also examine the effect of CVC on satisfaction and loyalty of customers of social firms that operate in the service sector in Mexico. The findings from our investigation could potentially genera te a greater understanding of value creation when an organization seeks to meet the social needs of its context (Esposito et al., 2021; Zainuddin & Gordon, 2020), especially from the perspective of clients of social firms in the service industry. Furthermore, we intend to confirm the relevance of both constructs, satisfaction and loyalty, since they are strongly related to the process of creating value for clients (Scridon et al., 2019).
Materials and Methods
A quantitative, explanatory and cross-sectional research was conducted to test the hypotheses. Participants were active customers of social firms operating in the service industry in Mexico. The sample was collected based on a non-probabilistic sample of convenience conducted in the capitals of two Mexican states (Puebla and Jalapa), located in the Centre-East of Mexico. Participants were approached after receiving the service and outside the facilities of the companies studied; they were asked to participate voluntarily by answering a questionnaire and the objective of the research was explained. Surveys lasted between 10 and 15 minutes, and 392 usable questionnaires were collected. The sample consisted of 57.7 % female and 42.3 % male respondents, with an average age of 35 years. The most demanded services were health 64.3 %, financial services 14.8 %, restaurants and cafeterias 11.5 % and sustainable energies 5.9 %, 67 % of the respondents belonged to a low social class, 32.7 % to the middle class and 0.3 % to the upper class.
Measures and Procedure
We used validated scales. To measure purpose in life, we used a unidimensional scale with 12 items developed by Robbins and Francis (2000). We used five dimensions to measure customer value creation. For economic, emotional, social and ecological values, we used the scales from Gordon et al. (2018) and for functional value, we used the Mahmoud et al. (2018) scale. We used the customer satisfaction scale developed by Clauss, Kesting and Naskrent (2019) and for loyalty, the scale proposed by Clauss, Harengel, and Hock (2019). The items were evaluated with five-point Likert scales: strongly agree, agree, not certain, disagree, strongly disagree. The appendix shows the scales.
Overall analytical strategy
We conducted structural equation modeling and used Mplus 7.11 treating the variables as latent. Furthermore, the variables were handled as if they had a non-normal distribution. First, we tested the fit of the measurement model, followed by the model fit of the structural model. We reported a combination of absolute and incremental fit index: x2, Root Mean Square Error of Approximation (RMSEA), Comparative Fit Index (CFI), and Tucker Lewis Index (TLI). We used the cutoff scores of RMSEA = < .08 and CFI and TLI > .90 as the minimum acceptable levels of model fit (West, Taylor, & Wu, 2012).
Results
Our measurement model included eight latent variables: functional value, economic value, ecological value, emotional and social value, purpose in life, customer satisfaction, and loyalty. The five types of values formed a second order latent variable referred to as consumer value creation. Results from the measurement model showed a satisfactory model fit, x2 = 1742.1 1, p < .001 (df = 805), RMSEA = .055, CFI = .97 and TLI = .97. Examination of the factor loadings revealed that they were all significant and in the expected direction. Given the results from the measurement model, we tested the structural model.
Results showed an acceptable model fit, x2 = 1736.96, p < .001 (df = 807), RMSEA = .055, CFI = .97 and TLI = .97. Examination of theindividual parameters revealed a significant influence of purpose in life on consumer value creation, y = .383, p < .001. Consumer value creation had a positive influence on customer satisfaction and loyalty, B = .906, p < .001, and B = .648, p < .001, respectively. Last, customer satisfaction had a positive influence on loyalty, B = .288, p < .000. The squared multiple correlations for the endogenous variables were: consumer value creation (.15), customer satisfaction (.82), and loyalty (.84). Figure 1 shows the structural model with parameter estimates.
Table 1 presents an overview of the results and recommendations on service strategies.
Discussion
The purpose of this study was to analyze the effect of purpose in life on customer value creation and the influence of customer value creation on the satisfaction and loyalty of customers of social enterprises functioning in the service industry in Mexico. We found support for the hypothesis of a positive influence of purpose in life on customer value creation, which was consistent with previous investigations (Khalifa, 2004; Sheth, 2017). Customers of social enterprises who see meaning in their lives are energized to perceive greater value creation from the services provided by social businesses. This is consistent with the consideration that branding strategies based on socially valued positions represent effective ways of achieving Brand differentiation (Holt, 2004).
We found a positive effect of customer value creation on customer satisfaction and loyalty. These results were consistent with other investigations in the service sector (Koller et al., 2011; Mahmoud et al., 2018; Sharma et al., 2017), which in itself might represent a contribution, knowing that customer value creation is as important in social enterprises as it is in non-social businesses. Creating customer value in social firms functioning in the service industry seems to be as complex as in traditional service companies. For some customers, social business models imply new experiences that generate certain expectations during service encounters (Yi & Gong, 2013). The strategic challenges for these companies are in aspects such as the integration of value, the maximization of operational efficiency, and the realization of the effective provision of social services/environmental value (Florin & Schmidt, 2011), which have a positive influence on customer satisfaction and loyalty.
Last, we found support for the positive influence of satisfaction on loyalty. Our results were similar to others from several studies (Gong & Yi, 2018; Ladhari et al., 2008; Lam et al., 2004); however, it is still relevant to academia and management to empirically support this connection in the context of social businesses. Even though many social enterprises focus on satisfying basic urgent human needs, satisfaction energizes consumers' deep commitment to acquire products and services when needed in the future (Oliver, 1999), even when other alternatives are available. Hence, achieving satisfaction represents a means to a positive end, consumer loyalty.
Conclusions
One of the main findings obtained in this research is that the Creation of Customer Value in social enterprises is affected by the purpose of life and that it also affects Customer Satisfaction and Loyalty. Therefore, our results made a contribution to our understanding of the role of value creation in social enterprises in the service industry in an emerging country. Many of these social enterprises operate with restricted budgets, and even when the value proposition is well-defined, most of them face fierce competition and fragmented ecosystems. Thus, this study increased our understanding of how the internal states, such as the purpose in life, influenced the creation of value. This was consistent with the idea that clients from social businesses perceive not only the economic, functional and emotional dimensions, but also the social and ecological value that a social company is able to provide. In addition, we found that value creation influenced variables that contribute to retaining existing customers, which is important given the fierce competition faced by social businesses. Therefore, we posit that communication and service marketing strategies need to emotionally connect purpose in life with perceptions of value creation of the target market through the significant experiences promised and provided by the company.
Customer value creation is a multidimensional construct and social companies need to pay attention to all dimensions. In emerging countries like Mexico, some service companies attend niche markets that can afford to pay premium prices and expect, as a result, robust functional, social and ecological value during the service process. However, most of our participants were low-income. Therefore, we posit the creation of customer value includes a functional value of consistent quality and sustained economic value at affordable prices. This image and the investment in ecological processes lead to social acceptance. In addition, the delivery of economic and ecological value should be integrated into strategic communication. A social enterprise that meets the needs of its customers and provides them with opportunities to enhance their well-being generates a systemic effect with positive implications. In addition to the important role of satisfaction on customer loyalty, it is crucial to prioritize the development of long-term relationships with customers in order to generate the fulfillment of the mission of the social enterprise, increase the odds of surviving, and even contemplate the possibility of scaling the business model.
This research had several limitations. First, we only focused on the consumer of social enterprise services given their growth to attend to health, financial and feeding needs in Mexico. Second, we used a convenience sample, which limits our ability to generalize our findings. Third, most of the participants resided in the capitals of two Mexican states (Puebla and Jalapa), located in the Centre-East of Mexico and with more than 50 % of their populations living in poverty. Future studies could be extended to the Southwest region, whose poverty levels exceed 60 % of its population. Last, we only focused on some antecedents and consequences of consumer value creation. For future research, it is important to include other sectors and obtain a probabilistic sample. Furthermore, it is recommended to explore other components of psychological well-being, such as overall life satisfaction and the emotional state of the customer at the moment of receiving the service and its effect on the creation of value for the customer. Also, the relationship between the customer and the contact personnel in these kinds of companies could be approached from topics such as from the lens of service encounter, service interaction and service experience.
