Stakeholder Dialogue on Quality and Value Creation for a Sustainable Public Service

Mikael Johnson
Karlstad University/Service Research Center (CTF), Sweden

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Ingår i: 10th QMOD Conference. Quality Management and Organiqatinal Development. Our Dreams of Excellence; 18-20 June; 2007 in Helsingborg; Sweden

Linköping Electronic Conference Proceedings 26:16, s.

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Publicerad: 2008-02-15


ISSN: 1650-3686 (tryckt), 1650-3740 (online)


Today’s society is undergoing a structural change process of becoming a service economy (Edvardsson et al.; 2000). According to the service centered view (Vargo and Lusch; 2004a) the value creation process is about the value outcome as perceived by customers (Grönroos; 2001). Hence value creation solves customer’s problems (Edvardsson et al.; 2005) or rather corresponds to and satisfies their needs and expectations. The service organization makes value propositions but the value is coproduced with the customer (Vargo and Lusch; 2004a). Value creation is a function of realizing customer benefits (Vargo and Lusch; 2004b) and as such this perspective emphasizes the customers’ value-in-use (Edvardsson et al.; 2005:113). The evaluation of the service quality depends on the customer’s definition (Reeves and Bednar; 1994) and experience (Edvardsson et al.; 2005) of it.

Grönroos (2001) expand the definition of the customer concept in talking about external (the actual customer) and internal customers. Further; he implies that the value creation process depends on that both categories experience value. Given the particular focus on sustainability and stakeholders it is arguable that the conventional customer concept and value creation of service organizations; in line with the Grönsroos (2001) ideas; can be expanded to include all internal and external stakeholders who can affect or is affected by the achievement of the organization objectives (Freeman; 1984:46).

It has been considered relevant for public agencies and organizations to join the progression and actually be an active part of it. The public change process often involves an ambition to adopt private sector concept as customer-orientation (McAdam et al.; 2005; Boyne; 2003; Hood; 2001; Politt; 2000). In private service enterprises; customer orientation and value is a natural part of the service proposition. Co-creation of customer value requires that external and internal business processes are coordinated (Edvardsson et al.; 2005). Or more precisely; that service operations (Johnston and Clark; 2001); multi-performance measurement tools (Kaplan and Norton; 2004; Brignall et al.; 1999) the can match the external change pressure (Edvardsson and Enquist; 2006) caused by both customers and other stakeholders involvement.

Customer orientation and quality is important to the long term success of a service organization (Deshpandé et al.; 1993). Delivery to high quality service demands for continuous dialogue with key stakeholders and an ability to respond to their needs (Bryson; 2004). This is an important determinant of an organizations performance (Jaworski and Kohli; 1993). The coordination of external and internal business processes (Edvardsson et al.; 2005) calls for three sets of activities (Jaworski and Kohli; 1993:54):

1. organization-wide generation of market intelligence pertaining to current and future customer needs;
2. dissemination of the intelligence across departments; and
3. organization-wide responsiveness to it.

Zadek (2001) argue that win-win business solutions are not only about technical quality of products and services; more important are the corporation’s ability to build a sense of shared values with the key stakeholders. In Enquist et al. (2005) this sensemaking process is developed. The dialogues between key stakeholders are divided into two interacting value-creating processes: the political-democratic process; and the customer-oriented value-creating process. Further; we argue for a dynamic approach to performance measurement (Enquist et al.; 2005). The present paper tries to conceptualize such a dynamic approach via the emerging management accounting practice of sustainability reporting. Sustainability reporting then can become the glue between internal and external business processes; between; service quality; performance measurement and real interactive stakeholder dialogue.

The stakeholder approach stimulates to a dynamic understanding of the complex drivers of value-creation and is an indicator of service quality problems. The more complex the organization; the greater will be the need for different kinds of dialogue with the stakeholders; not just in economic terms (Pruzan; 1998). Often the interest in the customers or stakeholders of views of the service includes some kind of; often intuitive and unstructured; dialogue processes. The different dialogues have; however; to be transparent; updated and sustained through a process of continuous interactive learning (Olve et al; 1999); and thoroughly planned and customized for each specific setting.

This is paper tries to complement previous studies (Edvardsson and Enquist; 2006) by viewing the issues of value creation in public service organizations through the lens of sustainability (Elkington; 1998 and 2001; Pruzan; 1998). The aim of the paper is to explore the links between quality; performance measurement; value-creation and accountability in customer- /stakeholder-oriented public service organizations (Edvardsson and Enquist; 2006; Enquist et al.; 2006; Enquist et al. 2005).


Stakeholder dialogue; value-creation; quality; performance measurement; sustainability reporting


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