Using cross-functional, cross-firm teams to co-create value: The role of financial measures

Increasingly, the involvement of representatives from all major business functions in cross-functional, cross-firm teams is being viewed as a means to develop and maintain profitable business-to-business relationships. However, if the measurements of the value co-created in these relationships with customers and suppliers do not incorporate the financial outcomes of joint cross-functional initiatives, managers can be led to make decisions that jeopardize the long-term profitability of the two firms. In this paper, the authors explore the differences in value co-creation when a company is linked to key customers and key suppliers through cross-functional teams and when it is not. Using a case study approach, the authors measured value co-creation in financial terms and describe how managers changed their behaviors toward customers and suppliers when they were able to compare the value that was being co-created in each relationship. In each pair of relationships, one involved cross-functional teams and the other did not. The results indicate that cross-functional, cross-firm involvement leads to increased value co-creation. The research suggests that marketing scholars and managers should emphasize the use of cross-functional teams that involve all major functions to manage relationships with key customers, and should incorporate financial measures in the evaluation of relationship performance.

► We contrast value co-created when key customers and suppliers are linked using cross-functional teams and when they are not.
► We describe how managers changed behaviors toward customers and suppliers when given financial measures of value co-creation.
► Managers who embrace value co-creation and cross-functional teams achieve competitive advantage for the companies involved.