Exploring Service Innovation in Cultural and Creative Blocks from the Perspective of Value Resonance

Abstract

The revitalization of cultural and creative blocks is seen as an important economic strategy for stimulating local industries; driving local economic development; creating employment opportunities; attracting entrepreneurs, tourists and residents; and developing the city as a whole in city marketing cases. This study uses exploratory research as a research strategy to examine how actors in cultural and creative blocks achieve service innovation in those blocks through value co-creation based on value resonance. Through the integration of resources, actors propose shared values and exchange services through service systems. In the process of exchanging services, the actors integrate their values, co-establish institutional arrangements, and create value resonance. Under the premise of value resonance, they then co-create value and achieve service innovation in cultural and creative blocks. This study explores the original functions of cultural and creative blocks, such as cultural preservation, enhancing a city’s image and serving as a tourist attraction, and analyses the value-enhancing and innovative services of these places, which will help to examine the effectiveness of the revitalization of cultural and creative blocks and the operations of innovation activities. Furthermore, this study put forward suggestions for the development of the cultural and creative block industry from the aspects of policy, economy, and society to provides innovative ways of thinking about the sustainable development of cultural and creative blocks and the invigoration of local economies.

Plain Language Summary

The revitalization of cultural and creative blocks is considered an important economic strategy for stimulating local industries, attracting entrepreneurs, tourists, and residents, creating employment opportunities, and developing the city as a whole, leading to economic development. This study uses exploratory research to examine how actors in the cultural and creative blocks achieve service innovation through value co-creation based on value resonance. Moreover, it explores the original functions of cultural and creative blocks and analyses the value-enhancing and innovative services of these places, which help examine the effectiveness of the revitalization of cultural and creative blocks and the operations of innovation activities. Furthermore, this study proposes suggestions for the development of the cultural and creative block industry from the aspects of policy, society, and economy to provide innovative ways of considering the sustainable development of cultural and creative blocks and the invigoration of local economies.

Keywords

value resonance value co-creation cultural and creative blocks service innovation service system

Background

Local place marketing is often used to promote urban development to attract tourists, residents, industries, and investors (Gold & Ward, 1994). More and more local governments see place marketing as a part of local management. The revitalization of cultural blocks must rely on the cooperation of actors with different backgrounds, such as the public sector, non-government sectors, cultural entrepreneurs and local entrepreneurs. This study defines “Cultural and Creative Blocks” as originating from historical or cultural accumulation, integrating arts, business, creativity, design, E-commerce, and other aspects, and A collection of shops, facilities, spaces, and streets with the potential for job creation and economic development (Landry, 2000, 2014; R. Lin & Chen, 2012; Ministry of Culture, 2008), for example: Dihua Street and Shidianzi Old Street in Guanxi. Therefore, revitalization is always a multi-faceted, mutually reinforcing and coordinated action plan, aimed at causing qualitative changes in the entire region, creating favorable conditions for the development of new forms of economic activities, and creating opportunities for the development of local residents (Gumieniczek, 2018). Through the guidance of industries and public authorities, actors can feel a sense of satisfaction and belonging through meaningful engagement. Once there is resonant engagement, industries will have also achieved its goals of corporate performance and consumer stickiness. Lusch and Nambisan (2015) pointed out that value resonance promotes service innovation. When values and new goals emerge, which in turn facilitate service innovation through exchange of resources. Vargo and Lusch (2016) believe that all participants work together to create value through resource integration and exchange of services.

Taiwan’s cultural and creative industries have developed vigorously in recent years. Various departments across Taiwan are actively expanding the development and implementation of policies related to these industries (C. B. Lee, 2015). In 1995, the Cultural Committee Taiwan CCA (CCA) launched the concept of “cultural industrialization and industrial culturalization.” It leveraging local cultural assets to revitalize rural and urban-rural economies (Chung, 2012). The policy of Taiwan’s CCI cluster is as follows: to promote the development of industries such as digitization, informationization, and creative industries to promote art and culture and social activities and economic development (Liao & Chapain, 2018).

This study identifies some of these limitations and needs more studies to fill these gaps, including existing the need to integrate service innovation domain (Peixoto et al., 2022; Shin & Perdue, 2022), to development new service innovation models (Calabrese et al., 2018), and the overarching research field (Belanche et al., 2020; Singh et al., 2020). Due to the regional and cultural specificity of innovation, little literature currently attempts to serve the drivers of innovation (S. Lee et al., 2010), and focus on service sustainability (Kajikawa, 2008). Although the concept of “culture as a service” is established internationally, the content and mode of cultural services are severely misconstrued due to the opposition of different standpoints (Barile et al., 2012). The existing literature illustrates new directions for developing urban knowledge economies, but there are still many problems to be solved about the composition and behavior of innovation clusters, how they interact in the urban environment, and how they affect the innovation process (Engel et al., 2018). In addition, how cities can harness culture and creativity to stimulate effective and sustainable urban renewal is a question that has yet to be fully answered (Della Lusica et al., 2017; Lidegaard et al., 2018).

Researches on creative industrial park in Taiwan deals mostly with the utilization of vacant space, marketing activities, operations management, industry selection and evaluation, formation and transformation park zone, and the local creative industries. Little attention is paid to the need for innovation in the provision of services in creative industrial parks (Chen et al., 2013). By looking at international cases of urban and rural revitalization, the key factor that determines success is whether the actors can co-create values, and the prerequisite for co-creation is for the actors to have values that “resonate.” The research motivation of this study is to explore ways to find resonance touchpoints between actors and the elements to realize those touchpoints, so that the interaction between the actors can be mutually beneficial (Fan & Tu, 2012). This study explores the establishment of value propositions by cultural and creative block actors, and then exchange services through the service system to achieve value resonance, and then realize service innovation in the context of value co-creation. Therefore, the aims of this study are as follows: (1) to explore how actors in cultural and creative blocks integrate values to achieve value resonance, and (2) how actors exchange services through service systems to achieve value co-creation and service innovation?

Literature Review

Value Propositions and Value Resonance

In service-dominant logic, value propositions are dynamic mechanisms that are co-created to adjust the way resources are shared in service ecosystems (Frow et al., 2014), and actors invite each other to participate in services (Chandler & Lusch, 2015). Value propositions are a reciprocal integration of resources between actors, and a coordination mechanism that seeks equal exchange (Kowalkowski et al., 2016). There are many innovative value propositions that actors can experiment with and develop. As a value balancing and coordination mechanism, value propositions influence the selection of prospective actors by the original actors and shape market interactions and the integration of new resources within various service systems (Frow et al., 2014).

“Resonance” is a term used in physics to refer to the physical phenomenon of a physical system vibrating at a specific frequency (resonance frequency) with a greater amplitude than other frequencies. Resonance originates from the Latin word re-sonare, meaning to “re-sound” or “to sound again” (Ruthven, 2021). Giorgi (2017) noted that both cognition and emotion can be used to facilitate resonance, such as aligning target values, beliefs and ideas, as well as staying consistent with the lives and experiences of customers. Meaningful engagement is the first step in resonant engagement; maximizing mutual benefits through the interaction between businesses and customers is the realization of resonant engagement. In order for customers and businesses to realize their respective interests, they step out of their traditional roles, and interact and collaborate at various stages of the service system, thereby improving existing products or services or even developing new ones. Motivated and meaningful engagement in this dynamic process is a prerequisite for resonant engagement (Wang & Mirzaei, 2019). As a result, consumers have more opportunities to participate in the development, production, marketing and use of products. At the same time, they are actors that engage in R&D and marketing, and become value creators. In the process of moving from value resonance to value co-creation, actors integrate and share their own resources as a necessary way of achieving value resonance.

To summarize, this study considers value resonance as “actors interacting and collaborating in a service ecosystem in order to realize their respective interests, putting forward a consistent value proposition, and working together to establish a coordination mechanism for value balancing, resource sharing, and dynamic resource integration in order to create value together” (Chandler & Lusch, 2015; Frow et al., 2014; Giorgi, 2017; Kowalkowski et al., 2016; Wang & Mirzaei, 2019).

Service Systems, Value Resonance, and Value Co-creation

From the perspective of service-dominant logic, service systems can be seen as a fundamental framework for value co-creation (IfM & IBM, 2008; Maglio & Spohrer, 2008; Maglio et al., 2009; Spohrer & Maglio, 2010; Vargo et al., 2008). Service systems contain diverse interacting actors, and when businesses and customers pool resources, including capabilities and competencies, this integration allows for the effective co-creation of value (Vargo et al., 2008). In service-dominant logic terms, an individual actor can phenomenologically determine value by sensing, feeling, remembering, evaluating, or imagining a change in their well-being or viability (Akaka et al., 2021). These interactive entities are as follows: (1) Enterprise activities: creative opportunities for enterprises to be created in the region; (2) Brand communication: for market structure research, including the mechanism through which the region can create a space where innovation can be developed and introduced into the market, market structure Research; (3) Resource mobilization includes the availability of human and financial resources for innovation support or access (Grobbelaar et al., 2016; Hekkert et al., 2007). Furthermore, Value resonance promotes brand integration and is a promoter of service innovation (Lusch & Nambisan, 2015). Value co-creation is a closely and highly interacting among enterprises, brands, customers, other stakeholders and the social environment (Merz et al., 2009). Brand communication is not only the result of interactions between firms and customers, but also includes connections with a wider range of actors (Brodie et al., 2009). When entities interact with one another, they are better able to adapt to the constantly changing environment (Vargo et al., 2008). When value resonance exists between actors, service systems often have consistent practices in collaborative relationships, where mutual trust reduces risk (Morgan & Hunt, 1994) and facilitates resource integration in innovative ways. Vargo and Lusch (2016) believe that value is created jointly by all participants through the integration of resources and exchange of services. Through the guidance and dynamic capabilities of businesses, customers can evolve from unmotivated engagement to motivated engagement, satisfying the basic functional value of the service and feeling a sense of satisfaction and belonging. Once resonant engagement has been formed, businesses also achieve their goals of better corporate performance and customer stickiness.

Service-dominant logic sees all actors engaging in service exchange as pursuing the same purpose—value cocreation—and being involved in the same activities of resource integration and service provision (Akaka et al., 2021; Vargo & Lusch, 2011), and emphasizes the importance of the consumer-firm exchange to the value proposition (Tran et al., 2021). Vargo and Lusch (2016) stated that value co-creation is a dynamic process, since value is created through customer engagement and service exchange. Value co-creation comes from direct and indirect resource exchange, interaction and integration among actors (Jaakkola & Hakanen, 2013; Prenkert et al., 2022; Sandberg et al., 2018). Actors integrating their resources into the value co-creation system is a necessary process to achieve value resonance. The purpose of value co-creation is to enhance value, and the way to co-create value is to integrate the actors’ resources into the value creation system to achieve better value creation in resonance. Because the actors are governed by shared values, their behavior is shaped by these values and norms, creating synergy that leads to value resonance. These norms and protocols guide actors to collaboration and enable businesses to provide better services to their customers (Vargo & Lusch, 2008). Customer engagement is gradually replacing the one-way logic behind the business-centered approach. It is difficult for businesses to fully access and have at their disposal the personal resources of the customers. A mutual exchange of resources is required to achieve value co-creation. The interaction between businesses and customers is the fundamental way of creating value together, and value co-creation is formed through the heterogeneous interaction between customers and businesses. A core issue of value co-creation is how to integrate the resources of customers into the value co-creation process so as to achieve resonance (Wang & Mirzaei, 2019). Customers can experience different manifestations of value in the process of engaging with services, and only through the integration of their own resources can they have an elevation of value.

Value Resonance, Value Co-creation, and Service Innovation

In the past decade, service-dominant logic (S-D Logic) has undergone a series of important theoretical turns, so that service-dominant logic can be further developed into a general theoretical basis for the market. In order to support the market theory, it is necessary to Develop more concepts of service exchange, resource integration, value creation, and institutions/ecosystems (Vargo & Lusch, 2017). Service Dominant Logic is a practical framework emphasizing the service perspective (Michel et al., 2008). Innovation must be viewed from a wider perspective in the context of social dimensions (Gustafsson & Johnson, 2003). In the past, innovation research tended to adopt the perspectives of good-dominant logic, which led people to tend to ignore innovation through services (den Hertog et al., 2010).

Lusch and Nambisan (2015) identified value resonance as a driver of service innovation. When value resonance exists between actors, service systems often have consistent practices in collaborative relationships, where mutual trust reduces risk (Morgan & Hunt, 1994) and facilitates resource integration in innovative ways. Value resonance sets the value creation of actors through the choice of partners and how they work together, allowing the actors to live symbiotically through their value and respond to the value of their customers. Institutions provide a coordination mechanism to achieve resource integration, and innovation is a process of collaboration, involving the interaction of actor networks and the actors’ resources integration. Institutions determine the form of interaction between actors and the way resources are integrated. In these processes, service innovation is realized (Vargo & Lusch, 2016; Vargo et al., 2015). In the dynamic process of resource integration and service exchange formation, actors develop innovative value propositions and co-create institutions through cooperation. The revised value proposition can only be accepted and implemented by actors, after institutionalization and the establishment of common institutional arrangements (Whalen & Akaka, 2016; Wieland et al., 2017).

Vargo and Lusch (2016) pointed out that value co-creation is a dynamic process, because value is created during the process of customer engagement, resource integration, and service exchange. Value is determined by the enterprise, employees, shareholders, customers, government agencies and other relevant actors co-create (Vargo et al., 2008). through exchanging resources, services, information with service providers (Grönroos, 2011; Payne et al., 2008; Ranjan & Read, 2016), and integrate actors’ resources to co-create (Vargo & Lusch, 2004, 2016; Vargo et al., 2008, 2020). Based on the service-dominant logic theory about value resonance (Vargo & Lusch, 2017), values and norms ultimately shape the behavior of actors as they are regulated by shared values in the process of resource integration. This creates synergy, which in turn leads to value resonance and new resource integration, resulting in innovative value co-creation among actors. When core values resonate with fundamental values, new goals are created, which enhance actor knowledge through the resource exchange to facilitate service innovation.

Consumers feel the sense of self-identity, sense of belonging, and satisfaction of space needs in the process of value co-creation (Gao et al., 2022). The basis for value co-creation comes from the resonance that is produced by the value resonance of the actors, such as attracting actors in the service system with a value proposition. Value co-creation requires the integration of different resources of diverse actors (Prenkert et al., 2022), and refers to the meaningful participation and cooperation of actors to jointly produce and enhance value for customers (Itani et al., 2022; Ranjan & Read, 2016).

Service-dominant logic assumes that the integration of resources can do the work of value co-creation for actors, helping them to create various possibilities and new potential resources to exchange with other actors. Value propositions invite other actors to participate in order to effectively connect actors in the system. Therefore, the value propositions of service providers must be able to attract actors in the system in order to have the possibility of integrating resources as well as using knowledge and skills to create value together.

Study Methodology and Design

Methodology

Wise (2017, p. 595) thinks the need to focus on “better understand how a particular community builds a new economic base, promotes local income generation and/or informs inclusive public policies.” The study explored how actors in cultural and creative blocks achieve service innovation in those districts through value co-creation based on value resonance (Barile et al., 2012; Della Lusica et al., 2017; Engel et al., 2018; Kajikawa, 2008; Lidegaard et al., 2018). The case study method is suitable for issues that are rarely discussed; by observing the actual environment, this method examines exploratory issues, and analyses the process and cause of a specific case, thus providing a basis for other studies (Yin, 1994). Therefore, this study adopted an exploratory (Eisenhardt, 1989; Yin, 1994) as it is suitable for exploring complex emerging cases (Eisenhardt, 1989; Eisenhardt & Graebner, 2007; Yin, 1994). Thus, this study adopts the case study method. This study explored the following question: “How can actors in cultural and creative blocks achieve service innovation in those blocks through value co-creation based on value resonance?” Through long-term in-depth interviews, detailed data about the background of the interviewees, the relationship between historical events and their decisions are obtained, which is conducive to the preliminary exploration of related theories (Langley, 1999). The selection of cases in this study was based on the following three aspects: “representative,”“the one next door,” and “the best practice” (Langrish, 1993). According to a survey conducted by Department of Information and Tourism of Taipei City, Dihua Street has become the third most popular scenic spot in Taipei for international tourists, surpassing Beitou Hot Spring Resort for the first time. In addition, the Guansi Shidianzi Old Street is now the most popular attraction for international tourists in Hsinchu County.

In this study, Vargo and Lusch’s discussion of value co-creation under a service-dominant logic and Grobbelaar et al.’s (2016) service system analytical framework are integrated to analyze the value resonance achieved by the actors in the two cases discussed in the study through the establishment of the actors’ value propositions and exchange of services via the service system, as well as the realization of service innovation in a value co-creation context. The structure of the initial analysis is shown in Figure 1 below:

Figure 1.

Realizing value resonance and service innovation in the context of value co-creation.

Data Acquisition

The main data for this study come from academic literature and interview records, and a process of coding and data analysis is adopted: the main findings are summarized, the unique characteristics of each case are analyzed, and finally cross-case analysis is carried out (Yin, 1994). In the cross-case analysis, results are drawn from individual cases and compared with other cases to generalize new patterns and themes (Eisenhardt & Graebner, 2007). Respondents are male and female aged 15 to 65, with educational background from high school to graduate school, and working fields include cultural entrepreneurs, association personnel, educators, designers, as well as business, manufacturing, and technology industries practitioners. Personal interviews were the main source of the primary data. A total of 28 respondents were interviewed for this study, including two experts with an average of 25 years of professional experience, four members from local development associations, 12 local cultural and creative personnel, six consumers, and four local residents. The respondents were coded as follows: experts (E1 and E2), association members (A1–A4), cultural and creative personnel (I1–I12), consumers (C1–C6), and local residents (R1–R4). Secondary data collected for this study include public authorities’ administrative plans, administrative reports, working reports, annual reports, news releases, publications, official websites, and other documents, such as newspapers and Internet news media, published monographs, journal articles, and dissertations. The semi-structured interviews emphasis on company operations, innovative services, policy implementation, changes in industrial structure, and future local industry development. Finally, personal interviews were temporarily ended based on the principle of theoretical saturation (Strauss & Corbin, 1998). The interview period was from August 6, 2020 to July 3, 2021, and 28 interviews were conducted. Conduct direct observations on cultural and creative industries, consumers, and local residents to gain an in-depth understanding of services, sales, and company operations.

Data Analysis

Because of the need to explore new patterns and themes, this study employs data collection methods, such as interviews, literature sources, and direct observations for case studies (Fillis & Lee, 2011). And according to the three-step method of coding and data analysis (Yin, 1994), the findings of other cases were compared with the findings of other cases through cross-case analysis (Eisenhardt & Graebner, 2007). Each service system incorporates the following structures for analysis: actor participation, presenting value propositions, establishing service system, service exchange, value resonance, value co-creation, service innovation. In order to improve the quality of this study design, this study adopts the principles set by Yin (1994) to improve the reliability and validity of the study. Commonly used concepts in these tests include trustworthiness, credibility, confirmability, data dependability, and this study uses construct validity establishes the correct operational measurement method (Table 1). Using triangulation points and multiple data sources can ensure internal validity and greatly reduce the risk of potential bias (Yin, 1994). In addition, this study adopts Triangulation to improve the reliability and validity of this study, and uses various and different methods, data, observers and theories in the research process to check and determine the source of data, data Gathering strategies, time, and theoretical framework equivalence (Denzin, 1978).

Table 1.

Profile of Respondents and Date of Interview.

Code	Category	Internal or external resource	Firm	Title	Data source	Date of interview
I1	Industry expert	Internal	Sedai Zone Co.	CEO Secretary	Interview	August 6, 2020
I2	Industry expert	Internal	All Black	Leader	Interview	November 4, 2020
I3	Industry expert	Internal	Peacock Bistro	Leader	Interview	November 6, 2020
I4	Industry expert	Internal	Primrose	Leader	Interview	March 30, 2021
I5	Industry expert	Internal	DdC	Leader	Interview	February 23, 2021
I6	Industry expert	Internal	Luguo Café	Leader	Interview	April 9, 2021
I7	Industry expert	Internal	Li Ting Xiang	Deputy General Manager	Interview	April 16, 2021
I8	Industry expert	Internal	69 Organic Bookstore	Owner	Interview	February 3, 2021
I9	Industry expert	Internal	Lo Ink House	Leader	Interview	February 2, 2021
I10	Industry expert	Internal	Experimental Life Shop 1 of Guanxi relationship	Leader	Interview	February 5, 2021
I11	Industry expert	Internal	Dazihzai	Leader	Interview	February 9, 2021
I12	Industry expert	Internal	DT52	Leader	Interview	February 18, 2021
A1	Industry association	External		Former President	Interview	February 3, 2021
A2	Industry association	External		Former Director-General	Interview	February 2, 2021
A3	Industry association	External		President	Interview	February 9, 2021
A4	Industry association	External		Supervisor	Interview	July 3, 2021
E1	Expert	External			Call interview	June 16, 2021
E2	Expert	External			Call interview	June 6, 2021
C1	Consumer	External			Interview	December 15, 2020
C2	Consumer	External			Interview	February 5, 2021
C3	Consumer	External			Interview	February 17, 2021
C4	Consumer	External			Interview	February 18, 2021
C5	Consumer	External			Interview	February 19, 2021
C6	Consumer	External			Interview	March 21, 2021
R1	Resident	Internal			Interview	February 16, 2021
R2	Resident	Internal			Interview	February 18, 2021
R3	Resident	Internal			Interview	March 18, 2021
R4	Resident	Internal			Interview	May 12, 2021

Case Profile

Case Description

Dihua Street is located in Taipei City. Since the 19th century, it has been the most important distribution center for tea and traditional Chinese medicine in Taiwan. In recent years, the development of Dihua Street came to a standstill. As a result, the buildings and blocks of Dihua Street still retain the appearance preserved from the late Qing Dynasty and Japan-ruled period.

The Taipei Urban Renewal Office has implemented the URS (Urban Regeneration Station) program since 2010, encouraging NGOs to enter the URS space, hoping to improve the urban quality of Taipei through art, culture, and creativity. Among them, the most well-known cultural and creative organization on Dihua Street is Sedai Zone Co., whose founder, Mr. Yi-Cheng Jou, adheres to the following operational principles: (1) using the street houses of the historic block as business places to nurture start-up firms; (2) integrating start-up firms into the local industrial chain to revitalize the local economy; and (3) operating a series of public places through start-up firms to attract creators to participate in cultural and creative activities.

Guanxi Shidianzi Old Street is the second case, located in Guanxi Township, Hsinchu County. In 1989, Guanxi Town received counsel by One Town One Product (OTOP) program of the Small and Medium Enterprise Division of the Ministry of Economic Affairs, and start to develop the Mesona procumbens Hemsl industry, and trying to transform the industry. Then the Hakka Affairs Committee formulated “Implementation Programme for National Hakka Romantic Route along Taiwan Road 3,” hoping to promote local industries and create employment opportunities through tourism. Since 2020, the Council for Hakka Affairs has implemented the Hakka Local Population Immigration Programme, which encourages young people to start businesses in their hometowns. Old houses in Shidianzi Old Street possess significant characteristics of Hakka culture and local industries. At present, there are more and more cultural and creative enterprises in Kansai Shidianzi Old Street started a business.

Cultural and Creative Block in Dihua Street

The Taipei City Government delimited the surroundings of Dihua Street as the “Twatutia Historic Special Zone” in 2000, and implemented the Traditional Shop Rejuvenation Project to assistance to rejuvenate old shops and highlighting their features (Taipei City Urban Regeneration Office, 2021). Furthermore, for aiming to embed industries in the local area and promote the return of original residents to employment in their hometowns, the Small and Medium Enterprise Administration of the Ministry of Economic Affairs implemented the Small Business for Township Revitalization (SBTR) program (Small and Medium Enterprise Administration, 2018).

Sedai Zone Co. started a business in Dihua Street to cultivate new cultural and creative enterprises in 2010. Therefore, many other cultural and creative institutions have also followed suit to form industrial clusters. Even local traditional industry operators have added their business models to cultural and creative industries. Elements is trying to transform, hoping to attract more young customers (Chou, 2019).

Guanxi Shidianzi Old Street

With the support of the Ministry of Culture and the Hsinchu County, the Hsinchu County Cultural Bureau commissioned Fantasy Story renovates Guanxi Shidianzi Old Street, and carries out basic repairs to the old houses. Entrusted by the owner, the old house is leased to cultural and artistic units. At present, many cultural and creative enterprises have settled in Guanxi Shidianzi Old Street. In addition, local associations play the role of promoting local culture. For example, Guanxi Township’s Native Culture Association of Hsinchu County conducts local cultural and historical surveys, and the Guanxi Art Community Development Association of Hsinchu County provides tour guide services and develops tourist routes to promote local culture (Cultural Affairs Bureau of Hsinchu County Government, 2023; Hakka Affairs Council, 2023).

Research Findings and Discussion

Based on the initial analytical framework of this study, the actors of Dihua Street in Taipei and Shidianzi Old Street in Guanxi were analyzed to see how they have integrated their resources; established value propositions; exchanged services through a service system of corporate activities, brand communication, market structure research, and resource mobilization; integrated the values of the actors; generated value resonance; and then realized service innovation in the context of value co-creation.

Value Resonance of Actors of Cultural and Creative Blocks

Actor Resource Integration and Value Proposition

There are many innovative value propositions that actors can experiment with and develop. Value propositions influence the selection of prospective actors by the original actors and shape market interactions and the integration of new resources within various service systems (Frow et al., 2014). The economic revitalization of cultural and creative blocks is not only about understanding and using existing cultural elements in addition to planning and creating a multi-functional complex space, but also leveraging cultural characteristics and increasing content depth to attract consumer attention.

Chou Yi-cheng, the head of Sedai Zone Co., has observed a behavioral trend where, in the future, people will not highly identify with a single brand, but will with values. Sedai Zone Co. has recruited a suitable team of vendors to establish themselves in Dihua Street based on the town’s five major industries: tea, cloth, agriculture, Taiwanese traditional opera, and architecture to create a community of value. Chou emphasized the importance of building a healthy ecosystem by creating good small clusters in the neighborhood, and then combining many of them into larger clusters (Chou, 2019).

By sharing resources, the 69 Organic Bookstore in Shidianzi Old Street has transformed from a bookstore-cum-bed and breakfast into a community building and cultural carrier. The bookstore owner believes that a bookstore is about human relationships, and the value of opening a bookstore in a remote region is to bring people into the bookstore. The establishment has recruited and formed a team of mothers who volunteer to tell stories, and training them to enhance storytelling skills. The bookstore has helped alleviate dysfunction for some families due to the volunteer mums’ storytelling event becoming a regular occurrence. In the bookstore’s second year, it joined forces with mothers in the community to launch the “Together for Good Cafeteria,” where the food ingredients were mostly grown and harvested by local residents. Once a week, residents share a meal together, which gives them the opportunity to discuss their vision for the future development of the community and to build consensus; the event also allows elderly people who live alone to interact with other residents.

Service Systems and Service Exchange in Cultural and Creative Blocks

According to the viewpoints put forth by Vargo et al. (2010), actors in the service system interact through the service platform, which also shapes the value galaxy of actors and creates value together as well as integrate information and experiences, leading to the integration of people, technology, processes, information, and facilitating the integration of resources through mutually beneficial interactions (Kleinaltenkamp et al., 2012; Vargo & Akaka, 2009; Vargo et al., 2010).

When value resonance exists between actors, service systems often have consistent practices in collaborative relationships, where mutual trust reduces risk (Morgan & Hunt, 1994), and actors create value together through service exchange and resource integration (Vargo & Lusch, 2016). The 69 Organic Bookstore on Shijianzi Old Street in Guanxi is a diversified operation that works with local businesses, shops and cafes to set up BookCrossing stations to promote book exchange and reading. The bookstore also works with local residents to form the “Cropholders Club,” which pays a fixed amount of money each year to adopt farmland, support organic rice farming through community-supported agriculture (CSA), and promote Guanxi’s “oxen-tilled rice.” In addition, the bookstore organizes small tours that show Hakka life and culture, and invite local farmers to showcase traditional farming methods so that visitors can experience traditional oxen farming. The tours are also an opportunity to promote the local brand of organic rice, changing the local concept of farming and mode of production as well as creating a habit of eating organic rice among consumers.

Value Resonance of Actors

Lusch and Nambisan (2015) identified value resonance as a driver for service innovation. When core values resonate with fundamental values, new goals emerge, which in turn enhance actor knowledge through systems and exchange of resources to facilitate service innovation. Because the actors are governed by shared values, their behavior is shaped by these values and norms, creating synergy that in turn leads to new forms of value resonance and resource integration.

Because the actors are governed by shared values, their behavior is shaped by these values and norms, creating synergy that in turn leads to value resonance. These norms and protocols guide actors to collaboration and enable businesses to provide better services to their customers (Vargo & Lusch, 2008). According to Chou Yi-cheng, the head of Sedai Zone Co., inviting stakeholders such as homeowners, local entrepreneurs, incoming vendors and Sedai Group to invest in projects not only creates mutual benefits but also sustainable operations, forming a new model for the economic revitalization of cultural and creative blocks (Chou, 2019). However, many cultural and creative blocks became plagued by disorder after neighborhood development companies intervened in the development of these locales because they failed to uphold local culture and sustainable development as their core values. Cultural and creative industry vendors have made the following observation.

Institutions provide a coordination mechanism to achieve resource integration, and Institutions determine the form of actors’ interaction as well as the way of resource integration. In these processes, service innovation is realized (Vargo & Lusch, 2016; Vargo et al., 2015). The different model was adopted by the cultural and creative vendors of Shidianzi Old Street in Guanxi. At first, the Hsinchu County Cultural Affairs Bureau commissioned a neighborhood development company to assist in renovating the streets and adjacent houses as well as attracting investment and vendors; however, after the project was completed, the company handed over the original business to the Guanxi Art Town Development Association, and then helped the vendors who have come to set up shop in the Old Street to apply for grants from public sectors, and gathered the vendors to organize activities. At present, most of the activities are organized by the vendors themselves in collaboration with other shops or groups, including seminars, exhibitions featuring specific artists, plant dye activities, theatre performances by amateur theatre groups formed by local residents, performances by indie bands, and occasional cultural and creative bazaars in the neighborhood. After the block participates in the government subsidy program, it will enter the government procurement law or the schedule and management of the project plan. The government also becomes a member of the value resonance at this time.

Proposition 1: The actors of a cultural and creative block create value resonance by integrating their own resources, proposing value propositions, exchanging services, and co-establishing institutional arrangements through service systems.

Value Co-creation and Service Innovation of Actors in the Culture and Creative Blocks

Value Co-creation of Actors in the Culture and Creative Blocks

Vargo and Lusch (2016) believe that all participants work together to create value through service exchange and resource integration. Actors exchange resources, services, and information through interaction, thus generating value (Grönroos, 2011; Payne et al., 2008; Ranjan & Read, 2016), and integrate actors’ resources to co-create (Vargo & Lusch, 2004, 2016; Vargo et al., 2008, 2020). Traditional street houses are the most important cultural assets of Dihua Street. “Once Dihua Street prospers, the street house cooperation model proposed by Sedai Zone Co. will benefit the landlords who will be motivated to rent out more street houses for use as its business places” (Wen, 2019). Cultural and creative firms emphasized that Sedai Zone Co. can negotiate rents with landlords on behalf of cultural and creative enterprises to prevent housing rents from continuing to rise. Therefore, start-up cultural entrepreneurs can relieve the pressure of rising rents and thus focus on their business. The goal is to attract more young creative talents, generate a cluster effect, and realize the sustainable development of cultural and creative industries in Dihua Street (Wen, 2019).

Value co-creation requires resource integration of different actors (Prenkert et al., 2022), and refers to the meaningful participation and cooperation of actors to jointly produce and enhance value for customers (Itani et al., 2022; Ranjan & Read, 2016). Local residents in Guanxi mentioned the development of Guanxi Shidianzi Old Street in recent years. The Guanxi Art Community Development Association has been doing the integration of network connections. In addition to combining residents and store resources, the old street is also integrated with nearby attractions. Personnel come to guide and introduce scenic spots, attracting crowds to bring in income. The residents think Old streets in other areas in Taiwan should first think about how to allow people to enter and stay in the old streets, and then think about the issue of profit.

Vargo et al. (2008) argued that value is co-created by companies, employees, customers, governments and other entities related to any particular transactions. Actors exchange resources, services and information with service providers through interaction and thereby create value (Grönroos, 2011; Payne et al., 2008; Ranjan & Read, 2016). Value co-creation is based on the value resonance of actors. If actors fully recognize each other’s value, the value will be created through their interaction, and the expected value can be created.

Service Innovation of Actors in the Culture and Creative Blocks

Dihua Street is located in the declined old town and local landlords tended not to lease their houses to outsiders, few culture and creative businesses entered this area. As the Sedai Zone Co. entered the Dihua Street, they rented many street houses and divided the buildings into many sections to form shop-in-shops, which were then sublet to young culture and creative business owners. Sedai Zone Co. also provided necessary assistance to those at the early stage of their business. In this way, the threshold for settling in the Dihua Street was lowered. This kind of innovative business model brought about the clustering effect. Many culture and creative business owners gathered in the Dihua Street and therefore changed its original business structure. The business district now attracts many young people and international visitors every year.

When core values resonate, new goals are created, which enhance actor knowledge through the exchange of resources to facilitate service innovation (Vargo et al., 2015). The sustainability products and services through the recognition of external resources and knowledge, firms with relevant actors can co-create to ensure that product and service meets customer and community expectations (Marrucci et al., 2022). The Shidianzi Old Street in Guanxi is located at a traditional Hakka village. The cultural services provided by the street are mostly associated with the Hakka culture. For example, an organic book store named 69bookstore developed a culture tour that can present local life to visitors. Among the many activities, the most characteristic one is the farm activity for parents and children, which allow visitors to become one-day farmers to experience activities such as planting and harvesting. Because many residents and consumers identify with the value delivered by the brand and want to participate in the farm activity, the original farmland cannot meet the needs of consumers.

Value co-creation is based on the value resonance of actors, and the value proposition can attract the actors in the service system. In the process of resource integration, the common value and principles regulate the actors, form the actors’ behavior and lead to a synergistic effect, which in turn generates value resonance and brings about innovative value co-creation among the actors.

Proposition 2: The value resonance of actors in the culture and creative block results in the value co-creation through the synergistic effect, co-establishing institutional arrangements, and further leads to service innovation.

Conclusion

A prerequisite for resonance participation is meaningful participation. Actors exchange their value proposition and choose their partners through interaction, and co-establishing institutional arrangements, which leads to the market interaction in various service systems and the integration of new resources. In this way, the actors can benefit each other and realize “resonance participation.” Specifically, actors interact and cooperate with each other at all stages in the service system, improving the existing products or services or developing new ones. When the actors have similar values, they can change the existing institutions and customs by negotiating their value creation and exchanging their professional skills, thereby achieving service innovation.

The Sedai Zone Co. recruited suitable culture and creative businesses to settle in the Dihua Street in the form of shop-in-shops according to the five local traditional industries: tea, fabrics, agricultural produce, Taiwanese traditional opera, and architecture to create a value community. Such innovative business model attracted culture and creative businesses to gather in the Dihua Street and resulted in the clustering effect, leading to a transformation of the business structure of the district. The Shidianzi Old Street in Guanxi adopted a different approach. Although the Culture Affairs Bureau of Hsinchu County Government entrusted a street development company to repair the old street houses and recruit businesses and investments at the early stage, the company left after the project ended, and the Guanxi Art Community Development Association took over to help the culture and creative businesses to apply for government funds and cooperated with them to hold cultural and art events and experiencing activities.

Proposition 3: By integrating resources and establishing value proposition, the culture and creative block actors exchange services through the service system and co-establishing institutional arrangements to generate value resonance, resulting in value co-creation and service innovation.

Conclusion and Recommendation

Conclusion

The practice of economic sustainability practice ultimately would affect the service innovation outcome of businesses (Y. H. Lin & Chen, 2018). In cases where corporate sustainability and service innovation are studied, service innovation is considered an antecedent of corporate sustainability (Forcadell et al., 2019). The sustainability products and services through the recognition of external resources and knowledge, firms with relevant actors can co-create to ensure that product and service meets customer and community expectations (Marrucci et al., 2022). The key factor for the sustainable development of culture and creative blocks and the growth of local industries lies in whether the actors can meaningfully participate in the process of service innovation and value increase and can incorporate resources into the service system of value creation. If the actors hold the mutually resonating value, establish the value they can identify with and propose the value proposition of living and prospering together, they can exchange services in the service system, co-establish institutional arrangements, and create new value together based on value resonance. This study used the Dihua Street and Shidianzi Old Street as examples to explore the innovation activities in the culture and creative blocks and how actors integrate resources and value and further exchange services through the service system to achieve value co-creation and service innovation on the basis of co-establishing institutional arrangements as well as value resonance.

This study is the exploratory research on Dihua Street and Shidianzi Old Street, proposing the theoretical basis for the formation of service innovation in the culture and creative blocks. The results of this study are as follows: (1) During the process of culture and creative block revitalization and local economy reinvigoration, actors in the culture and creative blocks exchange their services by incorporating their own resources and proposing value proposition in a service system that includes corporate activities, brand dissemination, market structure research and resource relocation. Therefore, their value echoes with each other; value resonation is achieved. (2) The actors in the culture and creative blocks co-create value through the synergistic effect when their value resonates with each other and co-establishing institutional arrangements, thereby changing the existing institutions and customs and generating service innovation. (3) Actors’ value resonance and co-creation are critical to the sustainable development of culture and creative blocks. The actors co-create value based on the prerequisite of value resonance to facilitate service innovation in the blocks.

Research Contribution

Under the service-oriented logic, during the process of value increase and service innovation, actors in the culture and creative blocks exchange their services by meaningfully participating in related activities, bringing in their own resources and proposing value proposition through a service system that includes corporate activities, brand dissemination, market structure research and resource relocation. Therefore, their value echoes with each other. The actors integrate their own value to generate value resonance under the premise of consensus. Based on value resonance, actors co-create the value of mutual benefit and achieve service innovation together. Whether the culture and creative blocks can be developed sustainably to provide innovative services through revitalization is determined by whether the actors can integrate their value, which is the foundation of value co-creation. A high level of value resonance and value co-creation determine whether the culture and creative blocks can be revitalized sustainably and provide innovative services to further boost local economy.

According to the above research results, this study expanded the concept of culture and creative block revitalization, which previously only limits to cultural preservation, city image improvement and tourism. This study provided an innovative thinking approach for the sustainable development of culture and creative blocks and the reinvigoration of local industries. Boosting local industrial and economic development through the revitalization of culture and creative blocks has been a mainstream approach of city marketing around the world. Previous studies on culture and creative blocks have mostly focused on the tourist function the blocks can provide. Studies have not fully explored how the actors in the culture and creative blocks establish consensus, generate value resonance, co-establish institutional arrangements, co-create value, and develop innovative services. This study proposed that the service innovation in the culture and creative blocks stems from the actors’ value resonance and co-creation, which can help examine the effect of culture and creative block revitalization and the organizational efficiency of cultural innovation activities. The study results can serve as a reference for the sustainable development of local economy.

Implications for the Culture and Creative Industry

As for the Shidianzi Old Street, the local association communicates and discuss with the culture and creative business owners, local shop owners and local residents to reach consensus, propose their recommendations to the government to gain more resources, and continue to hold cultural activities in the old street, they can help increase the popularity of the Shidianzi Old Street and attract more tourists to visit the street. The Sedai Zone Co. recruited suitable culture and creative businesses to settle in the Dihua Street in the form of shop-in-shops according to the local traditional industries to create a value community. Such innovative business model attracted culture and creative businesses to gather in the Dihua Street and resulted in the clustering effect, leading to a transformation of the business structure of the district.

According to the research results, this study proposed the following recommendations: (1) Policy aspect: Boosting local economy through the revitalization of culture and creative blocks has been a local marketing approach used worldwide, to facilitate urban development and attract business, tourists, and population. Culture and creative blocks are mostly based on the upgrading and revitalization of historical buildings and therefore have high potential for sustainable development. Successful cases can serve as models for the development planning of other cities. (2) Economic aspect: Driving the growth of local industries through the revitalization of culture and creative blocks has been a crucial urban development strategy in addition to tourism. Therefore, apart from public facilities, governments should invest more resources in culture and creative block revitalization in cooperation with civil society organizations and private companies, thereby improving local economy through the cultural industry. (3) Social aspect: The innovative services provided by the culture and creative blocks are based on the process that the actors bring in resources and establish value propositions and in turn exchange services, integrate value co-establish institutional arrangements, and eventually generate value resonance in the service system. Only by co-creating value under the premise of value resonance can the actors in the culture and creative blocks continue to provide innovative services, increase the value of the blocks and manage the blocks sustainably.

Future Directions and Research Limitations

More and more governments consider local marketing as an important part of local governance, in the hope that the revitalization of culture and creative blocks can stimulate the growth of local industries and boost local economy. International studies on culture and creative blocks have been limited to the restoration of historical blocks and its stimulation of the tourism industry and cultural blocks. Future studies should investigate more on how actors can exchange services, generate value resonance, achieve value co-creation and realize service innovation through the service system by bringing in resources and establishing value proposition when local governments intend to boost local economy through culture and creative block revitalization. Furthermore, in view of the diverse revitalization approaches and models for culture and creative blocks around the world, future studies should increase the number of samples to explore the revitalization cases in different countries and cities with different approaches, to avoid the inability of applying the proposed strategies to other culture and creative blocks due to the sample size bias.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Shih-Ling Kuo

Data Availability Statement

Data sharing not applicable to this article as no datasets were generated or analyzed during the current study.

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