SAMINT-MILI 20055
Master’s Thesis 30 credits October, 2020
Understanding Value in Frontier Technology Environments
A case study on indoor air quality and HVAC systems
Gerardo Gallegos Castillo
Abstract
Understanding Value in Frontier Technology Environments Gerardo Gallegos Castillo
Business dynamics have generally been driven by the ability to create and provide value to customers. Value has evolved over time having meanings from merely price to something that actually creates a competitive advantage.
Nevertheless, with the fast change in market conditions, it has become relevant to understand value, how it is originated, how customers perceive it and strategies to delineate it in order to fulfil customer needs in frontier technology environments. This thesis aims to research on how value is perceived in indoor air quality and heating, ventilating and air conditioning technologies, what customers look for and what the drivers are to originate value. The study is supported in empirical data obtained through four semi-structured interviews from customers with experience in these fields working in companies in Europe. After the research, the findings in terms of value entail several factors.
Customers approach value by means of performance, however, at the same time this represents a constraint since it is important to balance performance over price. The value promise is also key to comply with customer expectations and current regulations in place. Moreover, due to the fact that locations are different and the type of buildings too, flexibility is another way to adopt value especially because these technologies are expected to have long lifespans and hence, it is important to consider changes in the future. The results also suggest that sustainable value can be found, improving people’s health, reducing environmental impacts and creating key partnerships corresponding to the triple bottom line of sustainability. Finally, some discussions are given in terms of barriers to create value such as the lack of incentives or low capital to invest, followed by a trend of energy saving systems to optimize and improve current conditions in this market.
Keywords: value, business-to-business, indoor air quality, heating ventilating and air conditioning, sustainability
Supervisor: Undisclosed
Faculty of Science and Technology Visiting address:
Ångströmlaboratoriet Lägerhyddsvägen 1 House 4, Level 0 Postal address:
Box 536 751 21 Uppsala Telephone:
+46 (0)18 – 471 30 03 Telefax:
+46 (0)18 – 471 30 00 Web page:
http://www.teknik.uu.se/student-en/
Popular Scientific Summary
Customers are important assets for any company. Due to the fierce competition in the marketplace, evolution in technology and the fast changes in trends, firms are focusing on creating strategies to generate value to their customers and increase satisfaction to achieve different business goals. Value is a term that can be subjective, it can mean the cost that one has to pay for a product or service, it can refer to the benefits versus the sacrifices done by customers or it can also be seen as superior characteristics that can help to differentiate from others. Despite the meaning, value is something that can give a competitive advantage and hence, help to retain or gain customers by fulfilling customer needs and requirements. The ability to understand value has become relevant for firms, and this is not the exception in high frontier environments like indoor air quality and HVAC systems fields.
The present research is based on four interviews performed to customers within the HVAC industry, with the aim to grasp their needs, difficulties, priorities and features that create value to their business. The results lead to understand the dimensions of value that are pertinent for them. These dimensions include the value promise, delivering what has been agreed; high performance, balancing cost and optimal usage; flexibility, foreseeing future challenges so the technology can cope with them; and sustainable value to create benefits to society, the environment and the organization itself. Notwithstanding the foregoing, they are also subject to diverse constraints, starting with low inducements, lack of understating of the importance of indoor air quality, and the conservative of this market makes it difficult to implement and adopt new technologies.
The findings of this study can be useful for practitioners and subject matter experts related to high technology products. They can give an idea of the drivers and parameters to consider at the moment to create and provide value to current and future customers. It is important to address that this research is held in one case study under specific circumstances and the results are mostly representative for this particular case.
Acknowledgements
I firstly want to thank my parents and sister, they have supported me during my entire life and encouraged me to accomplish all my goals. I dedicate all this effort to them, for being there unconditionally and because I know that this achievement makes them feel even more proud of me. All of you are a source of inspiration, an example of commitment that gives me courage to dream big.
I also want to thank all the new friends that I got during this journey. Your friendship is definitely the most meaningful thing that happened to me in this experience.
Thanks for sharing a little bit of your lives, thanks for all the nice talks and specially thanks a lot for becoming my family in Sweden. I am so grateful to all of you because you made me see my greatness even at times when I was not able to see it myself.
I finally want to thank myself, for never giving up even after all the obstacles that this year brought. Thanks for getting until the end, for being persistent, for trusting yourself and most importantly thanks for evolving into a better person. There are no words to describe how thankful I feel to life.
Table of Contents
1. INTRODUCTION ... - 1 -
1.1 Problematization ... - 2 -
1.2 Purpose of Research ... - 5 -
1.2.1 Research objectives: ... - 5 -
1.2.2 Research questions: ... - 5 -
1.3 Disposition ... - 5 -
2. LITERATURE REVIEW ... - 7 -
2.1 Economic perspective of Value ... - 7 -
2.2 B2B perspective of Value ... - 9 -
3. THEORETICAL FRAMEWORK ... - 13 -
3.1 The PERFA framework for value ... - 13 -
3.2 The sustainable framework for value ... - 15 -
4. METHODOLOGY ... - 17 -
4.1 Methodological approach ... - 17 -
4.2 Research design ... - 19 -
4.3 Case study ... - 20 -
4.4 Data collection ... - 21 -
4.5 Methodology execution ... - 22 -
4.6 Ethical considerations ... - 25 -
4.7 Limitations of the study ... - 26 -
5. EMPIRICAL SECTION ... - 27 -
5.1 Background ... - 27 -
5.2 Indoor air quality studies related to health ... - 28 -
5.3 Regulations regarding indoor air quality ... - 29 -
5.4 Customers Insights Regarding IAQ ... - 31 -
5.4.1 Perspectives from company N ... - 31 -
5.4.2 Perspectives from company B ... - 35 -
5.4.3 Perspectives from company D ... - 39 -
5.4.4 Perspectives from Company R ... - 42 -
6. ANALYSIS ... - 48 -
6.1 Performance as value ... - 48 -
6.2 Ease of use as value ... - 49 -
6.3 Reliability as value ... - 50 -
6.4 Flexibility as value ... - 51 -
6.5 Affectivity as value ... - 52 -
6.6 Sustainable value ... - 52 -
7. CONCLUDING DISCUSSIONS ... - 56 -
8. BIBLIOGRAPHY ... - 61 -
9. APPENDIX A ... - 68 -
List of Tables Table 1. Indicators within the PERFA framework ... - 13 -
Table 2. List of participants and their backgrounds ... - 25 -
Table 3. WHO guidelines for indoor air quality ... - 29 -
Table 4. CO2 limits according to SWEA ... - 30 -
Table 5. Comparison among different regulatory entities regarding CO2 ... - 31 -
Table 6. Summary of interviewees insights ... - 45 -
List of Figures Fig. 1. Triple bottom line in terms of sustainable value ... - 15 -
List of Abbreviations
AHU Air Handling Unit B2B Business to Business CO2 Carbon dioxide
HVAC Heating, Ventilating and Air Conditioning IAQ Indoor Air Quality
ICU Intensive Care Units
ISO International Organization for Standardization SWEA Swedish Work Environment Authority
WHO World Health Organization
1. INTRODUCTION
This section elaborates on the background and problematization of this study.
Furthermore, value will be discussed as it is a central starting point of this thesis as well as trends and barriers to originate it. Thereafter purpose and research questions are posed, hence the aim of this study.
Heating, ventilating and air conditioning (HVAC) systems are a set of devices that aims to control heat transfer operations in a certain space (Sugarman, 2016). These systems intend to provide comfort conditions and create an indoor air quality (IAQ) that is appropriate for the occupants in a building; one of the principal tasks of HVAC systems is to bring fresh air to the indoor space in order to clear excess of pollutants through ventilation techniques (Sugarman, 2016). In this way it is possible to guarantee an optimal work environment.
Despite the benefits that HVAC systems can proffer, they are also known for consuming significant amounts of energy in buildings, and nearly half of the energy required is used to control the temperature inside the buildings (Vakiloroaya et al., 2014).
According to Kusiak, Li and Tang (2010) there is an increasing concern about energy consumption within HVAC systems and most of the energy consumed by such systems comes from the air handling unit (AHU) which is responsible to condition the air and provide the proper parameters of the incoming air.
Per Balaras et al. (2007) research, buildings in the residential and commercial sectors constitute around 40% of the energy consumption in Europe. The increase in energy consumption in this region is due to the standards that apply for working places or housing spaces, such standards are very demanding and require control systems that regulate comfort conditions in these buildings. In addition, changes in the weather as well as in regulations have risen the demand for cooling devices to maintain correct IAQ parameters indoors (Balaras et al., 2007).
The need of these HVAC systems has led to obtain some benefits from them, and these benefits can be translated to value for different stakeholders. However, value is something that has different meanings, it can depend on the stakeholders and how they perceive value, but it can also be related to the moment when the transaction is taking place, so value will be assessed in different ways and it will be transitioning from the one
generating the value to the one who is receiving it, taking into account customer needs, as explained by O'Cass and Ngo (2011).
La Rocca et al. (2016) state that in business-to-business (B2B) environments, customer needs are sometimes problematic to foresee (La Rocca et al., 2016, p.47). In addition, the creation of alternatives in business-to-business is complex and context dependent, so customers do not have the full picture of the implications, hence, the needs arise because of the relation with others (La Rocca et al., 2016, p.47). After all, the final result of the development seems to be the outcome of the joint effort of the players taking part in the process.
Under this research, a study about heating, ventilating and air conditioning systems will be carried out. The idea is to understand how these systems can create value to customers or end-users and at the same time, how customers perceive value in a high- technology B2B setting, aiming to grasp their main concerns, difficulties, needs and features that create value to their business to assess the possibility to improve current conditions within the market.
1.1 Problematization
One of the main assets for a company is the customers, and therefore the relationships with them, which are also assets, are key in the strategy of any company (Youssef et al., 2018). The evolution in these relationships has changed the perception and created a need to deep grasp customers, giving as a result the involvement of customers as proactive actors in order to add value and therefore fulfil the needs in a more accurate way (Youssef et al., 2018). “Consequently, the more value the company provided to its customers, the more they retained” (Youssef et al., 2018, p.146).
Due to this shift, moving from a product-centric to a customer-focus, companies have paid special attention and invested more resources to successfully implement customer management strategies (Verhoef, Reinartz and Krafft, 2010, p.247). The notion that customers are an asset to firms has then led to understand customer value and to evaluate how is driven as well as the advantages that it brings to the organization, giving as a result a way to allocate resources and make decisions (Verhoef, Reinartz and Krafft, 2010, p.247).
Within the HVAC systems and indoor air quality fields there is a wide range of customers with different particularities, they can include from simple buildings for example schools and restaurants, to very complex ones like hospitals and industrial buildings, thus, the way that the needs are analyzed has to correspond to the type of customer involved in the project (Du, Zhang and Lv, 2020). Since each type of building has been designed to satisfy a specific function, the value generated can vary, making it more challenging for HVAC systems to comply to every kind of space (Du, Zhang and Lv, 2020).
Intensive care units (ICU) are one particular example where one can see how challenging HVAC systems can become. In ICU, ventilation systems are not only responsible for controlling temperature, moisture, and other variables, but they are also key in hospitals as a strategy to avoid the spread of infections (Saran et al., 2020).
Furthermore, there are tough standards and regulations in place that must be fulfilled before these systems can operate, aiming for people health to control the exposure to biological hazards (Saran et al., 2020).
As stated by Gummerus (2013), superior customer value has become an ultimate objective to endorse competitive advantage, representing a priority for businesses to provide the highest value to their customers. Understanding customer value represents an interest because the insights that customers have on value can help to comprehend customer behavior in terms of loyalty, satisfaction and purchase intent (Gummerus, 2013, p.20).
It is fundamental for firms to create value in order for them to survive, either if the market is dynamic or not, firms are constantly exposed to several changes that can cause a variation in their offer, the way of making business and their interactions (Lindgreen et al., 2012). Nevertheless, in terms of economic value, an organization can have profitable customers only if such organization is also able to grant its customers with a value offer; in consequence, keeping customers which do not create any profit ends up annihilating value (Lindgreen et al., 2012).
Looking at Boothman’s (2020) publication, he listed some of the possible trends that may be part of HVAC systems in the future. These trends encompass energy management to become more efficient, systems that have a reduced level of noise, integration of feedback into the systems, more customized units and rising performance
standards. The combination of one or several of these aspects can lead to create superior value or provide a competitive advantage that allows differentiation.
Ellis and Mathews (2002) also acknowledge the importance that energy efficiency has in buildings, however, keeping high standards of indoor comfort represents a priority at the same time, due to this, a trade-off may be needed in order to comply with both, on one side a system than can regulate and guarantee that a good indoor air quality is achieved and on the other, a system that is capable to utilize energy in an optimal setting so that the consumption is not excessive (Ellis and Mathews, 2002). This trend seems to have some relevance and hence, it can be discussed if it creates value in HVAC systems.
Moreover, part of the importance of ventilation is due to the fact that individuals in urban areas are spending more time indoors, this is increasing the concern about studying the atmosphere in these enclosed spaces (Marć et al., 2017). It has been shown that the lack of good ventilation routines, the activities that humans do indoors and other pollutants that are generated inside the building have a direct impact in the indoor air quality (Marć et al., 2017).
In addition, there are several studies stating the effects that indoor air pollution has on people, not only in children but also in adults (Franklin, 2007). Respiratory diseases can arise as a consequence of poor indoor air quality, an inefficient supply of fresh air can also influence fatigue, dryness and eye irritation (Apte et al., 2000).
Furthermore, individuals inside the building can experience the sick building symptom which is a condition where the people inside buildings see their comfort or health impacted due to the time spent into a closed space such as an office (Apte et al., 2000).
The trends in energy efficiency in HVAC systems, humans spending more time in enclosed environments, and the impact on people’s health represent a demand that has to be taken care of. The players involved in this market have to look for opportunities that allow them to satisfy their customers, bringing alternatives that solve this problematic, incorporating an integral perspective of the issue so they can meet the expectations and originate superior value in several ways.
Although superior customer value can be beneficial, there may be factors that limit it. In their work, Hesselink and Chapping (2019) list some of the barriers that affect the adoption of these technologies in the building sector. These barriers include inadequate infrastructure, lack of incentives, low budget to invest in new technologies, without
leaving aside lack of knowledge about how these technologies work and the benefits that they grant (Hesselink and Chapping, 2019). Regardless of what the reason is, it is important to keep in mind the boundaries that can limit the adoption in ventilation systems.
1.2 Purpose of Research
This research aims to grasp the concept of value in HVAC systems by addressing the following research objectives and research questions.
1.2.1 Research objectives:
Due to the development of new technology in the firm, actions in different manners need to be taken to deliver a solution that can successfully create value for both customers and the company. Therefore, the following objectives have been established:
\ To understand what customers are looking for in terms of indoor air quality related to carbon dioxide.
\ To elaborate on customer needs and priorities within heating, ventilating and air conditioning systems in Sweden.
\ To find out relevant drivers that can help to build a robust value proposition for the stakeholders involved in the project.
1.2.2 Research questions:
\ How can carbon dioxide removal technology create value to the customers?
\ How do customers perceive value within this high technology environment?
1.3 Disposition
The content of this thesis is organized in seven chapters following this arrangement:
introduction, literature review, theoretical framework, methodology, empirical section, analysis and concluding discussions. The next chapter is the literature review, it contains
a collection of different theories and dimensions about value, starting with the economic perspective and changing to the B2B environment. The literature review serves to grasp an essence and describe the concept of value in different settings as to show its variety, and the ways in which value encompasses different themes. After that, the theoretical framework is presented, it covers two main theories which have been utilized to analyze the data, the first theory is an approach based on the experience of customers while the second one focuses more on sustainable value. Altogether these theories provide a solid set to process the information gathered and identify relevant facts aligned to the purpose of this thesis. In the methodology section, a selection of tools for qualitative research is done, arguing in each case what the purpose is and how this supports a systematic approach to conduct the whole study and then be able to drive relevant conclusions.
Thereafter, the empirical chapter comprises several building blocks to provide evidence related to indoor air quality and heating, ventilating and air conditioning systems. Besides that, most of the perspectives of the interviewees are shown to evidence their insights in terms of value within this field. Later, in the analysis section, the data obtained are contrasted with previous theories about value in order to find a fit with these theories and conclude with final discussions related to the topic and the subject of study.
2. LITERATURE REVIEW
The following section introduces a comprehensive review of the value theory related to this field. It is directed to provide several angles on how value is perceived and appraised in economics and B2B contexts.
2.1 Economic perspective of Value
Over the course of history, there have been several discussions about the concept of value.
Elder-Vass (2019) refers to this concept under an economical approach, meaning that it has certain link to price, what the customer is expecting to pay for an item; however, even if the price is set that does not imply that the value is perceived the same way by others (Elder-Vass, 2019, p.1486). Additionally, Elder-Vass (2019) presents value as normative under both social and ethical dimensions, the former on the manners to appraise items and the later on what is fair for a price.
Following the same line, Boltanski and Esquerre (2016) mention that value gives reason to prices, and in this sense, it denotes the characteristics that are part of the object of exchange, despite this, the value that the object can have in the market can differ from its real value (Boltanski and Esquerre, 2016). Moreover, they describe three main archetypes to determine value: the collection, the standard, and the asset where different attributes drive towards the explanation of price (Boltanski and Esquerre, 2016).
But even the antient Greeks have explored the concept of value before (Johnson, 1939). According to Johnson (1939, p.445) “For both Plato and Aristotle, labor is something which has value, not something which gives value”. These two philosophers considered wages as a reference that represents the value for labor, and labor is a way to create goods to society and requires effort and time (Johnson, 1939). Moreover, in one of his works, Aristotle stressed the inherent use that the object has, and that is what differentiates the value that it has (Johnson, 1939).
Furthermore, Marx was another exponent who formulated a theory of value.
Under his thought, he portrayed the connection of the amount of labor needed to create a good and the price of this good, besides that, he went one step further and evidenced the imbalance created due to the dissimilarity in wages paid and the value of the commodities
made, and how this was leading to a disadvantageous distribution of wealth, thus, creating a need to comprehend social labor (Collins, 2016).
The marginal utility theory uses more the term price rather than value, although it can be argued that the terms were used interchangeably (Elder-Vass, 2019, p.1488).
Marginalists explained how price impacts supply and demand and they both adjust to create a balance so that the price gets to an equilibrium point (Elder-Vass, 2019, p.1488).
Even though the demand can be affected by several factors, the price of the good in the market shows the same value for all actors (Elder-Vass, 2019, p.1488).
While trying to formulate a theory of value, Adam Smith also contributed to this task. As an economist, Smith formulated that the commodities to be exchanged need to indicate the expenses generated by labor or the objective of the exchange (Sinha, 2010).
In this sense, he phrased that the parts composing the price of a commodity should be linked to profits, wages and rent; regardless of his extensive work, he got exposed to different criticisms over the time (Sinha, 2010).
Part of this criticism to Smith’s work is mentioned by Meacci (2012) taking some of the Ricardian’s ideas. David Ricardo was another classical economist framing a value theory, again he takes into consideration the labor spent in the production of the commodity to estimate the value that it should have, dismissing, in some extent, the wages (Meacci, 2012). Ricardo’s contributions also include theories about rent, international trade, profits and wealth (Meacci, 2012).
To add more to this value theory under the economic perspective, Isaak Rubin took some of the Marx’s insights and reformulated some terms (Meng, 2010). Rubin stated that it is the value in the market which sets the equilibrium price and he also mentioned that “The state of technology determines the value of the product […]” (Meng, 2010, p.662). He did not only focus on the drivers of supply and demand in the market, but also, outlined that value needs to encompass aspects such as money and capital (Meng, 2010).
After exploring some of these theories driven mainly in economics, it is possible to grasp some of the factors that are tied to value, for some, it is closely related to price, even though, this could be subjective and perceived as it is not the actual value of the product, and for others it revolves in regards to the process that is behind its production and how the market will react depending on the needs of supply and demand.
2.2 B2B perspective of Value
According to Gil-Saura, Frasquet-Deltoro and Cervera-Taulet (2009), the tendency in business-to-business markets is to create more solid relationships, this has generated a need for a better selection of partners to increase productivity, share investments and create value. Consequently, marketing is changing from a perspective where everything was centered on transactions or value of exchange, to a perspective where value is based on relationships (Gil-Saura, Frasquet-Deltoro and Cervera-Taulet, 2009).
This change in focus is also addressed by Vargo and Lusch (2004). In their work, they compare different dimensions to understand how the logic is transitioning from goods to services. From the goods position, the manufacturer is who decides the value and “wealth is obtained from surplus tangible resources and goods.” (Vargo and Lusch, 2004, p.7). In contrast, when it comes to the service viewpoint, it is the consumer establishing the value based on the use, and what originates wealth is the transfer of knowledge and skills (Vargo and Lusch, 2004, p.7).
However, the value in business relationships can consist on several dimensions, as explained by Eggert, Ulaga and Schultz (2006). This value can be enhanced by augmenting the benefits received or reducing the costs of the relationship (Eggert, Ulaga and Schultz, 2006). They describe the ways of value creation in business relationships by core offering, referring to the quality and performance; sourcing process and customer operations, including new products development and time-to-market (Eggert, Ulaga and Schultz, 2006).
In a similar basis, Walter, Ritter and Gemünden (2001) see value in business markets as the balance between the advantages granted and the sacrifices done within the frame of a customer relationship experienced by influencers in the organization of the supplier. In addition, the target has been set on customer’s value since if a company wants to outperform in the market, then it needs to provide an added value to its customers, a way to differentiate itself from its competitors (Walter, Ritter and Gemünden, 2001, p.366).
Depending on the context, value can have multiple concepts in a B2B setting (Mencarelli and Rivière, 2015). It could refer to the cost-benefit granted, the gains created but value will certainly differ if it is perceived by the supplier, the customer or the network
(Mencarelli and Rivière, 2015, p.206). Therefore, when analyzing what customers understand by value, it is important to specify the limits where this term is addressed, and therefore make sure that the actors perceive it the same way.
How corporations delineate value is as important as defining what customers understand by value, and in some cases, corporations do not know what value means or how to appraise it (Lindgreen and Wynstra, 2005, p.733). Both streams are important since a customer who is content with the value proposition that has been received, this customer will later show loyalty and might influence in future decisions at the moment to buy again from the same company (Lindgreen and Wynstra, 2005, p.732).
Payne and Holt (2001) highlight the importance of considering value over time in a relationship, especially if the firm is following a relational strategy, since value can be influenced by different internal or external factors. Hence, value should not be addressed as a single time transaction, value will be modified as a consequence of the interactions among the actors, meaning the customers of the company (Payne and Holt, 2001).
Under the same perspective, in relationship marketing, value is a key component and the capability to give superior value to customers represents a favorable tactic of the previous decades (Ravald and Grönroos, 1996, p.19). The idea behind this strategy is to gain loyalty from customers, and the way to get it is through added value to the main offering, so that the satisfaction perceived by such customers increases by means of quality or other essential features that are important for them (Ravald and Grönroos, 1996, p.19).
Notwithstanding the above, Ravald and Grönroos (1996) note as well that even if added value is provided, this will not be successful in the long run if it is not aligned to customer needs, and therefore, could end up creating more expenses to the organization, and these expenses need to be transferred to the buyer in the final price. Thus, the value conferred to should have a focus based on customers (Ravald and Grönroos, 1996, p.21).
In their research, McDougall and Levesque (2000) acknowledge the difficulty to frame the concept of value, since this term can be understood in a different manner among several customers. So, the way that value is perceived can enclose not only the benefits obtained versus the expenditures, but also the advantages or aspects of the services that are not offered by other players (McDougall and Levesque, 2000, p.394). Finally, it is
also stated that quality and value are main elements that impact customer satisfaction (McDougall and Levesque, 2000, p.405).
Along with these contributions, there are also other streams discussing about how value is generated. O'Cass and Sok (2013) instance two main paths, one having a managerial angle and the other concentrated on customer’s perceptiveness. Besides that, value creation is a process with several phases, and in each phase, different actors participate, because of that, combining the managerial and the customer’s perspective paths can lead to a better understanding of the whole value term (O'Cass and Sok, 2013, p.1074).
As stated by O'Cass and Ngo (2011, p.646) “The primary pursuit of business is to create and maintain value”. These authors, same as Payne and Holt (2001), convey the importance to consider the transition of value over time. The stages where value is implicated and appreciated go from the proposition, the moment of trade, when the good is utilized, and the post-use; in all of these periods, value is assessed in different means by the organization and by the receiver (O'Cass and Ngo, 2011, p.647).
Other views about customers have also arisen, for instance, in relationship marketing where the customer is not a static agent only waiting to receive something from a supplier, by contrast, customers are active stakeholders involved within the co-creation value process (Sweeney and Webb, 2002, p.78). Furthermore, customer value emerges as well from the outcomes of relationships, generating benefits that can be tangible such as profits and add-on characteristics, and also intangible like trust and commitment (Sweeney and Webb, 2002, p.79).
While adopting the conception of customers being seen as co-producers of value, and in terms of the service-dominant logic, it is appropriate to introduce the term value- in-use since it is key under this framework (Witell et al., 2011, p.142). Value-in-use exists solely when the act of consuming the good or service is taking place, this means it is been used; therefore it requires to include customers while originating offerings, since they are the ones who will actually perform this process (Witell et al., 2011, p.142).
On the other hand, it is also possible to bring part of the principles of the resource- based theory. For instance, Bowman and Ambrosini (2000) express under this framework that within a firm a resource is valuable as long as it helps to fulfill customer needs, can meet requirements in a more affordable manner than the competitors, and grants the
organization with more effective strategies. In terms of the idea of value from the customers’ side, this is linked to their personal thoughts, desires, requirements, etc.
(Bowman and Ambrosini, 2000, p.2).
3. THEORETICAL FRAMEWORK
This chapter entails the specific theories to analyze in this research. The first one is mainly based on customer experience and the second one lays on value seen as sustainability. Each perspective surrounds diverse levels in which value can be achieved, perceived and created.
3.1 The PERFA framework for value
Taking part of the contribution from Lindi and Marques da Silva (2011), the PERFA framework, built on customer value propositions of innovations in Amazon, will be deployed. This framework relies on the expectations of customers in terms of performance, ease of use, reliability, flexibility and affectivity (Lindi and Marques da Silva, 2011, p.1701). The logic behind this approach is that customers make their minds during the decision-making process, so the value proposition has to be addressed taking into account the perception of the customer (Lindi and Marques da Silva, 2011, p.1696).
The Table 1 explains the concepts previously listed as part of this framework.
Table 1. Indicators within the PERFA framework
Indicator Definition
Performance Balance between a good service and profits for the company Ease of use Perception of the customers facing the least difficulties to
operate a product
Reliability Compliance to what has been committed
Flexibility Capacity of the organization to react to internal or external changes
Affectivity Emotional experience either by getting a product of the company or because of belonging to the firm
*Adapted from Lindi and Marques da Silva 2011
Starting with performance, this characteristic combines several aspects that the company includes in its value offer. It is about high quality, technical performance, specific attributes and being able to fulfill the requirements of customers (Bonner, 2010).
This covers another perspective, since while competing in the market, customers choose among the options that better satisfy their needs, besides that, they also build expectations
in terms of performance, how the device should operate and function (Lindi and Marques da Silva, 2011).
Secondly, ease of use, this indicator refers to how complicated or undemanding is to operate a system under its normal procedures (Davis, 1989). As defined by Davis (1989, p.320) perceived ease of use denotes “the degree to which a person believes that using a particular system would be free of effort”. Lindi and Marques da Silva (2011) emphasize that easiness is a feature that helps users or customers to adapt to a system, therefore, if the product decreases the effort performed during the task to be done, the value is increased.
The third element of the PERFA framework is reliability. According to van Raaij and Pruyn (1998), reliability implies that the product or service has to operate according to what has been defined and with an outstanding performance. Pitt, Watson and Kavan (1995) come to a similar definition but they also add accuracy as a factor for reliability.
The way that this adds value is by providing exactly what has been agreed, what is set in the specifications, with the benefits and gains that were committed (Lindi and Marques da Silva, 2011).
Flexibility is the fourth parameter under this framework. Flexibility is seen as the ability to react to change, it is the possibility to cope harmonically with both change and stability (Regev, Bider and Wegmann, 2007). In addition, Sanchez and Perez (2005) mention that flexibility enhances the competitiveness of the firm since it is perceived as the way that the company reacts to incertitude. The reason why this parameter is important is because the changes in the environment and the changes in the customer needs require the capacity to adapt to them to avoid customer dissatisfaction (Lindi and Marques da Silva, 2011).
Finally, the term affectivity. In some extent, this could be related to the specific features or characteristics that are bind to a brand (Farquhar et al., 1992). Furthermore, affectivity can encompass emotions embedded by the fact of using a product from a specific company (Lindi and Marques da Silva, 2011). Some of the value features in this sense are that it allows to create a bond with the organization by using its products, it can also lead to fortify brand reputation if it holds its value promise to its customers during the life cycle of the product (Lindi and Marques da Silva, 2011).
3.2 The sustainable framework for value
As explained in previous sections, value can have different interpretations. In many cases business models mostly focus on the economic value and the value for the customer (Biloslavo, Bagnoli and Edgar, 2018, p.753). Under these business models, the idea is to generate profits for the company by delivering value to customers; however, on the basis of an eco-critical perspective, value emerges from society wellness, considering effects on the planet as well as the impact to the population (Biloslavo, Bagnoli and Edgar, 2018, p.753).
To further elaborate on the above, Yang, Vladimirova and Evans (2017) describe that capturing value is done through the benefits offered not only to the organization but also to its stakeholders, and it incorporates economic value, environmental value and societal value. When these three aspects are combined, then it is possible to state that the offering is creating or delivering sustainable value (Yang, Vladimirova and Evans, 2017, p.32).
In their work, Joyce and Paquin (2016) present a tool for business models where they included social and environmental levels as part of the design of business models.
For this theoretical framework, only some implications regarding each dimension (environmental, social and economic) will be analyzed. The Figure 1 shows the interrelation of each layer in order to capture sustainable value:
Fig. 1. Triple bottom line in terms of sustainable value
In reference to the environmental aspects, it can be understood as the creation of more environmental benefits than negative consequences to the nature, that at the end
Social
Economic Environmental
adds value by preserving environmental resources (Joyce and Paquin, 2016). As one of the components of the environmental aspects is the functional value of the product, what the aim of the product is; another aspect is the environmental impacts, which is basically any adverse change generated to the environment, for instance, release of pollutants, natural resources exploitation, etc. On the contrary, the environmental benefits entail “the ecological value the organization creates through environmental impact reductions and even regenerative positive ecological value” (Joyce and Paquin, 2016, p.1479).
On the other hand, the social aspects are related to the balance and analysis of the stakeholders, how the actions of certain project or product can influence or affect others by its implementation (Joyce and Paquin, 2016). This dimension includes social value, which implies delivering positive outcomes to stakeholders and society; communities are also included within this dimension, how relationships with the surroundings can create value to different parties in society; in addition, end-users also conform this stream, and in this sense, the value arises on how well the needs are fulfilled so that this can contribute to a better life quality (Joyce and Paquin, 2016).
Lastly, the economic aspects consider the ability to generate economic value (profits) having an equitable distribution in a lawful way (Joyce and Paquin, 2016). As a component of this segment is the ability to build partnerships, that can result beneficial while creating strategies to share value; moreover, customer relationships are fundamental since they determine the methods to attract new customers and retain the current ones; besides that, the value proposition has to capture and clearly communicate the benefits that the customers get and create a return for the company (Osterwalder et al., 2014).
4. METHODOLOGY
This section presents the methodological approach driving this research. It gives sense to the systematic tools and techniques to analyze and collect data. It also describes the selections why some methods were more appropriate than others and it finishes with an explanation of the execution of the methodology once it was deployed.
4.1 Methodological approach
Research involves a series of steps to ascertain facts or to gather information on a particular matter in a systematic form (Habib, Pathik and Maryam, 2014, p.3). Research goes beyond collecting evidence, it is an in-depth study of a situation which aims to extensively investigate different alternatives to solve an issue (Habib, Pathik and Maryam, 2014, p.3). Depending on its type, it can be classified in various ways and circumscribe several strategies.
Bryman and Bell (2015, p.26) define a research strategy as “a general orientation to the conduct of business research”. These authors mainly differentiate two research strategies in their book, quantitative research and qualitative research. The distinctions between the strategies are principally based on their ontology and epistemology, as well as how the theory is managed within the research (Bryman and Bell, 2015, p.27).
Some of the characteristics listed by Habib, Pathik and Maryam (2014) of a quantitative research are a large sample size, the use of statistical analysis to outline conclusions, structured questions, and it should be able to quantify the indicators with an accurate statistic treatment. In addition, quantitative research can be utilized to recognize repetitive patterns and create models to predict behaviors, and it also requires a strict control under the variables of the study (Hammersley, 2013, p.11).
According to Bryman and Bell (2015, p.386) “qualitative research tends to be concerned with words rather than numbers”. Qualitative research can be characterized by its inductive approach, the interpretation of the world by the individuals taking part on the research (what the individuals think), and that reality is dynamic due to the interaction of its individuals (Bryman and Bell, 2015, p.27).
Qualitative research performs observation of the phenomenon taking place and provides voice to subjects so that they can express themselves in their own words, for
instance, in interviews (Hammersley, 2013, p.11). Qualitative research follows a holistic perspective, it is also thought that full impartiality is hard to attain, it demands interpretive techniques to make the natural setting perceivable in more than one single way (Gupta and Awasthy, 2015, p.14).
Moreover, Gupta and Awasthy (2015) present some objectives of qualitative research. For instance, understanding dynamism. They mean that reality is constantly evolving and is not static due to the interactions happening in the environment (Gupta and Awasthy, 2015, p.16). Another objective lays on a thorough description, where even extracts of the subject’s experiences are exhibited (Gupta and Awasthy, 2015, p.16).
Finally, they also comment on a holistic position, exploring the different parts which comprise the whole and untangling its interdependencies (Gupta and Awasthy, 2015, p.16).
Since the objective of this project is to understand how the technological concept is perceived by the customers, the methodology will follow a qualitative research. Under the bases of qualitative research, potential customers of this technology will be reached.
The insights from the customers can provide information that cannot be quantified; hence, it is necessary to understand their opinions, what they look for, what problems they intend to solve, what creates value to their business. The researcher will have to approach the customers to see how they interact in the market, the dynamism that occurs within the network and how other parties play a role into this high technology environment.
The holistic perspective in qualitative research contributes to integrate several insights from the participants taking part of this study. The participants working in HVAC systems can have different business agendas and pursue different goals, that is why this type of research is suitable to combine and address numerous angles, to see how they break the concept of value down and what it actually means for them. Consequently, they can comment on what they expect from new technologies in this sector and if they actually require a carbon dioxide removal technology in the short or long term. Customers can also explain the current needs in the market and the market trends leading potential innovations within indoor air quality.
Once the research strategy has been chosen, following a qualitative approach, a research design has to be addressed. A research design helps to set the boundaries on how
the data will be obtained and transformed for the analysis and align to the purpose of the research (Bryman and Bell, 2015, p.40).
4.2 Research design
Creswell et al. (2007) describe that depending on the scope of the research there are several types of qualitative research designs that can be executed. They mainly concentrate in five of them: narrative research, case study, grounded theory, phenomenology, and participatory action research (Creswell et al., 2007). In the next paragraphs an explanation of some of these designs is given.
Narrative research is based on stories in written or verbal form about something that happened over the time and which are interrelated (Creswell et al., 2007, p.240). This research design might be suitable when the issue can be framed using the series of events, and a way to analyze the data is through chronology (Creswell et al., 2007, p.240). Since the research that is intended to be carried out in this degree project is not related to situations developing in a time interval, narrative research has not been selected as an appropriate method to understand the problem. This research aims to investigate what is happening at the present time, how HVAC systems have evolved, what benefits they can grant for customers and end-users so conducting narrative research is inappropriate.
As another alternative, grounded theory can also be used in qualitative research.
Researchers use grounded theory to describe an interpretation or a theory about a phenomenon based on the perception of a high number of individuals (Creswell et al., 2007, p.249). Grounded theory demands a very extensive rigor and can use several coding procedures to interpret data (Creswell et al., 2007, p.241). In order to ensure feasibility during the research, and since a large number of respondents is hard to get during the timeframe specified, grounded theory will not be used for this thesis work. The idea behind this research is not to create theory related heating, ventilating and air conditioning devices, the objective is to hear what the customers have to say, the opportunities that they see for their business and in this way find interesting drives for the stakeholders.
Finally, Creswell et al. (2007) present case study as an alternative when the focus is on the context of the case, the case could refer to a group of people, one character, program, etc., using several ways of data collection to strengthen the research. For
instance, it can use observation, interviews, documents as a manner to collect data and it is used in disciplines such as medicine and social sciences (Creswell et al., 2007, p.245).
Under this background, case study design represents a good opportunity to develop a qualitative research, since the purpose of this case is based on an organization, a company developing a concept of a specific technology.
4.3 Case study
Case study has been chosen as the research design for this project. Case studies help in the study of events under their ‘normal’ environment so that it is possible to comprehend them (Heale and Twycross, 2018). It can be argued that when using a single-case study generalization becomes harder, however collecting different types of data makes possible to get a deep understanding of the studied situation (Heale and Twycross, 2018).
According to Jackson et al. (2007), case studies can be used when the research questions are from the type ‘how’ or ‘why’, there is low governance over the circumstances under analysis, and when the borders between the context and phenomenon are not explicitly delimited (Jackson et al., 2007, p.25). Considering the features stated before, case study suits under the objectives pursued for this research.
Firstly, the two main research questions of this thesis are ‘how can carbon dioxide removal technology create value to the customers?’ and ‘how do customers perceive value within this high technology environment?’. And secondly, the researcher wants to understand the phenomenon in its current environment, why the customers in ventilation systems operate the way they do and how value is seen depending on the situation happening at this moment.
Simons (2009) lists various advantages in the practice of case study research.
Firstly, it grants the possibility to the inquirer to proceed with a self-reflexive stance to know the object of study. Secondly, it can compile several viewpoints surrounding the phenomenon. Thirdly, case study can do both observe the process and how change evolves during the process. Lastly, “Case study is flexible, that is, neither time-dependent nor constrained by method” (Simons, 2009, p.23).
At the same time, case studies are also subject to flaws. Some of them are for example, that it becomes arduous to handle the large amount of data that is captured,
giving as a result very extensive documents (Simons, 2009, p.24). Additionally, this research design belongs to the specific period when it is taking place, and chances are that individuals participating in the research have evolved and changed (Simons, 2009, p.24). On this matter, the researcher has to make sure that the customers selected for this study can provide insights about the problematic happening at this moment, having as a common context the Swedish market.
This case study is constituted of several building blocks, covering different perspectives in terms of HVAC systems and indoor air quality. Therefore, a case study approach was the most suitable choice in order to answer the purpose of this study an in- depth knowledge was crucial. Hence, these building blocks entail the problems that carbon dioxide causes to the planet and to people, the regulatory framework applicable to Sweden and the insights from customers. The insights from customers are key for this research, and therefore, they have been given a high priority while collecting, processing and analyzing.
4.4 Data collection
There are diverse methods of data collection that can be used under this research strategy, for instance, focus groups and interviews. The former is a technique where a group of people interacts to share standpoints about a defined topic and it is usually led by a moderator (Chadwick et al., 2008, p.293). Furthermore, focus groups are beneficial to understand individuals’ detailed notions and practices and what is behind them (Chadwick et al., 2008, p.293). This tool can also be seen as a way to expand or elucidate data that have previously been gotten from other means (Chadwick et al., 2008, p.293).
Notwithstanding the foregoing, focus groups are not meant to be practiced when quantitative data is needed, if somehow the phenomenon to be addressed is not interesting to either the researcher or the members, and if the participants do not feel comfortable with the settings where the focus group is taking place, disrupting the interaction among the actors (Chadwick et al., 2008, p.293). Chadwick et al. (2008) mention that an ideal group size could be from six to eight people, despite this, focus groups will be neglected as a data collection alternative, due to the complexity to coordinate and bring together the stated number of participants.
Besides focus groups, interviews are also a procedure followed in qualitative research. Interviews are suitable to get in depth details about the issue considering the single perspective of the interviewees, they are also helpful when the matter at hand is difficult to discuss in front of more people and participants are not willing to express themselves in front of an audience (Chadwick et al., 2008, p.292). Although a series of questions is already prepared, it is relevant to go into more detail when it is uncertain what the interviewees mean, this can be done by using leading questions to expand their answers (Chadwick et al., 2008, p.293).
After setting aside focus groups and interviews offering a concrete strategy, collection of data then will be done by developing semi-structured interviews. Semi- structured interviews are constituted by a set of questions, in some cases, open-ended questions are formulated to allow the interviewees to detail their experiences (Galletta, 2013, p. 47). While preparing the interview guide, the questions should be related to the subject of study and they should help to answer the research questions, thus, a brainstorming was done to align the main topics of interest and later, elaborate questions that can help as a vehicle to drive the conversation and to get valuable outputs. In this document, the interview guide can be found in Appendix A. Most of the questions are open-ended, and the interview guide was refined several times until it got to its final version.
After conducting all interviews, the information collected will be transcribed and analyzed in-depth by means of thematic analysis. Thematic analysis is a method used in qualitative research and it entails screening data in order to find recurrent patterns (Clarke and Braun, 2017). Thematic analysis can be utilized in different settings, for example, case studies, besides that, it can be used under different samples, types of data, and “can be used for both inductive (data-driven) and deductive (theory-driven) analyses” (Clarke and Braun, 2017, p.298).
4.5 Methodology execution
As part of this research, a literature review has been done in order to understand the main streams with regard to the concept value, from its economic perspective to the different dimensions in terms of B2B, in such a way it was possible to capture the perception of
this term depending on the stakeholders, the type of transaction, the point on time and on this manner, grasp a more integral way of value definition and its boundaries.
Since this project is performed in cooperation with a Swedish startup, several meetings were held with the Project Manager and the Product Specialist in order to align some goals to the research objectives and get a better understanding of some aspects of their strategy. In addition, a review of the technical aspects of the technology involved in this project was done, for the purpose of gaining more insights and knowledge about the relevant features of the value offer.
This degree project is carried out using an inductive research approach, trying to find evidence in the data that can help to identify patterns that can further lead to possible generalizations (Woo, O'Boyle and Spector, 2017, p.257). Both primary and secondary data were gathered to understand the grounds of the regulatory framework, potential stakeholders such as possible customers and competitors, so that it was possible to outline key building blocks for this degree project.
Because this research is following a qualitative approach, to interact, to get closer to the customer voice and in this way being able to understand their needs and concerns, an interview guide was developed with the objective to let the stakeholders talk and express their thoughts in their own words. The interview guide consists of eleven main questions, starting with general questions for example “What challenges are you currently facing in terms of indoor ventilation?”, to specific questions for instance “What current features create value to your business regarding Indoor Air Quality?”. Follow-up questions were also added depending on the pace of the conversation. The interview guide can be found in Appendix A. As a final step, the subject reader of this thesis project reviewed the interview guide prior conducting the interviews, in order to make sure that the questions were consistent and avoid lack of objectivity.
Before proceeding to the interviews, the interviewees were contacted via email to inform them about the project, the research objectives, and the aim of the study. The interviewees were asked about the possibility to audio record the interview and they all agreed to be audio recorded, this allowed to analyze the answers several times and ensure that the information was not lost. Besides that, the participants were also asked about if they wanted to hide their identity for the interview, and they consented to show their
names, nonetheless, to avoid any possible conflict of interest this information will not be revealed.
The interviews were done using a software which allows video calling. During the interviews, additional notes were taken to emphasize specific insights that the person was providing, or when something important was addressed and then there was a need to create a follow-up question on that matter. The people participating in this study are stakeholders that are related to the topic about indoor air quality or they have knowledge on heating, ventilating and air conditioning (HVAC) systems and/or air handling units (AHU).
In total, four interviews were conducted within this research. The participants have different backgrounds, and work in different positions in companies located in Europe. These companies either are located in Sweden or have customers or a branch in this Scandinavian country. The reason why these interviewees were involved in this study was because they understand the current market needs, are aware of the actual and new technology, and can provide standpoints to comprehend how value is created, transferred and perceived within this field.
The interviews lasted from approximately 45 minutes to 61 minutes and none of them was possible to be done face to face due to circumstances out of control. The first person participating in the interview has five years as a Manager in the Research and Development Department of a company in Sweden focused on indoor climate and with presence in more than five countries in Europe and America. As a company, they offer products and services to help customers to choose the right ventilation solution to create an accurate environment and provide comfort.
The second interviewee of this research is a Strategy Research and Development Manager, he has been in that position for almost twenty years and his office is located in Slovenia. The organization that he represents is an international group with facilities around the world and headquarters in Sweden, they develop products and system solutions within the construction and indoor climate fields.
The third interview participant works in a consulting firm based in United Kingdom, he is the Head of the Healthy Buildings Department and has held that role for one year. They provide different services in terms of building performance and indoor air quality, they offer advise during the different stages of the project from the concept
generation to the final phase, making sure that buildings deliver high performance in an integral sense.
The last participant develops a role as an Export Sales Representative in a global ventilation company, he has been in that position for one year but has been in the business for more than ten years. The company holds operations in more than fifty countries around the globe, it combines energy efficient systems and sustainable developed products to create reliable indoor environments for the customers.
The Table 2 summarizes the list of participants who took part of this study. An overview of the location, position and the field that they are related to is given. In order to clarify the columns ‘participant’ and ‘company’, two haphazard letters have been selected for the participant and one for the company. These letters are not associated with the interviewees and have been set to allow an easy identification of the information that they provided for the following sections in this degree project.
Table 2. List of participants and their backgrounds
Participant Company Location Position Related field
CD N Sweden R&D Manager Construction and
indoor climate
EP B Slovenia Strategic R&D
Manager
Construction and indoor climate
SH D United
Kingdom
Head of Healthy Buildings
Building performance and
air quality
VM R Sweden Export Sales
Representative
Ventilation and indoor climate
4.6 Ethical considerations
The startup company linked to this project and the student signed a binding agreement where some of the clauses state that the name of the company, confidential features about its technology, and details that can lead to its identification will not be disclosed, therefore a careful handling of sensitive data has been done in order to minimize the risk to expose any of the parties.
Informed consent has been provided to the respondents before the interview, the objective of the research was described to the participants so they can have a clear
understanding of the aim and accept to partake in the interview. During the interview relevant information about the objectives of the study, its scope and particularities has been given to the individuals, so they understand their role in their participation. The respondents participating during the interview will have the right to remain anonymous if they decide it that way, additionally they will have to authorize the possibility to audio record the interview ensuring that their privacy is respected. Finally, the participants will be addressed with respect, giving them freedom to respond to the questions, however they can also deny answering them and their decisions will be respected.
4.7 Limitations of the study
The present study mainly addresses direct customers (HVAC manufactures) since they are expected to be the ones using this technology and leading the trends in this market.
Even though end-users play an important role in this research, it was not possible to reach them. However, one could argue that since HVAC manufactures work closely with end- users and, the consulting company participating in this research connects both manufactures and end-users, then they all can provide insightful information regarding end-users and the expectations that they have, as well as the main troubles and benefits that they experience.
One could suggest that more participants are needed for this study, however even though only four interviews were conducted, the customers provided great amount of data during the interviews that it was possible to identify relevant perspectives about value in their business. On average, each interview lasted more than forty minutes, and the open- ended questions allowed to get in-depth aspects of the customer needs, challenges, priorities, etc., in terms of indoor air quality and HVAC systems. Additionally, follow- up questions were also asked in order to collect more evidence that could strengthen the results of this research.
5. EMPIRICAL SECTION
The following chapter aims to describe and explain a background of the case study, building in the effects of indoor air quality, the regulatory agencies legislating about it and perspectives mentioned by customers, so it is possible to have a broader understanding about the topic.
5.1 Background
Industrialization has changed the social, economic and environmental dynamics during the last decades; the installation of new factories and industries have raised the levels of pollutants contaminating the soil, water and air (Stearns, 2013). In terms of air contamination, activities such as power generation and burning of gas increase the amount of methane, nitrous oxide and carbon dioxide released to the atmosphere (Creamer and Gao, 2015).
Carbon dioxide (CO2) is a colorless and odorless gas with a higher density compared to the air; carbon dioxide is a molecule part of the atmosphere and it is also produced by different biological systems (Azuma et al., 2018). Several effects related to the presence of carbon dioxide have been addressed over the last years.
In the planet, there is evidence that shows that CO2 is a greenhouse gas contributing to global warming (Creamer and Gao, 2015). In addition, there are other concerns regarding human health, for instance respiratory issues, and higher concentrations of carbon dioxide could influence cognitive performance like problem solving and decision making (Azuma et al., 2018).
Cognitive performance is needed in working and educational environments;
taking an exam or holding business meetings can be challenging if there is not a good air quality (Azuma et al., 2018). Considering that human beings produce themselves CO2 as a product of breathing, then it is important to verify the quality of the air to make sure that people doing an activity within this space (indoors) are not encountering any health- related repercussion (Rosbach et al., 2013).
Indoor spaces are diverse and different depending on the region and the type of activities the facility holds. Weather, occupancy rate as well as design are some factors considered in the process of constructing a building. In addition, ventilation is another
