How do firms capture value in a full-scene smart service? Effectiveness of value proposition and co-creation capabilities

Driven by data intelligence technologies and smart business logic, firms are increasingly advocating and implementing a novel full-scene smart service model. However, little is known about how value is co-created and captured in this model. Therefore, this study develops a research model based on the business model framework to examine how the value proposition of full-scene smart service influences the high-order capabilities of value co-creation (technological innovation capability and cooperation capability) and how these specific co-creation capabilities ultimately affect value outcomes. Our model is tested on a three-year panel (2018–2020) of 104 Chinese A-share listed firms providing full-scene smart service. Consistent with our theorizing, we find that value proposition acts as an important business model element to improve a firm's value co-creation capabilities and its economic value and that the value co-creation capabilities drive the firm's economic and social value. In further subsample analyses, we find that the results vary across firms with different levels of value proposition intensity and economic performance. The study contributes to theory and practice by shedding light on the value-creation mechanism of the full-scene smart service model.