Journal of Service Research, Ahead of Print.
Immersive technologies like virtual reality (VR) provide new opportunities to augment service encounters by supporting customer–service agent collaboration and problem-solving. Guided by the value cocreation and service technology infusion literature, a design science research (DSR) study is carried out with three iteratively developed versions of a VR application used to make decisions about forest management services. The aim is to develop design principles (DPs) for physical VR technology-infused service encounters. DSR produces unique knowledge on how a VR solution affects customer–service agent collaboration. In each development cycle, the problem–solution fit is evaluated, and emerging problems are addressed in the following DSR cycles. Based on interviews (N = 127) with customers and service agents of a forest management service company conducted during the DSR cycles, we show that VR technology solutions support collaboration and problem-solving in knowledge-intensive service encounters by invoking dialogue difficult to generate otherwise—especially when decision-makers are novices and service outcomes are physical and irreversible. We present three new DPs that help conceptualize how collaborative service encounters can be improved by using a developing VR technology: (1) the principle of empowerment, (2) the principle of focus, and (3) the principle of guided decision-making.