When chatbots speak local: cultural understanding as a driver of value co-creation

Purpose This study investigates how chatbot cultural understanding shapes consumer responses in online retail, focusing on perceived brand localness, consumer–brand identification and value co-creation behaviors. Guided by social identity theory, the study also examines the moderating role of consumer ethnocentrism. Design/methodology/approach This study employs a sequential mixed-methods design. Study 1 involves 15 semi-structured interviews that explore consumer perceptions of culturally intelligent chatbots. Study 2 tests the proposed model through a field study of 303 consumers recruited online and analyzed the data using structural equation modeling. Findings Chatbot cultural understanding enhances perceived brand localness, which leads to consumer–brand identification and, in turn, value co-creation behaviors. Consumer ethnocentrism does not moderate associations between chatbot cultural understanding and perceived brand localness and indirectly with value co-creation behaviors. Originality/value This research extends social identity theory to conversational AI, highlighting how culturally attuned chatbots act as cultural insiders that strengthen consumer identification and co-creation. It contributes to international marketing by demonstrating the role of cultural alignment in driving value co-creation in digital service encounters. These contributions are bounded to encounters in which international retailers actively localize chatbot communication, and the evidence is drawn from a single cross-border e-retailer operating in one collectivist emerging market.