<p>While the importance of value co-creation has been well established, prior research has predominantly adopted a single-customer perspective, with limited attention to dual-perspective analyses. This study addresses this gap by employing paired data collected from frontline service personnel and their customers to examine how value is (co-)created during service processes. Data were collected from 71 service personnel and 162 customers in professional service contexts (e.g., banking), and analyzed using <i>SmartPLS 4.0</i>. Findings: (1) co-production has stronger effects on employee engagement than on employer branding; (2) employee engagement is a primary driver of employee loyalty and serves as a mediating mechanism between co-production and employee loyalty; (3) employee loyalty does not significantly influence customer loyalty, whereas customer value creation does; (4) an optimal pathway for establishing employee loyalty is identified as co-production → employee engagement → employee loyalty, while customer loyalty is primarily shaped through the pathway co-production → customer value creation → customer loyalty; (5) co-production intensity exerts moderating effects; and (6) employee seniority may function as a boundary condition in the relationship between employee loyalty and customer loyalty. Contributions: First, it is among the few studies to use paired data to examine value co-creation processes in service encounters. Second, it highlights the critical role of employee engagement in fostering employee loyalty. Third, it extends the co-production model (Auh et al., 2007) by identifying employee engagement as a mediating mechanism. Finally, it validates the applicability of the encounter process model (Payne et al., 2008), particularly in professional service contexts.</p><p>Clinical trial number: Not applicable (this study does not involve human experiment).</p>