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Utilizing customer knowledge in innovation: antecedents and impact of customer involvement on new product performance

Abstract

This study examines the antecedents and impact of three forms of customer involvement in innovation: customer involvement as an information source (CIS), customer involvement as co-developers (CIC), and customer involvement as innovators (CIN). We propose that the three forms of customer involvement employ different ways of utilizing customer knowledge and thus are influenced differently by the nature of customer knowledge, the firm’s knowledge management strategy, and organizational support for knowledge management implementation. Using primary data from multiple industries, we test a set of drivers along these three dimensions and find that the three forms of customer involvement are driven by different factors. Furthermore, the impact of customer involvement on product performance is contingent upon the firm’s technological capability, and the contingent effect also varies across different forms of customer involvement. These findings provide important theoretical implications as well as practical guidance for adopting and managing customer involvement in innovation.

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Notes

  1. Although firms with a stronger market orientation may be more motivated to engage customers in innovation, customer involvement is different from the concept of market orientation. While market orientation focuses on gathering and utilizing market intelligence (Kohli and Jaworski 1990), the three forms of customer involvement go beyond collecting market information. For example, CIN avoids gathering customer information and allows customers to innovate on their own. Market orientation is the firm’s overall orientation toward market intelligence, while customer involvement is about specific approaches of engaging customers in innovation.

  2. Although the literature has sometimes used “co-creation” and “co-development” interchangeably, for clarity we make a distinction between them in this study. We use co-creation to refer to the broad concept of customer co-creation of value and co-development to refer to the specific activity of customers co-developing new products/services with NPD employees.

  3. As shown later in the Method section, correlations among the three forms of customer involvement are reasonably low, and the three constructs show strong discriminant validity.

  4. Some research argues that customers may not know what they want. This may lead to the argument that firms should drive customer needs rather than be driven by customer needs, but the issue of market-driven or market-driving innovation is beyond the scope of this study. Despite the difficulty of understanding customers’ needs, to design products of high market acceptance, firms need to find a way to utilize the information customers have. The different forms of customer involvement are different ways to utilize this information.

  5. Toolkits used for innovation are different from those for mass customization that only offer a limited number of choices for customers to select from (Piller et al. 2011; Salvador et al. 2009). The toolkits for innovation are carriers of technological knowledge that can be creatively applied to product design (von Hippel 2001). In this sense, the “building blocks” in the toolkits are pieces of technological knowledge that can be highly complex, and innovation with these toolkits can be a highly creative process. For example, statistical analysis software Stata provides users a programing language that allows them to design new modules for analysis, which requires a lot of creativity from the customers (Franke and Schreier 2002). Research finds that products designed by customers using toolkits vary widely, indicating innovation toolkits’ ability to allow for customer creativity (Franke and Piller 2004).

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Acknowledgments

The authors gratefully acknowledge the Product Development and Management Association (PDMA) for providing funding for this research and assisting the data collection process. They also thank Gina O’Connor for her valuable comments on this project.

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Correspondence to Anna S. Cui.

Appendix

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Table 6 Measurement items

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Cui, A.S., Wu, F. Utilizing customer knowledge in innovation: antecedents and impact of customer involvement on new product performance. J. of the Acad. Mark. Sci. 44, 516–538 (2016). https://doi.org/10.1007/s11747-015-0433-x

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Keywords

  • Customer involvement
  • Customer co-creation
  • Knowledge management
  • New product
  • Innovation