Co-creation, one of the hottest buzz words in management theory today. In a world where customers continue to become ever more important, why not let your customers help you make your next product?

What the paper examined

The researchers were curious what would drive a company to choose a certain co-creation strategy and how that strategy would impact product performance. They identified three different strategies of customer involvement in innovation: customer involvement as an information source (CIS), customer involvement as co-developers (CIC) and customer involvement as innovators (CIN).

Within CIS, customers have a more passive role in innovation, whilst in CIC they co-develop the product with the company. Companies using CIN let the customer develop the product himself, without any company intervention.

They also identified three different sets of drivers that influence which types of customer involvement companies use. Those were the nature of customer knowledge, the knowledge management strategy of the company and the implementation of knowledge management within the company. Each set had two different components, which can be seen in the framework below.

Afterwards, the researchers determined that the technological capabilities of a company influenced the way newly co-developed products perform. Adding this part to the research led to the following complete research framework.

How they investigated it

The researchers engaged in a partnership with Product Development and management Association. They sent all their members a survey on new product development trough co-creation with consumers. The survey asked respondents to rate questions like “We used customers as a key information source” and “We utilized designs that were created by our customers” on a seven point Likert scale. The researchers than ran a structural equation model to determine the outcomes and implications of the data.

What they found

In the end, they established that the choice for the three product co-creation strategies were influenced differently by the three involvement drivers. A takeaway of the most important results is provided in the table below.

Construct	Results
Nature of customer knowledge	Firms facing heterogeneous needs are more likely to engage in CIC and CIN. Firms facing tacit needs are less likely to engage in CIS and CIC
Knowledge management strategy	Market exploitation is more strongly associated with CIC than market exploration Market exploitation is more strongly associated with CIS than market exploration.
Knowledge management implementation	The effect of interfunctional coordination on CIC and CIS is significantly stronger than that on CIN Strategic flexibility is more important for firms using CIN
Technological capabilities	Technological capabilities of a company significantly influence product performance when a firm uses a CIC or CIN strategy

 

Why it matters

The value of the research is two-sided. Academic literature widely recognizes the challenges of implementing customer involvement, yet very few studies have examined the organizational mechanisms needed to overcome these challenges. Furthermore, the contribution of customer involvement to firm performance is still unclear. This study tries to fill that gap in research. From a managerial perspective, there is much to be gained from understanding what the researchers determine. Firms can look at the nature of their customers’ knowledge and their own knowledge management systems to determine the best way to co-create with consumers. Also, this research can also help predict the performance of those products. This helps in making investment decisions and determining innovation strategies.