The end-consumer as a source of innovation

The present paper is concerned with the role that end-consumers play for firm innovation. It suggests a notion of consumers as active individuals engaged in production activities, which require competencies. It is argued that related to certain industries there exists even very competent end-consumers whose knowledge – if applied- is a valuable input to production. For firms to obtain knowledge spillovers through consumer feedback an interface and interaction between the parties is required. Theoretically the papers builds out from Adam Smith’s principle of the division of labor and from Alfred Marshall’s principle of variation. By applying the first principle I intend to establish a connection between specialization and the growth of knowledge. The latter principle refers to the fact that individuals possess different perception powers and unlike attitudes resulting in different solutions to similar problems. This generates a variety of outcomes. Differences makes room for selection process and hence for learning. The case of the computer games industry is presented. It resembles a fast growing industry with close ties to competent consumers. End-consumers form on-line communities. These communities are virtual hubs of information and knowledge exchange where producers can “suck up” knowledge