Customer co-production and its impact on new product success across strategic types

© 2015 Dr. Max TheilackerThe active participation of customers in a firm’s new product development (NPD) processes has long been discussed as a way to increase the alignment between the firm’s market offerings and its customers’ needs and preferences, and is ultimately suggested to create a competitive advantage for the firm. Yet, suggestions for when and how to engage in co-production activities are largely based on theoretical considerations and case-based research that tends to focus on individual methods for customer participation (e.g., focus groups, the lead user method, idea contests), and the according findings are ambiguous at best. This thesis represents one of the first studies to investigate how firms utilize co-production approaches on a larger scale—across different methods, across stages of the NPD process, across different firms, and taking into account internal resources relevant to customer co-production projects. Particularly, the thesis seeks to explain the mixed results found in prior literature by considering the firm’s overarching business strategy (represented by Miles & Snow’s strategic types) as a contingency factor. This dissertation substantially contributes to research on customer participation in NPD processes by integrating a business strategic perspective for the configuration and application of co-production approaches. In two empirical studies, we first investigate the existence of persistent archetypes of co-production approaches (Paper 1, Part A) and the performance implications of utilizing these approaches contingent on the firm’s strategic orientation (Paper 1, Part B). The second study (Paper 2) seeks to consolidate contradicting views on the benefits and impediments of utilizing customer co-production prevalent in prior research. Specifically, we propose that co-production constitutes a form of external (or market-based) slack, which, in combination with internal slack resources can either benefit or diminish the success for NPD projects. Further, we investigate the notion that the modifying influence of internal slack varies for firms following different strategic orientations. We find, in Paper 1, that the success implications of co-production are indeed largely contingent on the firm’s strategic stance. That is, firms that strive for innovative leadership tend to benefit more from utilizing approaches that involve customers in more extensive ways, while less progressive firms tend to benefit more from less extensive co-production approaches. The results of Paper 2 show that co-production is beneficial under low slack conditions but can hamper NPD efficiency and project discipline when internal slack is high—to a point where the negative effects of slack outweigh the positive effects of customer co-production. Consistent with the findings of Paper 1, this effect appears to be more pronounced for firms aiming for innovation leadership and less pronounced given defensive business strategy. Theoretical and practical implications as well as directions for future research are discussed