Does high product complexity & production cost drive high customer involvement in product development?

Does high products complexity & production cost drive high customer involvement in product development? Author: Ellen Wendel Tutor/Examiner: Sarah Philipson Background The purpose of this thesis first arose when interviewing the CEO and the chief of product development of a Swedish wood company. The lack of communication between the two of them and the overall information flow within the company seemed to me brutally bad. When leaving that company a question popped up: Do a low production cost/unit and/or a low product complexity on an industrial market result in low customer involvement? Problem focus/hypotheses Product failure is costly and time consuming; doing it right the first time can keep a company alive and give it competitive advantages, Matzler et al (1997). Customer involvement has proven to increase the chances for a successful product launch, von Hippel (1988), Lagrosen (2005), Pitta et al (1996) and Matzler et al (1997). With the assumption that customer involvement can affect product development in a positive way, any conditions that might drive customer involvement in product development would be of interest. This thesis investigates three hypotheses concerning how product complexity and production cost drive customers involvement; H1: High product complexity positively predicts the use of high customer involvement in the product development. H2: High production cost positively predicts the use of high customer involvement in the product development. H3: High production cost and high product complexity together positively predicts the use of high customer involvement. Method The main study was executed with surveys sent per e-mail. The investigated populations are wood component suppliers and machine suppliers. The suppliers were chosen to get a vast range of product complexity and production cost. The hypotheses were analyzed with chi-square statistics and percentages. To get a basic understanding of the industry, I first made a pre-study; interviewing two suppliers and telephone interviewing the head of glued edge pine panel issues at the Swedish Wood & Furniture Association. Findings Hypothesis 1 I conclude that higher product complexity leads to higher customer involvement on both industries. This result gives more validation to the emerging theory stated by Richard et al (2004). Hypothesis 2 This thesis validates hypothesis 2 among wood suppliers. I suggest future research to validate a possible theory the states that higher production cost drive higher customer involvement. Hypothesis 2 is not accepted on the machine supplier industry since the results were inconclusive. No overall pattern was found. However, the result indicates that the hypothesis might be correct up until a certain level of complexity, after which the relationship is negative. Hypothesis 3 I consider hypothesis 2 to be validated on the wood supplier market. I suggest future research to validate a possible theory the states that higher production cost and product complexity and production cost combined drive higher customer involvement. The thesis result indicates that hypothesis 3, on the machine supplier market, might be correct up until a certain level of complexity and production cost combination, after which the relationship is negative. Hypothesis 3 cannot be accepted for the machine supplier industry since the results are inconclusive. General findings from the hypotheses All three hypotheses indicate a positive prediction that product complexity, production cost and the two variables combined will drive the behavior of “usage or no usage” of customer involvement, regardless of industry. Opponenter: Elna Hägglund och Frida Tillmar