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Influence of customer participation on creating and sharing of new product value

  • Original Empirical Research
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Abstract

This research applies an institutional arrangement perspective to develop an end-to-end model for the interaction between customers and upstream suppliers to develop a new product to understand how new product value is created and shared. The model is empirically tested by collecting primary data from 188 manufacturers across different industries. The research demonstrates that customer participation affects new product value creation by improving the effectiveness of the new product development process by enhancing information sharing and customer–supplier coordination and by increasing the level of customer and supplier specific investments in the product development effort. In addition, increasing the formalization of the customer participation process enhances both customer and supplier relationship-specific investments in the new product development process. The impact of customer participation on the customer's share of the new product value pie is more complex then is first apparent. Based on the dependence and equity perspectives the results suggest that exchange partners' power (relative dependence) positively influences a partner's ability to capture new product value, but this power is offset by a desire of exchange partners to ensure the distribution of value is “fair” and reflects each party's contribution to the value creation.

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Notes

  1. A summary of the results from these supplementary tests are available upon request.

  2. Items used in constructing common method and acquiescence factors are available from the authors upon request.

  3. As a further test, we evaluated each hypothesized interaction using multiple regression analyses. The results were identical to the multigroup method. Details are available upon request.

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Authors and Affiliations

  1. College of Business, University of Illinois, Urbana-Champaign, USA

    Eric Fang

  2. University of Washington, P.O. Box 353200, Seattle, WA, 98195-3200, USA

    Robert W. Palmatier

  3. College of Business, University of Oklahoma, 307 W. Brooks, Room 207, Norman, OK, 73019-4007, USA

    Kenneth R. Evans

Authors
  1. Eric Fang
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  2. Robert W. Palmatier
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  3. Kenneth R. Evans
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Correspondence to Eric Fang.

Appendix

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Table 4 Measurement items and factor loadings
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Fang, E., Palmatier, R.W. & Evans, K.R. Influence of customer participation on creating and sharing of new product value. J. of the Acad. Mark. Sci. 36, 322–336 (2008). https://doi.org/10.1007/s11747-007-0082-9

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