The Value of Customer Co-Created Knowledge during the Innovation Process

Customer co-creation during the innovation process has recently been suggested to be a major source for firms' competitive advantage. Hereby, customers actively engage in a firm's innovation process and take over innovation activities traditionally performed by a firm's employees. Despite its suggested importance, previous research has revealed contradictory findings regarding its impact, the nature of involved customers, and the channels of communication that enable co-creation. To provide a more fine-grained picture, customer co-created knowledge is first delineated into its key value dimensions of relevance, novelty, and costs, and then their impact on various innovation outcomes is investigated. Next, the study examines the antecedent role of customer determinants, i.e. lead user characteristics and customer-firm closeness, on these knowledge value dimensions. Finally, it is explored how these effects are moderated by the type of communication channel used. An empirical validation of the conceptual model is performed by means of survey data from 126 customer co-creation projects. The data analysis indicates that customer co-creation is most successful for the creation of highly relevant but moderately novel knowledge. Co-creation with customers who are closely related to the innovating firm results in more highly relevant knowledge at a low cost. Yet, co-creation with lead users produces novel and relevant knowledge. These effects are contingent on the richness and reach of the communication channels enabling co-creation. Overall, the findings shed light on opportunities and limitations of customer co-creation for innovation and reconcile determinants originating in relationship marketing and innovation management. At the same time, managers obtain recommendations for selecting customers and communication channels to enhance the success of their customer co-creation initiatives