Comparing internal and external lead users as sources of innovation

Abstract

External lead users’ ideas are valuable to firms but difficult to access due to their location outside organizational boundaries. A potential solution to this problem is to employ lead users within organizations, i.e. to use internal/embedded lead users. Due to their ability to link knowledge about needs and solutions, internal lead users can be expected to produce better ideas compared to external lead users or ordinary employees. We test this conjecture in the home appliances industry using a sample of 864 employees (283 ideas) and 239 users (66 ideas). We find that internal lead users’ ideas are of higher quality than those of ordinary employees and users, but – unexpectedly – are of lower quality than the ideas of external lead users. These findings contribute to research on internal/embedded users by showing how their ideas differ from ideas from other relevant sources of innovation. Our findings contribute also to research on external users’ compared to employees’ ideas as inputs to new product development and the literature on individual knowledge recombination for innovation.