Involving online community customers in product innovation: The double-edged sword effect

Abstract

Existing research in the field of business has generated differing views on the relationship between customer involvement and firms' product innovation. Drawing from their findings, some researchers have presented a positive assessment of customers' utility in product innovation, while others have provided a nonsignificant or even negative assessment of customers' usefulness in this area. This paper reconciles these different views by demonstrating that there exists a nonlinear relationship between customer involvement and firms' product innovation performance. To arrive at this conclusion, we use survey data from Chinese manufacturing firms and their online community customers, as well as objective data from the Chinese technology firm Xiaomi, to empirically test our hypothesized nonlinear relationship theory. The results of analyzing the two datasets demonstrate that there is an inverted U-shaped relationship between online customer involvement and firms' product innovation performance. Additionally, we find that customer online community affiliation moderates this relationship; specifically, for low or moderate levels of customer involvement, customer online community affiliation strengthens the positive online customer involvement–product innovation performance relationship, while for high levels of customer involvement, such customer affiliation weakens the positive impact of online customer involvement on firms' product innovation performance. Furthermore, we also show that the factor “customer online knowledge contribution” mediates the relationship between customer involvement and product innovation performance. Overall, this study provides new empirically-supported insights into the impacts of customer involvement and the contribution of customer knowledge through online communities on firms’ product innovation performance, thereby adding significant findings to the literature, as well as offering practical implications to firms regarding how they can best involve online customers in product innovation to achieve the most effective performance.