Abstract
By bridging strategy, innovation, servitization, and new service development literatures, this study suggests that customer participation enhances the effectiveness of new service development strategies. The effects are particularly pronounced in the environments characterized by low competitive intensity and high complexity of customer needs. Empirical evidence is obtained from a sample of 226 large manufacturing firms with respondents representing service, functional, and general management. The results are the first to support the importance of customer participation in the new service development context. While largely consistent with the new product development research, they offer novel insights into the role of environmental contingencies in harnessing the input of customers in the new service development process for the benefit of the firm.
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