The Role of Market Orientation and Relational Embeddedness in Customer Participation Relation

Abstract

Customer participation in the production of goods and services appears to be growing. Most previous research on customer participation relations has focused on the direct relationship of organizational and relational factors promoting performance related outcomes. But reported numbers of failing customer participation relations vary between 50 and 70%. Thus, companies need to deal with the double sided edge of the sword. On the one hand, firms need customers to learn about market needs and solutions for new product. On the other, customer participation opens the door for opportunistic behaviour and failure. Considering this tension between external knowledge acquisition in the generation of a continuous stream of innovations and the high number of product failures, this paper investigates how customers in customer participation relations contribute to the supplier's acquisition of new marketing knowledge that is needed to sustain and renew strategic advantage. By studying the current literature, we think SEML is a kay factor in the customer participation process. By examing the sources and consequences of SEML we find proactiveness of both participants in customer participation relationships has a positive effect on suppliers' exploratory marketing learning outcomes and the results show that supplier exploratory marketing learning does not have a direct positive effect on new product financial performance.