Projective customer competence: Projecting future customer needs that drive innovation performance

•Projective customer competence (PCC) is a firm's ability to both understand as well as shape the future needs of customers.•PCC has positive implications for both innovativeness and profit.•Relational embeddedness, knowledge redundancy and customer interactivity are strong predictors of PCC.•Knowledge redundancy is conducive to developing PCC, but also has a negative direct effect on innovativeness.

Projective customer competence is the ability of a product development organization to both understand as well as shape the future needs of customers. To conceptualize this competence and establish its antecedents and performance implications, we draw upon the literature on inter-organizational relationships and innovation. Based on survey data from managers involved with business to business product development, validated with secondary financial data and in-depth interviews, we establish measurement properties for projective customer competence and demonstrate that this competence develops through customer relationships characterized by relational embeddedness, knowledge redundancy and interactivity. Projective customer competence is also shown to have positive implications for both innovativeness and financial performance. Surprisingly, relational embeddedness is shown to be the strongest predictor of projective customer competence, and, while knowledge redundancy helps build projective customer competence, it also has a negative impact on innovativeness.