Customer participation and new product performance: Towards the understanding of the mechanisms and key contingencies

In a study of 243 firms of varying sizes across 14 different industries, we investigate the effect of customer participation on new product development performance. We confirm that overall customer participation is positively related to new product development performance and that the effect is mediated by innovativeness. We also demonstrate that these effects are contingent upon absorptive capacity of the firm in question such that firms with high absorptive capacity stand to gain more from engaging their customers in new product development than firms with low absorptive capacity, especially at the later stages of the NPD process. The results are robust to alternative estimation techniques, measures employed to operationalize key concepts, and the industrial makeup of the sample. Post hoc analyses provide non-trivial managerial implications for the decision makers at the firm level.