The psychological and behavioral consequences of customer empowerment in new product development: Situational framework, review, and research agenda

Abstract In search of innovation and market success, firms have started to empower their customers in many ways, from customizing and self‐producing their own products ( products made for one ) to selecting and designing products for the broader marketplace ( products made for many ). This power shift has important behavioral and psychological consequences for customers and, hence, has attracted considerable interest from academics and practitioners alike. However, the literature is scattered, provides inconsistent findings, and lacks both a comprehensive conceptualization and empirical overview. Specifically, extant literature neglects the situational nature of customer empowerment, equalizing inherently different customer empowerment activities while failing to consider the divergent effects on participating versus observing customers (i.e., customers who do not participate in the new product development process themselves). This limits advancement of the field, and impedes integration with the related fields of innovation, marketing, and consumer research. To facilitate a better understanding of the psychological and behavioral consequences of customer empowerment, we systematically review literature in the field and develop a conceptual framework that integrates different customer empowerment situations and their respective psychological (e.g., firm perceptions and feelings of empowerment) and behavioral (e.g., product preferences and willingness‐to‐pay) consequences. Using this framework, we structure previous research, highlight similarities and differences across customer empowerment situations, and set the stage for future research. By taking a customer perspective, this research advances our understanding of why some customer empowerment strategies are more successful than others (and under which circumstances). On a broader level, we show that adopting a behavioral and psychological perspective may be a promising way to study innovation.