By: Annouk Lievens / Dominik Mahr / Kande Kazadi
Research and practice have investigated firms’ benefits of co-creation with external stakeholders, such as more creative ideas, reduced development costs, and improved product quality. However, little is known about how consumers perceive products and their firms that communicate about such co-creation activities. Using two experimental studies, we investigated how consumers’ knowledge about the involvement of different types of stakeholders during the innovation process changes the adoption of new products.
Contemporary academic and practitioner thought no longer view firms as closed entities that transform inputs into outputs to create value. Instead, firms co-create value by interacting with consumers and other types of stakeholders during the innovation process (Mahr, Lievens and Blazevic, 2014). For example, Heineken engages consumers, professional designers, and internal Heineken employees to co-create a new club space, with the rationale that these seemingly unrelated, diverse stakeholders would combine their resources and produce creative outcomes.
Emerging research on consumers’ reactions to co-created products has mainly investigated how the average consumer reacts when he or she knows that a product is the result of co-creation activities between a firm and other consumers. In the context of co-creation with one stakeholder type, initial results of recent studies confirm the assumption that such information influences consumer attitudes. This influence can be positive as well as negative. For example, Schreier, Fuchs and Dahl, (2012) find that consumers are more likely to purchase breakfast cereals and T-shirts if they are aware that these products have been designed with users. Conversely, Fuchs, Prandelli, Schreier and Dahl, (2013) find that when luxury items are labeled as designed with consumers, consumers are less likely to buy these products.
However, firms have increasingly started to include multiple stakeholders during the innovation process. For example, Carlsberg recently announced a collaboration with customers, suppliers and other stakeholders to advance sustainable packaging. Given this increased involvement of multiple, diverse stakeholders during the innovation process, insights regarding the impact of communication about stakeholder co-creation on consumer adoption of new products is highly relevant (MSI, 2014). Therefore, we wanted to investigate whether consumers also value stakeholder co-creation, and to what extent they value stakeholder co-creation more than consumer co-creation or internal development of new products.
Additionally, we aimed to explore the underlying mechanism that would drive such potential higher valuations for stakeholder co-created products. Do consumers think stakeholder co-created products are of better quality? Or do they think the firm brings in additional competences by collaborating with multiple stakeholders? Or both?
Furthermore, we were interested in whether adding more parties to the innovation process, or more diverse parties mattered for the consumers. Therefore, we studied the impact of stakeholder composition according to the number and diversity of stakeholders involved. This article gives a short overview of the main results and implications of this study, which is currently under revision in an academic journal. Initial results of a first study are available in (Kazadi, Lievens and Mahr, 2014).
We find that overall, consumers are more likely to adopt products co-created with multiple stakeholders than internally developed products.
We conducted two experiments with a total of 394 participants, where we exposed consumers to an artificial press article describing the launch of a new product. In the first paragraph of each press article, we provided information about the product’s development process, such that the text stated the product was developed internally, with consumers, or with various stakeholders. Each consumer only saw one type of article, which allows us to compare across groups and see where we find differences in willingness to pay. The products we used were a new type of olive oil (low complexity) and a laptop (high complexity). All other information in the article remained constant.
Next, participants completed a questionnaire that captured their attitudes towards the product they were shown, and how much they were willing to pay for it. To measure consumers’ willingness to pay, we asked each participant how much he or she would be willing to pay for the product shown (Homburg, Koschate and Hoyer, 2005). By standardizing these numbers, we ensured that we could compare them across product categories.
We find that overall, consumers are willing to pay more for products co-created with multiple stakeholders than internally developed products. Interesting however, the higher valuation is even more pronounced for complex products, as opposed for non-complex products.
When examining the potential underlying mechanism, we find that consumers’ appreciation for stakeholder-co-created products is driven by their positive perceptions of the producer’s “innovative capability”, rather than positive perceptions about the product’s quality itself. This implies that consumers see a firm, that includes multiple stakeholders during the innovation process, as more competent in creating new products.
Furthermore, our study shows that consumers have a higher appreciation for diversity in the stakeholders involved in innovation, than a higher number of a particular type of stakeholder involved in the development process of a product. It seems that consumers value the combination of different competences higher than bringing in more of the same type of competences.
Implications for managers
Our results indicate that consumers will pay premiums of up to 33% if they realize that a laptop has been co-created with multiple stakeholders.
For managers, our study results suggests that if they decide to open their innovation process and engage in co-creation, they should seek advantages beyond simply improved innovation processes. Co-creation—and for complex products, mostly stakeholder co-creation—has a unique effect on adoption of new products. Our results indicate that consumers will pay premiums of up to 33% if they realize that a laptop has been co-created with multiple stakeholders. Therefore, communicating, not only about a product’s characteristics, but about the external parties involved during the innovation process thus is beneficial.
Moreover, managers should explicitly communicate about the different types of stakeholders involved during the innovation process and, if possible, stress their diversity. For example, a video campaign that explicates how a product was developed, as it is often the case for complex products such as cars or computers, may stress the different external stakeholders involved in the process.
The effect of stakeholder co-creation on consumers’ adoption of new products, stems from consumers’ positive perceptions of the innovation capability of the firm. Thus, consumers’ increased likelihood of adopting the new product might not be limited to a specific product in question. If it spills over to the firm’s or brand’s other products, firms have a powerful incentive to engage in and communicate about stakeholder co-creation projects.
For advertisers, our study confirms the somewhat counterintuitive finding that advertisers may consider focusing on the process of developing a product rather than the resulting product. This may be done by including facts about the innovation process in display- or video advertising. For example, Apple has launched many of its recent products with a video explaining the innovation process and resulting benefits. One recommendation resulting from our study might be to include information about the various parties involved during the innovation process, and how they collaborated throughout the process, in such videos.
About the authors
Dr. Kande Kazadi is a researcher at the University of Antwerp, Belgium, working under the supervision of Prof. Dr. Annouk Lievens and Dr. Dominik Mahr (Maastricht University). His research focuses on the simultaneous involvement of multiple stakeholders in a firm’s innovation process. .
Annouk Lievens is a Professor of Marketing at the University of Antwerp, Belgium and chairwoman of the Marketing Department. Her research centers on service innovation management, knowledge creation and organizational communication within services organizations. She has published in journals such as the International Journal of Service Industry Management, Journal of Product Innovation Management, European Journal of marketing, Journal of Service Research, Journal of Management Studies, The Journal of Business Research and Journal of the Academy of Marketing Science.
Dominik Mahr is an Assistant Professor at the Department of Marketing and Supply Chain Management of the School of Business and Economics, Maastricht University. His research interests are in open innovation, customer co-creation, digital media, knowledge creation, healthcare and strategic marketing. Dominik’s publications have appeared in journals like Journal of Product Innovation Management, BMJ Quality & Safety (previously Quality & Safety in Health Care), Health Policy and Research Policy.
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