Positive effect of customer involvement in new service development

Customer involvement has been recognized as an important factor for successful service development. Despite its acknowledged importance, a review of the literature suggests that there is little empirical evidence about the effectiveness and outcomes of interacting with customers while developing new services. Against this backdrop, the present study investigates the effects of customer involvement on operational dimensions (i.e. innovation speed and technical quality) and market dimensions (i.e. competitive superiority and sales performance) of new service performance. Findings reveal that whereas customer involvement has a positive direct effect on technical quality and innovation speed, it has an indirect effect on competitive superiority and sales performance. In terms of managerial implications, the study offers critical insights on how customer involvement in new service development gets translated into improved new service performance.