Customer Involvement in New Service Development: An Examination of Antecedents and Outcomes*

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. Similarly, the extant literature shows mixed views about the effect of technological uncertainty on customer involvement and the effectiveness of customer involvement at different stages of the new service development process. Against this backdrop, the present study has three objectives: (1) to investigate 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; (2) to examine the effect of technological novelty and technological turbulence on customer involvement; and (3) to explore the moderating effect of the stage of the development process on the relationships among technological novelty, technological turbulence and customer involvement, and customer involvement and new service performance. A total of 807 firms with 75 or more employees in a varied set of industries were selected from the Dun & Bradstreet's 2004 listing of Spanish service firms. A questionnaire was mailed to the person in charge of new service development at each company. A total of 102 complete questionnaires were returned. 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 through both technical quality and innovation speed. The study also finds a positive effect of technological novelty as well as technological turbulence on customer involvement. Contrary to expectations, the study does not find any moderating effects of the stage of the development process. This study has several theoretical and managerial implications. In terms of theoretical implications, the study supports the role of technological uncertainty (novelty and turbulence) as an antecedent to customer involvement. It also provides empirical evidence of the impact of customer involvement on operational and market dimensions of new service performance. In terms of managerial implications, the study offers critical insights on how customer involvement in new service development translates into improved new service performance. Furthermore, it reveals that the importance of customer involvement in technologically uncertain contexts and its impact on new service performance are independent of the stage of the development process, suggesting that managers should involve customers throughout the entire development process.