While customer participation (CP) is often seen as positive, this study reveals a paradox in technology-based innovation. For non-participating consumers, higher CP can increase perceived risk, specifically financial risk, which negatively impacts their intent to purchase or recommend the product. This effect is less pronounced for simple products and stronger for complex ones.
Technology-based innovation is crucial for developing new products today. Companies increasingly involve customers in new product development, notably products featuring innovations driven by technology. This involvement, known as Customer Participation (CP), can range from providing ideas in the early stages to acting as co-developers.
While CP can strengthen innovation and provide a competitive advantage, it can also have drawbacks. Through a series of experiments, one study revealed the ambiguous value of customer participation when it improved the potential for a product success and when it had the opposite effect.
In each experiment, participants read one of four scenarios involving:
The first experiment used sneakers, identified in a pre-test as a moderately complex product. The scenario’s high technology-based innovation sneaker featured an AI-driven insole that could adjust to the body shape and weight of the wearer. The low technology-based sneaker featured innovative deodorizing properties and comfortable wear. Having read their assigned scenarios, participants were questioned on their perception of the level of CP involved in the product’s development and the level of the product’s technology-based innovation. They were then questioned on their intention to purchase and recommend the sneaker (“behavioural intentions”.)
This experiment confirmed the negative impact of customer participation on behaviour intentions for technology-based innovation products. Participants indicated they were less likely to purchase and recommend high technology-based innovation products if customer participation in the product’s development was high. For low technology-based innovation products, the level of customer participation made no difference.
A second experiment used the same scenarios and questionnaires method as the first, but with bicycles (also a moderately complex product) instead of sneakers in the scenarios. It also explored through its questionnaire potential risks perceived by participants in buying the product (as well as other factors such as the company’s innovation ability and customer orientation).
This experiment revealed perceived financial risk as the reason for the negative impact of CP on customer intentions to purchase and recommend technology-based innovation products. When the level of customer participation was high, greater technology-based innovation in the product led participants to perceive higher financial risk in purchasing the product, which in turn lowered their behavioural intentions.
The study’s authors concluded that consumers weigh both risks and benefits in purchase decisions, and uncertainty about new technology amplifies perceived risk. Thus, for products involving sophisticated technology-based innovation, non-participating consumers might question the expertise of participating customers thus reducing trust in the product and, particularly with deeper involvement, negatively impacting their intentions to purchase and recommend the new products.
The third and fourth experiments were similar to the second experiment but involved, respectively, low-complexity sportswear and high-complexity automobiles. The third experiment found that for low-complexity products such as sportswear, perceived risk due to high customer participation did not significantly impact purchase and recommendation intentions. The final experiment showed that the negative effect of high CP through perceived financial risk was more pronounced for complex products, such as automobiles.
In sum, the studies consistently showed that while low CP allows consumers to positively evaluate technology-based innovation, high CP increases perceived financial risk, offsetting these positive effects, particularly for moderately to highly complex products.
The study offers practical guidance for companies developing technology-based innovative products. First, it highlights that the level of customer participation (CP) should be carefully considered. For high-tech innovative products, lower levels of CP may be more effective in driving positive consumer behavioural intentions. This suggests focusing customer involvement on earlier stages, such as providing conceptual ideas, rather than deeper engagement like co-development.
Second, because high customer participation, especially in the development of technologically innovative products, can increase perceived financial risk, companies should implement communication strategies that emphasise the technical expertise of participating customers to alleviate concerns.
Finally, for highly complex products, such as automobiles, high CP can negatively impact risk perceptions and purchase decisions. However, for less complex products, such as sportswear, CP appears to have a lesser impact on perceived risk and behavioural intentions, suggesting that other factors, such as company innovativeness or customer orientation, might be more important. Therefore, firms should tailor their CP strategies based on the complexity of the product they are developing.
Understanding the relationship between CP, risk, and behavioural intentions helps companies strategically involve customers to foster positive consumer responses.
Hyeyeon Yuk’s profile on LinkedIn
https://www.linkedin.com/in/hyeyeon-yuk-9a4810287/?originalSubdomain=uk
Euejung Hwang’s profile at the University of Edinburgh Business School
https://www.business-school.ed.ac.uk/staff/euejung-hwang
Tony Garrett’s profile at Korea University Business School
https://biz.korea.ac.kr/eng/professor/professor_view?no=86
Jong-Ho Lee’s profile at Korea University Business School https://biz.korea.ac.kr/eng/professor/all.html?page=1&keyfield=name&key=%EC%9D%B4%EC%A2%85%ED%98%B8
The paradox of Customer Participation: The Role of Perceived Risk in Technology-Based Innovation. Hyeyeon Yuk, Euejung Hwang, Tony C. Garrett, and Jong-Ho Lee. International Journal of Consumer Studies (May 2025).
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