Cross-border Customer Engagement in New Product Development: Challenges and Opportunities

Description

Technology is rapidly changing our society; enabling us to reshape our business models. In an increasingly complex and dynamic global business environment, business success has never been more about strong collaborative partnership with customers. New products, services, and/or solutions that benefit from the insights, perspectives, and know-how of the customers have greater chance of success.

Much of what we already know is limited to factors contributing to the operational efficiency in reaching the market. Underdeveloped, however, is how to tap on customers’ mind and how to best engage customers in new product development process, a task rendered more difficult in remote partnerships.

Our aim in this research is to identify factors that condition the effectiveness of customer engagement in development of a new product or solution.

Globalized firms are increasingly facing intensified pressure to respond to local market preferences and regulatory requirements. Such firms need to deal with “liability of foreignness” that is mainly related to understanding and applying market related knowledge in local markets. A prominent strategy employed by global firms to overcome such pressures is customer engagement, that is, when an international customer engages in development of new products. Many firms such as, McKinsey and Hilti – global producer of construction tools – often encourage their international customers to engage in development of new products and services. With this megatrend, research on customer engagement in new product development has flourished during the past few years. Yet, much of what we know regarding the consequences of customer engagement in new product development is limited due to two important reasons.

First, existing literature mainly focuses on examining the consequences of customer engagement without paying enough attention to contextual factors that condition such relations. As such, it is not clear when and under what condition firms should pursue or avoid customer engagement. Second, few, if any, studies investigate customer engagement in cross-border buyer supplier settings. However, firms increasingly invest their resources in engaging their international customers in new product development and, hence, it is of immense importance to investigate how factors related to cross-border settings such as organizational distances (i.e. geographical distance, cultural and language differences) influence the effectiveness of such arrangements.

Our study offers a number of important theoretical and managerial implications. First, we look at international customer engagement from a new theoretical perspective of motivation, ability and opportunity (MOA) and social capital theory. In doing so, we consider not only the importance of firms’ ability and opportunities to learn and utilize customers’ knowledge but also the behavioural aspect of customer engagement (i.e. willingness to learn and use new knowledge) that has been surprisingly undervalued by earlier studies.

Second, our study provides guidelines for practitioners on (1) when to peruse or avoid international customer engagement in new product development and (2) how to enhance the effectiveness of such arrangements. In this regard, our study will contribute to professional bodies such as PDMA that focuses and frequently publishes papers on customer engagement in new product development.