Co-Creation Association

This article was writen by Arjan Tijmes, who worked for six months at Capgemini Consulting as a gratuation student.

On the fourth of August I graduated at the University of Twente and received a Master of Science degree in Business Administration. For my master thesis, I worked for six months with the Business Innovation Consulting team of Capgemini Consulting. With their help, I researched the relation between co-creation and firm performance, especially focusing on the role of innovation success and motives of firms to engage in co-creation. My thesis was rewarded with a nine (out of ten, Dutch grading scale), with which I graduated my studies cum laude. In the rest of this post I added the summary of my thesis. You can also download the full report or take a look at the presentation below.

The full thesis report: click here.
The thesis presentation: click here.

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Both the academic and consulting world is experiencing the increasing impact of the connected, informed and active consumer and is developing new theories and service offerings to support this development. Based on this development, this research seeks to answer the following research question: To what extent has co-creation impact on firm performance through innovation success in large firms and what is the international position of large Dutch firms in respect to co-creation and innovation success? Co-creation is the extent in which a firm has a deep interactive dialogue with its customers; firm performance is the extent in which a firm is capable of reaching sustained competitive advantage; innovation success is the successful exploitation of new ideas; and large firms are firms with more than 500 FTE of employees.

To answer the research question, this study first explored the role of customers in firm performance and innovation success in different organizational functions and the motives for involvement of customers. The research subsequently constructed a conceptual model hypothesizing a positive effect of co-creation on innovation success and a positive moderating effect of the number of involved functions in co-creation on the effect of co-creation on innovation success. The research applied secondary survey data analysis on a sample of 327 firms to test the hypotheses using GLM analysis. The research executed a supplementary survey resulting in a sample of 50 firms and two interviews with firm managers to research the motives for co-creation using descriptive analyses. The two surveys were combined to test the international position of Dutch firms using Student’s t-tests and descriptive analyses.

The research concludes that there is no main effect of co-creation on innovation success, but that the moderating effect of the number and type of organizational functions involved does make this relation significant. The direction of the effect depends on the exact configuration. In general and for an increased positive effect on innovation success, firms should combine low levels of co-creation with a higher number of involved functions and high levels of co-creation with few involved functions. Co-creation takes relatively equally place in the marketing/sales, service/support and product development functions of firms, while co-creation in the production and logistic organizational function is far less common. The research further concludes that firms are highly engaged in co-creation and notice an increasing trend. Both firms and their customers are ready for co-creation, but firms do not have the time to set up the proper processes and capabilities. The main drivers are the identification of new needs and improvement of customer loyalty, while increasing markets share, customer base and brand awareness is less important. The research also finds that co-creation benefits innovation success through the development of new markets, products and new customers. This shows that while firms are motivated to engage in co-creation by better serving current customers and to leverage a wide range of innovation antecedents, co-creation eventually results in serving new customers mainly through operation innovation antecedents. Firms with more commodity type products or that are deeper in the value chain are more constraint in co-creation. Lastly, the research concludes that there are no large differences between Dutch firms and foreign firms in either of these dimensions. The research did show that Dutch firms are less active in co-creation in the NPD and service/support functions of the firm in comparison with firms worldwide.

The main managerial implication of this research is that managers should balance additional knowledge and increasing project complexity by choosing between a combination of a high level of co-creation and few involved functions or a low level of co-creation and many involved functions. The choice should be made on the basis of the progression of the firm’s offerings and closeness of the firm to the end-consumer. The discussion of the academic implications shows that the co-creation concept as developed by Prahalad and Ramaswamy (2004) and Vargo and Lusch (2004) needs more explication in the role of different organizational functions and the process towards engaging in high levels of co-creation. The open innovation model (Chesbrough, 2003) is affected, because this research shows a non-significant effect of knowledge partner involvement and a moderated (by the number of involved functions) effect of customer involvement on firm performance. The role of exploitative absorptive capacity deserves more attention in the open innovation model, because this research shows a very strong positive effect of this factor on innovation success.
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