Unpacking the role of customer involvement in new product development and marketing in new ventures

<p dir="ltr">The failure rate of new ventures (NVs) has consistently remained high, with over 50% failing within their first five years. A key driver of these failures is the inability of NVs to identify and address real customer pain points with scalable solutions, often resulting in a lack of market demand for their products. Addressing these pain points requires a deep understanding of customer needs, which can be achieved by leveraging customer knowledge. This critical marketing resource provides invaluable insights that guide the development of innovative products and enhance product–market fit. While entrepreneurs are advised to involve customers in product development initiatives to capitalize on these insights, surprisingly, research on customer involvement in new product development (NPD) has produced mixed findings, leaving entrepreneurs with limited guidance on how, when, and to what extent customers should be involved, as well as the outcomes they can expect.</p><p dir="ltr">NVs face unique challenges that differentiate their customer involvement processes from those of established firms. These include market uncertainty, which renders customer information incomplete, unpredictable, or unknowable; a lack of legitimacy and liability of newness, which makes customers skeptical of NVs and their products; and the absence of an established customer base, which limits opportunities for feedback and engagement. Additionally, NVs’ NPD activities are intertwined with the entrepreneurship process, creating tensions and resource allocation challenges that demand cost-effective and efficient approaches to customer involvement. Given the unique characteristics of NVs, a systematic understanding of the customers’ role in NPD within the NV context is lacking, making this a critical area for further exploration. This thesis aims to address this gap by advancing knowledge of customer involvement within the context of NVs by developing three interdependent research papers.</p><p dir="ltr">The first paper, titled “<i>Customer Involvement in the New Venture Entrepreneurship Process: A Systematic Literature Review Using the Input-Process-Output Model</i>,” assesses the state of the literature focusing on customer involvement in the entrepreneurship process by conducting a systematic review of the literature. Through an examination of 121 studies, this paper analyzes and synthesizes the literature using McGrath’s (1984) input-process-output model. Existing studies are categorized into three phases of the entrepreneurship process as identified in the literature: opportunity identification, innovation, and opportunity exploitation. This paper develops a theoretical framework that integrates the existing literature, provides a holistic understanding of the customer’s role in the entrepreneurship process, and unpacks primary areas of conversation about customer involvement. By leveraging this theoretical framework, the study identifies gaps in the literature, highlights areas requiring further exploration, and provides researchers with a clear foundation for future investigations.</p><p dir="ltr">The second paper, titled “<i>Mapping the Role of Lead User Involvement and Entrepreneurs’ Social Listening in New Product Success: A Social Network Analysis</i>,” investigates the dynamics of lead user involvement in NVs’ NPD activities. Drawing on lead user theory and data from 2,686 NPD projects launched on crowdfunding platforms, this paper examines how the social network characteristics of NVs’ early customers shape their market position (i.e., lead userness) and how their product feedback affects new product success. Further, this paper investigates the moderating effects of the entrepreneurs’ social listening in the above relationship, defined as their active engagement in attending to, observing, interpreting, and responding to customer feedback. The findings indicate that the degree centrality and betweenness centrality of NVs’ early customers within the crowdfunding network significantly impact their ability to provide product-related feedback, which, in turn, influences the success of NVs’ new products. Further, the findings suggest that this effect is strengthened when entrepreneurs respond positively to product-related feedback, indicated by having a higher level of social listening. The findings offer valuable insights for entrepreneurs to identify lead users in crowdfunding platforms and maximize the effectiveness of customer involvement in NPD.</p><p dir="ltr">The third paper, titled “<i>Achieving New Venture Sales Targets: The Role of Brand Identity and Customer Involvement</i>,” draws on institutional theory and utilizes data from 2564 NPD projects launched on crowdfunding platforms to explore the role of brand identity on customer involvement as advocators and its implications for new product adoption by early customers. The findings indicate that emphasizing functional values through brand competence enhances legitimacy and fosters early customer advocacy for utilitarian products. In contrast, highlighting emotional values through brand warmth builds legitimacy and advocacy for hedonic products. Furthermore, the results highlight the role of brand distinctiveness in securing early customer legitimacy and generating positive word of mouth. Additionally, customer advocacy early in the sales campaign contributes to achieving NV sales targets, with this effect amplified when early customers have a higher level of opinion leadership, as these individuals serve as powerful legitimacy signals, influencing subsequent customer behavior. The findings offer practical insights into branding strategies for NVs, demonstrating how brand identity can enhance customer involvement, promote early sales, and support successful new product commercialization.</p><p dir="ltr">This thesis offers several theoretical and managerial implications. First, given the multifaced nature of entrepreneurship, reviewing the existing literature on customer involvement offers a fresh perspective that contributes to enriching the domain knowledge on the role of customers in the entrepreneurship process of NVs. Second, the thesis resolves inconsistencies in the literature on the effectiveness of customer involvement in NPD by examining customers’ market positions—specifically, their lead userness in driving product-related feedback—and the role of entrepreneurs’ social listening in effectively attending to, interpreting, and responding to this feedback. Third, the thesis explores the often-overlooked role of customer perceptions of legitimacy, analyzing brand identity as a mechanism for securing early customer legitimacy and advocacy, which, in turn, helps NVs achieve their sales targets and reduces failure rates.</p>