The role of customers in NPD has fundamentally shifted. Customers are no longer passive recipients but active participants in value creation. Firms increasingly empower customers, either by allowing them to self-design unique products (products made for one) or by engaging them in designing products for the broader marketplace (products made for many). This power shift has important psychological (attitudes, perceptions, emotions) and behavioral (actions, intentions) consequences. While existing research has explored these consequences, the literature is scattered and inconsistent, lacking a cohesive conceptualization. Inconsistencies arise from neglecting the situational nature of customer empowerment, failing to distinguish between effects on participating and observing customers, and overlooking the diverse manifestations of customer empowerment across NPD stages. This review aims to address these gaps by providing a comprehensive overview of the positive and negative consequences of customer empowerment, identifying key boundary conditions and moderating factors, and ultimately answering: How do different customer empowerment strategies influence participating and observing customers? When does customer empowerment create value, and when does it backfire? How do these effects differ across strategies and customer groups?

The authors conducted a systematic literature review using Scopus, focusing on articles published in top technology, innovation management, and marketing journals since 2001. Initial searches yielded over 42,000 articles. After applying several exclusion criteria (e.g., focusing on psychological and behavioral outcomes, excluding service-focused and B2B studies), the final sample comprised 66 articles. The review analyzed articles regarding methodology, themes, and key findings, categorizing them based on the proposed conceptual framework. The framework's two dimensions (outcome of the customer empowerment activity: product made for one vs. product made for many; customer group: participating vs. observing customers) created four distinct situations analyzed in the review. The analysis examined customer-related, product-related, firm-related, and task-related psychological consequences and moderating factors.

The authors followed Tranfield et al.'s (2003) systematic review process. The search strategy involved Boolean searches in Scopus using keywords related to customer empowerment (e.g., co-creation, crowdsourcing, user empowerment) and new product development (e.g., product, goods, offering). The initial search resulted in 42,208 articles. The authors then limited the scope to articles published in the top 50 journals in technology and innovation management, marketing, and Financial Times top 50 journals, published since 2001. This reduced the number of articles to 942. Both authors independently screened the abstracts and relevant sections of the full texts, excluding duplicates and irrelevant articles, leading to a sample of 611 articles. Four further exclusion criteria were applied: (a) focus on non-psychological and non-behavioral outcomes; (b) focus on antecedents of customer empowerment; (c) focus on services; (d) focus on B2B industries. This resulted in a final sample of 66 articles, published in 20 journals. Intercoder reliability was 95.1%. Data from these articles were extracted and summarized in an Excel spreadsheet, categorizing articles based on the developed conceptual framework across four customer empowerment situations.

The review identified predominantly positive effects of customer empowerment across all four situations. However, the nature and intensity of these effects varied depending on the situation. **By me for one:** Participating customers customizing products for themselves or others generally showed positive behavioral consequences (higher willingness-to-pay, purchase intentions, recommendations). Psychological consequences included feelings of accomplishment, self-efficacy, and increased product appreciation. Moderators included customer characteristics (need for uniqueness, uncertainty avoidance), firm characteristics (ethical practices), and task-related factors (process complexity, tool support). Future research should explore consumption and usage of self-designed products, and the effects of collaborative customization. **By me for many:** Participating customers involved in co-creating products for the broader market exhibited positive behavioral consequences (increased demand, loyalty, and word-of-mouth). Psychological consequences included increased psychological ownership and trust in the firm. Moderators included the outcome of the co-creation process and cultural factors (individualism). Future research should explore the long-term effects and potential negative consequences of idea rejection. **By others for many:** Observing customers presented with user-designed products also showed positive behavioral consequences (increased product preference, purchase intentions). Psychological consequences included increased trust in and identification with the firm. However, these positive effects were moderated by product complexity, customer power-distance beliefs, and brand type (luxury brands showed negative effects). Future research should investigate negative consequences and the effects across different stages of the customer journey. **By others for one:** Observing customers exposed to another's customized product showed a motivation to express their own uniqueness, potentially leading to different product choices and increased willingness-to-pay. Moderators included closeness to the other person and comparison targets. Future research should explore the psychological consequences (e.g., envy, feeling less unique) and the effects on future customization behaviors and purchase decisions.

The findings demonstrate the situational nature of customer empowerment's consequences. While positive effects dominate, the review highlighted critical boundary conditions, such as the role of product complexity, cultural factors (power-distance beliefs), and brand type (luxury vs. mainstream). The framework helps explain why some customer empowerment strategies succeed while others fail. The differences between participating and observing customers highlight the importance of considering both groups when designing and evaluating customer empowerment initiatives. The focus on both behavioral and psychological consequences provides a more holistic understanding of customer empowerment's impact, going beyond simply observing purchase behavior. The integration of consumer psychology into innovation management provides a novel perspective, bridging the micro and macro levels of analysis.

This review provides a comprehensive framework for understanding the psychological and behavioral consequences of customer empowerment in NPD. The findings highlight the importance of considering the situational context, distinguishing between participating and observing customers, and acknowledging both positive and negative consequences. Future research should investigate the limitations identified, including exploring the service sector, investigating antecedents, integrating the firm perspective, and examining alternative conceptualizations of customer empowerment. Further, exploring the effects of technological advancements like AI and the increasing convergence of physical and digital products is crucial.

This research focuses primarily on the customer perspective, neglecting a detailed analysis of firm-level consequences. The generalizability of findings is limited by the focus on the B2C context with physical products and the exclusion of service industries. The framework, while theoretically grounded, represents one possible approach to conceptualizing customer empowerment; alternative conceptualizations might yield additional insights. Finally, the reliance on existing literature may have unintentionally biased the results towards prevalent research topics, potentially overlooking less-studied but equally important aspects of customer empowerment.