The psychological and behavioral consequences of customer empowerment in new product development: Situational framework, review, and research agenda

The paper addresses how empowering customers in new product development (NPD) influences customers’ psychology and behavior. The authors note a proliferation of empowerment practices (e.g., customization, crowdsourcing) but fragmented findings and inconsistent conceptualizations. They argue current work often conflates distinct manifestations and overlooks differences between participating customers and observing customers. Key research questions: How do different empowerment strategies affect participating versus observing customers? How do these strategies influence customer behavior and perceptions of firms and products? Under what conditions does empowerment create value or backfire? The study proposes a situational framework (outcome: product made for one vs many; audience: participating vs observing) to integrate findings and guide future research. The work is important because customers’ psychological and behavioral reactions ultimately drive sales and firm success, and a customer-level lens can complement firm-level innovation research.

The authors define customer empowerment as customers’ active participation in any stage of a firm’s NPD process (ideation, development, commercialization, post-launch), encompassing co-creation, co-production, self-customization, etc. They review prior work showing empowerment can occur via toolkits, crowdsourcing platforms, beta testing, self-assembly, and self-production, and note differing roles of customers across stages (as co-developers providing inputs vs. users providing outputs/feedback). Drawing on situational consumer research, they conceptualize empowerment along two dimensions: (1) outcome of empowerment (product made for one vs product made for many) and (2) customer group (participating vs observing), yielding four situations: By me for one; By me for many; By others for many; By others for one. Prior literature documents both positive and negative outcomes across these situations, but evidence is scattered, with a heavy emphasis on mass customization (“by me for one”) and less on observing customers. The review also highlights known moderators (e.g., brand type, complexity, cultural values such as power distance, preference insight) and calls for an integrated perspective linking innovation management and consumer research.

The study follows a systematic review approach (Tranfield et al., 2003) using Scopus. Two sets of Boolean search terms were employed: (1) a comprehensive set for customer empowerment (e.g., customer participation, co-creation, crowdsourcing, mass customization; 13 additions beyond prior lists) and (2) product-related terms (product, goods, offering). Searches in titles/abstracts/keywords yielded 42,208 records. Inclusion was limited to articles (2001–2023) in top field journals (top 50 technology and innovation management; top 50 marketing; FT50), resulting in 942 records. Screening removed duplicates (n=4) and non-NPD/empowerment focus (n=327), leaving 611. Additional exclusions removed studies focusing on (a) non-psychological/behavioral outcomes, (b) antecedents, (c) services, and (d) B2B contexts, yielding a final sample of 66 articles across 20 journals (intercoder reliability: 95.1%). Data extraction captured article metadata, methods, psychological and behavioral outcomes, moderators/boundaries, and effect directions. Studies were categorized into the four situational cells and further classified by effect level (customer, product, firm, task). The publication trend shows growth from 2003 to 2023, with concentration in Journal of Marketing, Journal of Marketing Research, Journal of Business Research, and Journal of Product Innovation Management.

Overall: Of the 66 studies, 92.4% report positive customer reactions to empowered products. Research is concentrated in “By me for one” (52 articles), with fewer in “By me for many” (8), “By others for many” (12), and “By others for one” (5). Universal boundary conditions include potential backfiring for luxury brands and for high product/task complexity. By me for one (participating, product for one): Behavioral: Higher product demand/preferences, purchase intentions, willingness to pay (WTP), spending, conversion/click-through rates, recommendation intentions, and longer time-to-disposal; greater sharing of customized products and loyalty intentions. Psychological: Customer-level gains in accomplishment, competence, self-efficacy, psychological ownership, perceived empowerment, self-authenticity, identity expression, well-being; product-level increases in perceived preference fit, uniqueness, usefulness, aesthetic/functional fit, product identification and satisfaction; task-level enjoyment and interface fluency but costs of perceived complexity/effort. Moderators: Preference insight and ability to express preferences, product involvement, uncertainty avoidance (attenuates), culture-specific processing style (matching interfaces boosts outcomes), presence of others and gifting, integration of peer input, outcome attractiveness and contribution magnitude, (un)ethical production processes (reverse effects under unethical), self-production intensity (too high reduces satisfaction), product type (hedonic vs utilitarian), and brand factors (luxury, possessive brand names). By me for many (participating, product for market): Behavioral: Increased product choice/demand, purchase intentions, WTP, enjoyment of use, willingness to take care of and defend products, positive WOM; stronger brand satisfaction and loyalty; possible reduction in future idea sharing if ideas are rejected. Psychological: Psychological ownership, perceived control/empowerment, satisfaction; stronger trust, firm connection, and customer-brand identification. Moderators: Alignment of outcomes with participant preferences and perceived competence (attenuation when low), sense of collectivity/group identity, cultural individualism (stronger effects in lower-individualism cultures), and firm feedback/excuses mitigating rejection effects. By others for many (observing, product for market): Behavioral: Often higher product preference, purchase intentions, WTP, loyalty and commitment intentions, and recommendation intentions for “user-designed” offerings; some studies find no main effect on actual purchase. Psychological: Observers feel more empowered by user-driven firms; perceive greater customer orientation, fairness, and innovation ability; higher firm trust and identification; infer higher product quality, reliability, and usability (with caveats). Moderators: Luxury brand context can backfire (lower perceived quality, reduced agentic feelings unless users are legitimized or described as artists/celebrities); product/design task complexity and low familiarity with user innovation attenuate benefits; power-distance beliefs and political ideology moderate (low PDB/liberals prefer user-designed; high PDB prefer designer-designed). By others for one (observing, product for an individual): Behavioral: Exposure to others’ customized products increases observers’ motivation to express uniqueness, drives choices of more unique options, and can increase WTP for uniqueness; observers are typically unwilling to pay more for others’ self-designed products; upward comparisons to professionals lower evaluations of one’s own self-designed products. Psychological: Increased motivation to express uniqueness; unique customized designs reduce perceived preference fit among secondhand-market customers; in gifting, recipients perceive higher uniqueness and appreciation when customized for close others. Moderators: Closeness to the customizing other (stronger effects for close others), defensive processing and self-repair opportunities, seller type (professional vs individual), and uniqueness of the design. Cross-situational reflections: Positive effects occur across early and later NPD stages. Participating customers primarily experience product- and task-level psychological benefits that drive behavior; observing customers’ effects arise more via firm-level inferences that spill over to product evaluations. Luxury branding and complexity consistently emerge as risk factors. Future research opportunities span usage/post-purchase effects, shared (social) customization, digital vs physical customization and AI support, managing empowered participants over time, dark-side conditions, and broader customer journey stages.

The review demonstrates that customer empowerment meaningfully shapes both psychology and behavior, addressing the core questions about when and how empowerment creates value or backfires. The situational framework clarifies that effects depend on who is involved (participant vs observer) and the scope of the outcome (for one vs for many). Participating customers benefit through enhanced self-related and product-related perceptions (effort yields value during and after the process), translating into stronger purchase and WTP. Observing customers, lacking direct effort investment, rely on inferences about the firm (e.g., innovation ability, customer orientation), which then influence product reactions. Importantly, boundary conditions—luxury brand context, high complexity, low user innovation familiarity, cultural values such as power distance and individualism, and task/interface design—determine whether empowerment’s effects are positive or negative. The analysis integrates findings across NPD stages, showing that empowerment can work at ideation, development, commercialization, and post-launch (e.g., self-assembly), with generally positive outcomes but notable exceptions (e.g., idea rejection harms future engagement; luxury brand customization can dampen purchase intent under high design freedom). The framework advances integration between innovation management and consumer research by adopting a customer-level psychological lens to explain market outcomes and highlights practical levers (process design, communication, legitimization, feedback) to optimize empowerment strategies.

This paper contributes a situational framework that integrates four empowerment contexts (“by me/others” × “for one/many”) and synthesizes 66 studies on customer-level psychological and behavioral consequences. The review reveals predominantly positive outcomes across contexts, identifies consistent risk factors (luxury branding, complexity), and distinguishes mechanisms for participating versus observing customers. Practically, it guides firms on when and how to involve customers in NPD and when to communicate empowerment to the market to elicit favorable reactions (e.g., higher WTP, purchase likelihood, brand trust). The authors propose a research agenda spanning post-purchase usage and sustainability implications of self-designed products, shared vs solo empowerment, digital customization and AI augmentation, managing empowered participants for long-term relationships, dark-side/boundary conditions (firm, customer, product, context), and customer-journey stages for observers. More broadly, they advocate for a psychological, customer-centric lens to enrich innovation management theory and practice.

- Scope constraints: Focus on behavioral and psychological consequences in B2C physical product NPD; service contexts and B2B settings excluded, limiting generalizability. - Omitted linkages: Antecedents of empowerment and their pathways to consequences were not integrated, suggesting future work to connect motivators with outcomes. - Perspective emphasis: Customer-side consequences were emphasized over firm-side performance outcomes; integrating both perspectives could reveal interactions and trade-offs. - Conceptual framing: The proposed situational framework is one of several possible lenses; alternative conceptualizations (e.g., engagement levels) may yield additional insights.