Engaging in or escaping co-creation? An analytical model

Customer co-creation, the practice of involving customer in a firm’s new product development, has received increasing attention. We develop unique analytical model to study co-creation and examine conditions under which is economically beneficial for both firm. In our model, firm determine (simultaneously or sequentially) their innovation share co-created product, directly affecting development costs final quality. The decides price (affecting demand, revenues purchasing costs) its level manufacturing flexibility unit production cost fixed investment). Our generates important insights. show that when consumer surplus profit are positive, want “engage”in either obtains negative economic value from they prefer avoid co-creation. find thrives customers more sensitive quality less price, environment investment intensive, demand high. Under these conditions, increase. How efforts shared between an instrument guide process. When first contribute results customer’s effort