“Determinants of User Innovation and the Sharing of Product Modifications.”

Empirical studies have shown that, in many fields, product end users rather than product manufacturers are the first to prototype and apply innovations that later become the basis of important commercial products. This fundamental finding has the potential to significantly affect the way that product developers and market researchers go about the idea generation stages of new product and service development. In this study, we explore aspects of user innovation that are central to the systematic tapping of user innovation as an input to new product and service idea-generation. By studying data drawn from a sample of 122 Australian libraries using a type of library IT system called an “OPAC,” we confirm that users do frequently innovate. What is new is that we find that innovating users have two characteristics – leading edge status and in-house technical capability that can reliably distinguish them from non-innovating users. We also find that user-developed innovations are frequently of potential commercial interest to product manufacturing firms, and that users are often willing to share or trade information about their innovations with fellow users and inquiring manufacturers. We develop and test an economic model which explains this behavior. We conclude by discussing how our findings might affect approaches to idea generation in product and service development processes.