Managing co-creation in new product development in multinational corporations : a two-part study

Abstract

In today’s increasingly digitalized and globalized era, a firm-centric approach to new product development (NPD) is giving way to a co-creation paradigm, in which firms actively engage and collaborate with significant stakeholders in the value chain to jointly discover, shape, and create new products and solutions. In particular, more and more multinational corporations (MNCs) are leveraging co-creation for innovation in foreign markets to access local knowledge and capabilities, broaden innovation resources, and alleviate market uncertainties. This thesis focuses on addressing two research questions relating to managing co-creation in NPD in MNCs: (1) How can MNCs strategically manage concurrent co-creation with customers and distributors in emerging markets? (2) How does the MNC’s broader organizational context influence the innovation outcomes of customer co-creation at the subsidiary level? Through this two-part thesis, I aim to contribute to the growing body of literature on co-creation and provide firms with greater insights on how to manage co-creation in a more effective and fruitful way.

The first part of this thesis explores how MNCs can effectively manage their co-creation processes with two groups of downstream stakeholders—customers and distributors—for major innovations in emerging markets. Through two multi-informant surveys of foreign subsidiaries in an emerging market, this study examines the differential contributions of and the required strategic mindset to dually manage customer and distributor co-creation. Study 1 confirms that customer co-creation contributes more to new product innovativeness, whereas distributor co-creation contributes more to speed to market when developing major innovations. Study 2 identifies stakeholder assets and co-creating platform capabilities as the major operational constituents of a co-creation process, and finds that they interact to positively impact major innovations. Furthermore, this study delineates a key tenet of the effectuation theory—the concurrent expanding-converging cycles—and uses it to explain how firms should adopt a malleable strategic mindset, in terms of resource alignment and internal processes, in managing customer and distributor co-creation. Specifically, firms are advised to maintain an open strategic mindset in managing customer co-creation and a focused mindset in managing distributor co-creation.

The second part of this thesis adopts the broader agency perspective to examine both the bright and dark sides of customer co-creation, and how MNCs’ broader organization context may impact the innovation outcomes of customer co-creation at the subsidiary level. Specifically, this study investigates how MNC subsidiaries’ customer co-creation efforts influence new product innovativeness and knowledge leakage to competitors, and how these double-edged effects are contingent upon MNCs’ global integration and local adaptation mechanisms. Through a dyadic managerial survey of foreign subsidiaries in an emerging market, the findings reveal that the effects of customer co-creation on new product innovativeness and knowledge leakage depend on subsidiaries’ vertical and lateral integration with the MNC network, as well as their functional and personnel adaptation in the host country. This study sheds light on the important role that MNCs’ broader organizational context may play in co-creation management, indicating that proper alignment of global management mechanisms can help subsidiaries to fruitfully leverage customer co-creation for innovation in foreign markets.