IT’S ALL IN THE MIX: HOW USER-DESIGNED PRODUCTS AND COMPANY-DESIGNED PRODUCTS CAN PEACEFULLY COEXIST

Abstract

Across industries, companies operate open innovation platforms that encourage users to share ideas and become product designers. Likewise, companies explicitly promote products based on user ideas as “user-designed” (e.g., McDonald’s MyBurger, LEGO Ideas). This paper introduces and empirically investigates two managerially relevant factors that can influence the effect of user-designed products on consumers’ reactions. Specifically, Studies 1a and 1b reveal an inverted U-shaped relationship between the share of user-designed products in a company’s product portfolio and consumers’ purchase intentions, which is mediated by consumers’ perceptions of the company’s innovation ability. Study 2 examines the role of the market entry strategy for user-designed products. While the inverted U-shaped effect holds for followers, the relationship between the share of user-designed products and consumers’ purchase intentions becomes U-shaped for first movers. These results suggest that user-designed products can have unexpected consequences that managers need to be aware of and consider in their actions.