Collaboration with Lead User Firms in New Product Development: A Source of Schumpeterian Opportunity

Abstract

Firms regularly collaborate with customers in new product development (NPD). Research showed that a customer’s lead userness is related with the development of products that are commercially more attractive and generate higher revenues. We contribute to lead user research in a business-to-business context by addressing two gaps: the type of entrepreneurial opportunity embodied in lead user collaboration, and factors moderating firms’ ability to benefit from lead user firms. Our main hypothesis is that customer lead userness is associated with the pursuit of Schumpeterian opportunities (disequilibrating, radical, rare, based on new knowledge, and requiring creative activity) instead of Kirznerian (equilibrating, incremental, common, based on existing knowledge, and requiring alertness). Analyzing data of 139 high-tech small firms we find support for our main hypothesis. Next, based on the sender-relation-receiver model of knowledge transfer, we investigate how customer market dominance, duration of the relationship, and firms’ R&D intensity moderate the association between lead userness and opportunity type. We find that lead userness and Schumpeterian opportunity pursuit are related only when the relationship with the customer firm is relatively new. Tentative evidence is found that lead user benefits are obtained with customers that are not dominant in their market, and when the receiving firm’s R&D intensity is average or high (i.e., absorptive capacity).