Innovation and business success: The mediating role of customer participation

Abstract

Innovation and the customer participation are central issues in research focusing on the performance offirms. However, the current literature offers little guidance on the extent of connection between firm innovationcapabilities and customer participation and how they work together to enhance the quality of servicesand drive firm performance. Drawing on the literature focusing on firm capabilities and relationship managementparticularly customer participation, this study proposes that customer participation may account forthe effects of service firm innovation capabilities (both technical and non-technical) on service quality.Empirical evidence from 259 firms supports this proposition. In addition, the study also finds that servicequality positively enhances firm performance.