Customer Participation and Product Innovation in the Era of Industry 4.0 and 3D Printing: Evidence at Firm and Individual-Level

My PhD dissertation consists of two chapters which empirically analyse the impact of the modern technologies of Industry 4.0 on customer participation (CP) in new product development (NPD) process of firms in general, and the impact of 3D printing on individual-level innovation performance in particular. These studies aim to contribute to the debate on the evolution of CP from customers as passive recipients of products offered by firms to independent makers of their desired products. Initially, customers had no input in what was offered to them, and they were the submissive recipients of firms’ products. The market was perceived as the aggregate of demand and value transfer, whereas companies were the points of value creation (Kotler, 2002; Vargo & Lusch, 2004). With the advent and omnipresence of the Internet, information asymmetry reduced between firms and customers. As a result, the customers started taking part in the NPD process as mere information providers to active partners. Consequently, active customers happened to appear as lead users (Von Hippel, 1986) whose opinion carried weight which could influence the changes in product features and subsequent adoption of products by other customers. Companies also realized the importance of customers’ feedback and opinion; hence, CP evolved further, and customers were provided with toolkits (Von Hippel, 2001b). “User toolkits for innovation” provided customers with a free environment within defined bounds related to specific products and allowed them to develop their customized products via trial-and-error. Customers also started forming virtual customer communities (Nambisan, 2002) to discuss the ideas and information regarding products and desired new features. But it is the recent work which has given formal recognition to CP in NPD (Chang & Taylor, 2016) by acknowledging various participation roles a customer can 7 take on in NPD, e.g. a customer as an information source, a co-developer and an innovator (Cui & Wu, 2016; 2017). The world is forecasting the fourth industrial revolution prompted by advanced technologies, and the twenty-first century demands technological innovation and novel product development approach (L. Li, 2018a). The term ‘Industry 4.0’ (German: Industrie 4.0) – representing the much-anticipated fourth industrial revolution symbolising the increased use of modern technologies in the manufacturing process of firms – was coined at ‘Hannover Messe 2011’ in Germany as part of its high-tech strategy to sustain the competitive advantage and meet the requirements of future production. Other countries have also initiated similar ventures and use different terminologies like ‘Internet of Things’ in the United States and ‘Made-in-China 2025’ in China to represent the phenomenon of Industry 4.0. Consequently, there is an increasing trend of investment by firms in the technologies associated with Industry 4.0. Although some of these technologies like robotics, 3D printing, laser cutting are in use since over two decades, many of Industry 4.0 applications necessitate the combination of these technologies (Xu et al., 2018). However, the connectivity between these technologies is not extensively discussed before 2011. But now, the discussion has started as the technologies have reached a mature state of application and are materialized under the concept of Industry 4.0 (Santos et al., 2017). According to Gilchrist (2016), “Industry 4.0 is essentially a revised approach to manufacturing that makes use of the latest technological inventions and innovations, particularly in merging operational and information and communication technology.” The first chapter of this thesis is a firm-level analysis which focuses on analysing the impact of Industry 4.0 technologies on CP in firms’ NPD process where customers work as co-developers. Customer participation is defined as the magnitude of the customer’s engagement in 8 the company’s NPD process (Fang, 2008). Scholars consider the investment in modern technologies a significant internal factor to cater to customized demand of consumers (Kotha, 1996). Industry 4.0 technologies are interactive because of the digital connectivity of tools and remote inputs and have the potential to take the magnitude of customer’s participation to a higher level and engage them in the product design and production process. Hence, it is essential to empirically investigate this claim as the Industry 4.0 technologies will not only help to develop new products and services (Lee et al., 2014), but the provision of customized products will also help to reduce the number of goods returned. For empirical analysis, we collected the data from 123 North Italian firms by using a structured questionnaire targeted to chief operating officers or managers in charge of technological and manufacturing processes. The firms were currently using Industry 4.0 technologies like 3D scanner, additive manufacturing, IoT and intelligent products, robotics, big data and cloud, augmented reality and laser cutting. Another facet of recent technological scenario is that it takes the empowerment of customers and end-users one step further from toolkits and customer communities. Now some technologies are in direct reach and use of individuals. One potentiality linked with such technologies, especially 3D printing (3DP), is the transformation of customers into real “makers” (Anderson, 2012). 3DP is “a process of joining materials to make objects from 3D model data, usually layer upon layer, as opposed to subtractive manufacturing methodologies” (ASTM, 2012). A computer-aided design (CAD) file of the object idea is generated by using a software which contains all the information of the physical object. To develop the physical object, the 3D printer receives the print command and based on the digital file, transforms the information in the arrangement of material layers upon layers. As the material layers bind together directly from a CAD file, it reduces the product development time and intensity of physical flows (Holmström et 9 al., 2017). The additive style of manufacturing also eliminates many intermediaries like labour (Ford & Despeisse, 2016) and expensive and time-consuming tools. 3DP is ideal for the economies-of-one and is not resource-intensive. These features make 3DP ideal for end-user and open innovation. Subsequently, 3DP aids firms as well as individual makers to execute a project from the design stage to final output (Rayna & Striukova, 2016a). Apart from knowledge creation and social exchange, the use of technology forms the basis of the relationship of makers movement with entrepreneurship (Browder et al., 2019). The prices have decreased considerably, and 3DP is in access to end-user and makers. Recent research shows that makerspaces are significant platforms for 3DP spread and adoption (Woodson ey al., 2019). 3DP has the potential to empower makers and boost end-user innovation and entrepreneurship linked with the maker movement. Despite the increasing importance and relevance of 3DP, very little is known about the factors affecting the acceptance and use of 3DP among the exiting users. More importantly, the impact of the use of 3DP on innovation performance is not empirically acknowledged at individual-level. The second chapter is an individual-level empirical analysis of the factors affecting the acceptance and use of 3DP by makers in makerspaces. Makerspaces have been used as local places of shared resources and provision of manufacturing technologies that are not as commonly available as internet connectivity and computers (Kostakis et al., 2015). This chapter uses an extended model of the unified theory of acceptance and use of technology 2 (UTAUT2) (Venkatesh et al., 2012) to explore the factors affecting the acceptance and use of 3DP by makers. The model is extended on the outcome side to analyse the impact of the use by incorporating a new construct, ‘innovation performance’ as a consequence of use. For empirical analysis, I developed a survey, using the scales validated by exiting studies and distributed it to the visitors 10 of makerspaces registered on three platforms; hackerspaces.org, makerspaces.make.co and fabfoundattion.org and had the facilities of 3DP. In total, 338 responses were used for the empirical analysis of the study. The results of the first chapter confirm that the use of Industry 4.0 technologies does have a positive impact on CP in the development of product design and production process of the firms. The effect is stronger for CP in design than CP in the production process. The firms which report product flexibility as their competitive advantage, are more like to allow CP in the product design and production process. The findings of the second chapter, focused at the individual-level adoption and impact of 3DP on innovation performance, show that the makers are adopting 3DP printing because they expect an increase in their performance and the opinion of the important people around them also matters in the adoption decision. Empirical results indicate that the adoption of 3DP also depends on the availability of facilitating conditions and the hedonic motivation extracted from the use of 3DP. The results also provide empirical evidence of the impact of the use of 3DP on makers’ innovation performance.