Knowledge Bank

Past research exploring consumer response to co-creation has shown that consumers who are empowered to select what products a firm offers show a stronger demand for the selected product than non-empowered consumers due to an increase in psychological ownership of the product. However, this past research has not systematically examined what influence the amount of participation an individual perceives themselves as having in a collaborative design process has on their degree of psychological ownership. This article investigates the effect that consumers’ perceived amount of participation has on psychological ownership of a product and whether reference group dynamics impact this effect. Two studies mimicking a collaborative design process demonstrate that any perceived amount of participation, whether large, small, or ambiguous, equally increases consumers’ psychological ownership of a product, future loyalty intentions toward the company, and underlying demand for the product, compared to attributing full influence to a single “winner”, which is equal to allocating no participation to consumers. Further, in cases of non-empowering participation allocation strategies, psychological ownership increases when in-group members are perceived to have a significant influence on the product while future loyalty intentions toward the company decrease when dissociative out-group members are perceived to have a large influence. This effect is moderated by consumer’s degree of association with their in-group. Reference group dynamics have no effect when consumers are given an empowering participation allocation, showing that the “empowerment-product demand” effect is stronger in determining consumers’ psychological ownership in a product and future loyalty intentions toward the company than social identity and reference group influence. These results support previous research findings, build on the exploration of the psychological effects of co-creation strategies, and will help managers design their co-creation initiatives.