Entrepreneurial orientation and new product performance in SMEs: The mediating role of customer participation

Entrepreneurially oriented SMEs are known to network to overcome resource limitations regarding newness and smallness, thus market intelligence acquisition and utilization have been shown to be of importance for EO firms. This study examines the mediating role of customer participation in new product development (NPD) on the relationship between entrepreneurial orientation (EO) and NPD performance. In a study of 232 SMEs, the results show that EO is positively related to customer participation and customer participation mediates the relationship between EO and NPD performance. Two contingency factors are examined that impact EO's relationship with customer participation - firm age and firm size. The results show that when firms become older or larger, customers become less utilized in EO firms' NPD process, thus indirectly affecting the impact of EO on NPD performance negatively.