Examining the Role of Psychological Ownership and Feedback in Customer Empowerment Strategies

Abstract

Customers increasingly seek to engage with companies by actively taking part in the value creation process. Companies have reacted to this trend by integrating customers into product development processes in an effort to better fulfil their needs and simultaneously decrease costs. While research has explored various antecedents and consequences of such co-creation activities, only little is known about the psychological ownership’s role and its interaction with peer feedback. This research shows that psychological ownership emerges when customers engage with companies in creating the product portfolio. Furthermore, implementing feedback loops accelerates customer engagement’s positive effects in terms of product evaluations and customers’ willingness to pay. Negative feedback reverses these effects suggesting that companies should pay closer attention to feedback options when integrating customers into value creation processes.

Full text

Examining the Role of
Psychological Ownership
and Feedback in Customer
Empowerment Strategies
Joe F. Hair1
Kati Barth2
Doreen Neubert2
Marko Sarstedt2, 3
Abstract
Customers increasingly seek to engage with companies by actively taking part in
the value creation process. Companies have reacted to this trend by integrating
customers into product development processes in an effort to better fulfil their
needs and simultaneously decrease costs. While research has explored various
antecedents and consequences of such co-creation activities, only little is known
about the psychological ownership’s role and its interaction with peer feedback.
This research shows that psychological ownership emerges when customers
engage with companies in creating the product portfolio. Furthermore, imple-
menting feedback loops accelerates customer engagement’s positive effects in
terms of product evaluations and customers’ willingness to pay. Negative feed-
back reverses these effects suggesting that companies should pay closer attention
to feedback options when integrating customers into value creation processes.
Keywords
Value co-creation, customer empowerment, psychological ownership, peer feedback
Journal of Creating Value
2(2) 194–210
© 2016 SAGE
SAGE Publications
sagepub.in/home.nav
DOI: 10.1177/2394964316661811
http://jcv.sagepub.com
Corresponding author:
Marko Sarstedt, Otto-von-Guericke-University Magdeburg, Faculty of Economics and Management,
Chair of Marketing, Universitätsplatz 2, 39106 Magdeburg, Germany.
E-mail: marko.sarstedt@ovgu.de
1 Cleverdon Chair of Business, Mitchell College of Business, University of South Alabama, Mobile,
Alabama, USA
2 Otto-von-Guericke-University Magdeburg, Faculty of Economics and Management, Chair of Marketing,
Magdeburg, Germany.
3 University of Newcastle, Faculty of Business and Law, Newcastle, Australia.
Value Creation and Co-Creation

Hair et al. 195
Introduction
ʻYou are Threadless. You make the ideas, you pick what we sell,
you’re why we exist’.
Threadless company’s philosophy represents the idea behind customer
co-creation, specifically customer empowerment: integrating customers into the
value creation process (i.e., customer co-creation) by giving them control and
decision power over the product portfolio (i.e., customer empowerment), espe-
cially in new product development (Bugshan, 2015; Fuchs & Schreier, 2011;
Prahalad & Ramaswamy, 2004; Saarijärvi, 2012). Threadless invites its custom-
ers to submit designs for T-shirts and to evaluate others’ designs. Those with the
best ratings are produced and sold to the broader market (Ogawa & Piller, 2006).
Instead of employing classical market research to infer products that (presum-
ably) meet customers’ tastes, Threadless allows its customers to design the
products and to determine the product portfolio (Ogawa & Piller, 2006).
Threadless is not alone in its efforts to actively involve customers in the value
creation process. An increasing number of companies such as McDonald’s,
Coca-Cola or FedEx are also following this rationale of customer co-creation
and empowerment (Fuchs & Schreier, 2011). By transferring some extent of
control and responsibility to their customers, these companies seek to better
fulfil customers’ needs, develop more innovative products and simultaneously
decrease costs, while reducing their business risks (Ogawa & Piller, 2006).
Not surprisingly, customer co-creation has attracted considerable attention
among marketing researchers over the past decade. For instance, a large body of
research has discussed the paradigm change in value creation from company-cen-
tric to customer co-creation (e.g., Ogawa & Piller, 2006; Prahalad & Ramaswamy,
2000; Prahalad & Ramaswamy, 2004; Vargo & Lusch, 2004). Other studies have
explored options to integrate customers in value creation, for example, via toolkits
or virtual customer communities (e.g., O’Hern & Rindfleisch, 2010; Prahalad &
Ramaswamy, 2004; Sawhney, Verona, & Prandelli, 2005). In contrast, the conse-
quences of empowering customers have not been researched in greater detail.
Specifically, prior research has focused primarily on the impacts of customer inte-
gration on satisfaction and loyalty (e.g., Auh, Bell, McLeod, & Shih, 2007;
Bendapudi & Leone, 2003; Chan, Yim, & Lam, 2010; Dong, Evans, & Zou, 2008).
However, there are few nuanced investigations that go beyond these two conse-
quences of customer empowerment. A notable exception is Fuchs, Prandelli and
Schreier (2010), who examined the consequences of customer co-creation in the
context of customer empowerment to select (i.e., asking customers to select from a
set of product configurations), using as a framework the concept of psychological
ownership, which refers to customers’ feelings of possession that are not necessar-
ily connected to physical or legal possession (Pierce, Kostova, & Dirks, 2003).
Fuchs et al. (2010) show that psychological ownership plays a crucial role in the
context of empowerment to select strategies that facilitate positive customer out-
comes such as word-of-mouth. While Fuchs et al. (2010) provide valuable insights
into psychological effects of customer empowerment, their study is limited to
dyadic company–customer interactions in the context of customer empowerment

196 Journal of Creating Value 2(2)
to select. The roles of other customers and their opinions on co-created products
that may affect such interactions remain unexamined.
The shift from traditional value creation to customer co-creation is accompa-
nied by the shift from company-initiated dialog to a forum of ideas and com-
munication (Prahalad & Ramaswamy, 2004; Saarijärvi, 2012), where customers
can not only interact faster and more frequently with the company but also with
fellow customers (Prahalad & Ramaswamy, 2004; Sawhney et al., 2005). Yet,
prior studies have not considered the role of peer feedback, which may have a
significant bearing on customers’ attitudes and perceptions of a created product.
Ample research on the role of social influence suggests that people may change
their opinion when encountering incongruence of their opinion and others’
opinions (Cohen & Golden, 1972; Deutsch & Gerard, 1955; Raghunathan &
Corfman, 2006). This altered evaluation is motivated by the need to belong
(having the same opinion as a signal of bonding and association) and the need
for accuracy (having the same opinion as a signal of a confirmed ‘correct’ opin-
ion) (Raghunathan & Corfman, 2006).
In a large-scale experiment, we address this lack of empirical investigation of
the influence of peer feedback concerning the effects of customer empowerment
strategies. By implementing feedback loops, we examine whether empowered
customers designing a new product are more prone to changes in their evalua-
tions of a brand and a product when receiving feedback on their designs.
In addition, we add to the literature by employing an empowerment to create
strategy as opposed to an empowerment to select strategy (Fuchs et al., 2010).
Finally, prior research relied on product-related variables with unknown brands.
In this research, we examine customers’ perceptions of an established brand
where they have the power to co-create the final product portfolio.
We find that a feedback loop changes the attitude towards and intentions
related to the created product depending on the nature of the feedback. Positive
feedback enhances the positive effect of co-creation, while negative feedback
undermines the effect. Furthermore, we find support for a more favourable
brand attitude when customers are empowered to create. Finally, we show that
this form of value co-creation has a significant influence on the emergence of
psychological ownership.
Theory and Hypotheses
Customer Empowerment as a Strategy in a Co-creation Context
Traditional value creation is seen as a company-led process in which customers
assume only a passive role. The distribution of roles in production and consump-
tion is clear-cut: companies produce and create value, while customers only con-
sume the market offerings predetermined by the companies (Saarijärvi, 2012).
Although firms have substantively expanded their product portfolio, they still often
fail to differentiate themselves from their competitors and fully capture the increas-
ing heterogeneity of customers’ needs and wants (Ogawa & Piller, 2006; Prahalad
& Ramaswamy, 2004). If consumer inputs are solicited in classical market research,

Hair et al. 197
it seldom influences corporate decisions (Prahalad & Ramaswamy, 2004; Sawhney
et al., 2005). In recent years, the long established, company-centric value creation
process has started to shift to the co-creation of value. Increasingly, value is being
created jointly by firms and customers (Prahalad & Ramaswamy, 2004; Saarijärvi,
2012; Vargo & Lusch, 2004). Triggered by the Internet, customers have easier
access to a broader range of information and networking opportunities making the
markets more transparent and giving voice and power to customers (Bugshan,
2015; Füller, Mühlbacher, Matzler, & Jawecki, 2009; Prahalad & Ramaswamy,
2004; Sawhney et al., 2005). The evolution from company-centric to interactive
value creation is referred to as customer co-creation; that is, the integration of cus-
tomers into the value creation process, thereby giving them a sense of decision
power (Fuchs et al., 2010; Prahalad & Ramaswamy, 2004). An increasing number
of companies have begun to respond to and make use of this changing customer
role, especially in the new product development stage. This shift involves empow-
ering customers to create a company’s offerings by suggesting new products
(ideas), or empowering them to select which products are produced and marketed
(Fuchs & Schreier, 2011; Fuchs et al., 2010).
Although they give decision power to customers, companies can benefit
from the loss of power by developing more innovative products that are less
costly and risky, and can thus more closely meet customers’ needs and wants
(Ogawa & Piller, 2006). At the same time, even customers not taking an active
part in the value creation process view companies that empower customers in a
more favourable light, regard them as more customer-oriented and, ultimately,
show stronger behavioural intentions in terms of purchase intentions, positive
word-of-mouth, loyalty and corporate commitment (Fuchs & Schreier, 2011).
In line with the above, we hypothesize a co-creation effect that positively affects
customers’ assessments of a product and a brand as well as their word-of-mouth
intentions, willingness to pay and willingness to defend the product in public.
H1a: Customers who are empowered to create show an improved brand atti-
tude compared to non-empowered customers.
H1b: Customers who are empowered to create are more willing to spread
positive word-of-mouth than non-empowered customers.
H1c: Customers who are empowered to create feel a greater joy when using
the created product than non-empowered customers.
H1d: Customers who are empowered to create are more willing to defend the
product in public than non-empowered customers.
H1e: Customers who are empowered to create show a higher willingness to
pay than non-empowered customers.
The Emergence of Psychological Ownership in Customer
Empowerment Strategies
Originating from the organizational behaviour literature, which broaches its role as
a predictor of employee attitudes, job satisfaction and organizational commitment
(Van Dyne & Pierce, 2004), marketing scholars have recently begun to transfer the
concept of psychological ownership to marketing research (e.g., Folse, Moulard, &

198 Journal of Creating Value 2(2)
Raggio, 2012; Jussila, Tarkiainen, Sarstedt, & Hair, 2015; Reb & Connolly, 2007).
Psychological ownership entails that individuals consider an (intangible) object as
their own, although this sense of possession might not be accompanied by any
legal justification (Pierce et al., 2003). Thus, legal ownership is not a necessary
condition for psychological ownership to emerge. Individuals may develop feel-
ings of ownership decoupled from legal ownership or indeed be the legal owner of
an object without there being feelings of ownership. Furthermore, psychological
ownership is both cognitive and affective in nature, encompassing beliefs and
thoughts as well as emotions regarding (immaterial) objects (Pierce et al., 2003).
Psychological ownership emerges through three mechanisms (Pierce et al.,
2003): (a) exercising control, (b) investing the self into an object and (c) getting
to know an object intimately. Having control over and taking responsibility for
an object strengthens feelings of ownership and the connection to that object
(Fuchs et al., 2010). Folse et al. (2012) show that psychological ownership can
be evoked by ‘psychological ownership message appeals’ (Folse et al., 2012,
p. 296) that communicate responsibility for a target or investment in a target,
such as ‘YOU have made a difference’ or ‘because of YOU’ (Folse et al., 2012,
p. 298). Although participants were not actively engaging in contribution to a
target, they assumed a higher level of psychological ownership. To evoke psy-
chological ownership, subjects must perceive themselves as the cause for the
outcome (Pierce & Jussila, 2011). By exerting some extent of control over a
product portfolio, customers feel as though the decision is theirs (Agarwal &
Ramaswami, 1993; Hunton, 1996). Hence, when companies empower their cus-
tomers by shifting responsibility and influence in the final product portfolio, and
actually follow the decisions made by customers, they can increase their psycho-
logical ownership. As Pierce et al. (2003) note, ‘the most obvious and perhaps
the most powerful means by which an individual invests himself or herself into
an object is to create it’ (Pierce et al., 2003, p. 93). As a result, people develop a
strong association to objects they psychologically own and connect them to their
self-identity and self-concept (Belk, 1988; Pierce et al., 2003). A large body of
research has shown that (feelings of) ownership relate to stronger appreciation,
closeness and liking for the (psychologically) owned product (e.g., Kamleitner,
2015; Kirmani, Sood, & Bridges, 1999; Peck & Shu, 2009).
The finding that ownership leads to a higher valuation for an object than non-
ownership is not new. Kahneman, Knetsch, and Thaler (1990) demonstrated the
endowment effect, showing that people evaluate the possession of a product higher
than obtaining a product (see also Carmon & Ariely, 2000; Kahneman, Knetsch, &
Thaler, 1991; Reb & Connolly, 2007; Strahilevitz & Loewenstein, 1998). However,
in contrast to psychological ownership, the conceptualization of the endowment
effect is based on the valuation discrepancy between loss-averse owners and those
aspiring to ownership (Folse et al., 2012). Reb and Connolly (2007) sought to relate
psychological ownership to the endowment effect. While their results suggest that
the endowment effect ‘may be primarily driven by subjective feelings of ownership
rather than by factual ownership’ (Reb & Connolly, 2007, p. 112), they differentiate
between legal ownership and physical possession of an object by holding it in one’s
hands. Hence, Reb and Connolly’s (2007) definition of psychological ownership
does not fully correspond with the definition by Pierce et al. (2003). Similarly, Peck

Hair et al. 199
and Shu (2009) state that perceived ownership is linked to possession and touch.
However, according to Pierce et al. (2003), the emergence of psychological owner-
ship is independent from (legal) possession and is connected to the investment of a
person’s self into an object. Psychological ownership arises when spending time
and effort with an object, independent from any buying decision. In contrast, the
endowment effect occurs in purchase settings as the difference between the seller’s
willingness to accept a price and the buyer’s willingness to pay. As such, psycho-
logical ownership might mediate the emergence of the endowment effect.
Thus, customers who are empowered to create can travel all three routes to
psychological ownership: (a) they exert control over a product portfolio; (b)
invest themselves in generating a product and in this way (c) come to know a
product intimately, which increases the familiarity and identification with the
product during the co-creation process.
H2: Empowered customers show higher psychological ownership levels
towards a self-created product than non-empowered consumers.
The Role of Feedback in Customer Empowerment Strategies
Customer co-creation changes a market from a one-sided communication in
which a customer is only a recipient of information selected by a company, to an
interaction between customers and companies (Bugshan, 2015; Prahalad &
Ramaswamy, 2004). However, this interaction does not occur in a vacuum. Fuchs
et al. (2010) found that for empowerment to select strategies, the co-creation
effect decreased if the collectively selected product did not match the customers’
individual favourites. This finding indicates that the congruence of opinions may
play an important role in the co-creation experience.
Marketing research has recognized the influence of others’ opinions (Cohen
& Golden, 1972; Deutsch & Gerard, 1955; Raghunathan & Corfman, 2006) on,
for instance, buying decisions (e.g., Bearden & Etzel, 1982; Cohen & Golden,
1972), the propensity and valence of word-of-mouth (Ryu & Han, 2009) or the
self-brand connection (Edson Escalas & Bettman, 2003). Social influence theory
suggests that subjects strive to agree with others (Burnkrant & Cousineau, 1975;
Cohen & Golden, 1972), which is motivated by two forms of social influence:
the need to belong and the need for accuracy (Deutsch & Gerard, 1955). The
former describes a wish or a social norm to identify with others and their evalu-
ations. The latter encompasses a form of informational value—other opinions
serve as evident information about a reality (Burnkrant & Cousineau, 1975).
Satisfying their need for accuracy, subjects feel confirmed in their own judg-
ments when they are in accordance with others’ judgments. However, in case of
incongruent opinions, subjects can change their assessment of products solely
due to perceived opinions of others—regardless of whether they consider these
others’ judgments to be expert judgments (Raghunathan & Corfman, 2006).
In light of the above, we expect empowered customers designing a new prod-
uct to be susceptible to changes in their brand and product evaluations when
encountering feedback on their designs. We assume that social influence may

200 Journal of Creating Value 2(2)
alter customers’ evaluations when facing others’ different opinions. Thus, we
hypothesize that for empowered customers receiving positive (negative) feed-
back on their product design, the co-creation effect increases (decreases).
H3a: Positive feedback enhances the co-creation effect for empowered cus-
tomers; that is, these customers show an improved brand attitude and a higher
willingness to pay for the product, feel a greater joy when using the created
product and are more willing to spread positive word-of-mouth and defend the
product in public than empowered customers who receive no feedback.
H3b: Negative feedback diminishes the co-creation effect for empowered cus-
tomers; that is, these customers show a declined brand attitude and a lower
willingness to pay for the product, feel lesser joy when using the created prod-
uct and are less willing to spread positive word-of-mouth and defend the prod-
uct in public than empowered customers who receive no feedback.
Consistent with the above hypotheses, we contend that peer feedback influ-
ences the psychological ownership level. Bendapudi and Leone (2003) have
examined the effect of the self-serving bias on customer satisfaction when cus-
tomers and firms produce jointly. According to the self-serving bias, the respon-
sibility level people take for a jointly generated outcome depends on the
outcome’s success (Wolosin, Sherman, & Till, 1973). If the outcome is success-
ful, people assign more responsibility to themselves and ascribe the success to
their contribution. If the outcome is negative, they take less responsibility and
blame the other party. We contend that the effects of self-serving bias apply
when receiving feedback. Positive feedback equals a successful outcome.
Hence, a customer would ascribe more responsibility to himself or herself.
Since one mechanism to induce psychological ownership is taking control and
responsibility for an object, an increase in responsibility leads to an increase in
psychological ownership. In contrast, we assume that empowered customers
who receive negative feedback take less responsibility for their design and feel
lower psychological ownership.
H4a: The psychological ownership level further increases for empowered cus-
tomers after receiving positive peer feedback.
H4b: The psychological ownership level decreases for empowered customers
after receiving negative peer feedback.
Design, Procedure and Measures
Pretests
The emergence of both the co-creation effect as well as of psychological ownership
depends on characteristics of the target product (Pierce & Jussila, 2011).
Specifically, the target product needs to be perceived as attractive, accessible and
manipulable (Pierce & Jussila, 2011). We therefore ran a series of focus groups and
face-to-face interviews with undergraduate students from a major German univer-
sity in which we explored the suitability of different product categories and product
types. These analyses showed that designing an inlay for a thermos mug meets the

Hair et al. 201
above requirements. Next, we ran a pretest in which we simulated the design pro-
cess using a toolkit, as Thomke and Von Hippel (2002) suggest. Pretest participants
who designed a thermos mug exhibited significantly higher psychological owner-
ship levels than those who did not. In light of these results, we deemed the use of
thermos mug inlays for our main experiment to be appropriate.
Design
To test our hypotheses, we conducted a laboratory experiment at a major German
university in collaboration with an established coffee bar chain located on the
campus. A total of 213 undergraduate students participated in the experiment for
course credit or a reimbursement of €5. Participants were randomly assigned to
the control group or one of three experimental groups. Members of the experi-
mental groups designed a thermos mug inlay but received no feedback, positive
or negative feedback. Table 1 illustrates the experimental design. The experiment
primarily draws on a between-subjects design, with the exception of the analysis
of the feedback’s effect on participants’ willingness to pay in our hypothesis H3.
Here, we draw on the change from the second to the third measurement as a
within-subjects analysis of experimental groups 2 and 3 respectively.
Table 1. Experimental Set up
t0t1t2t3t4
Control group
n = 45
Market Research (R) O1O2
Experimental group 1
n = 59
Empowerment (R) O1X1O3
Experimental group 2
n = 56
Positive Feedback (R) O1X1O4X2+ O5
Experimental group 3
n = 53
Negative Feedback (R) O1X1O4X2– O5
Source: Authors’ own.
Notes:
R—Random assignment
O1—First measurement with buying frequency and attitude towards the product
category as control variables; attitude towards the brand, psychological ownership,
word-of-mouth and willingness to defend the product in public; enjoyment of using the
product and willingness to pay as variables of interest
O2, and O3—Second measurement of all variables of interest and demographics
O4—Second measurement of willingness to pay and demographics
O5—Second measurement of all variables of interest and third measurement of
willingness to pay
X1—First treatment: Design of a thermos mug
X2 +
–—Second treatment: Exposure to feedback, with: + indicating positive feedback and
– indicating negative feedback
t—Time.

202 Journal of Creating Value 2(2)
Procedure
Hypotheses H1 and H2 were tested drawing on the experimental group 1 (EG1;
‘Empowerment’) and on the control group (CG; ‘Market Research’). Specifically,
subjects in the experimental group 1 (n = 59) took part in the design process,
while participants in the control group (n = 45) were asked to participate in a
‘market research project on coffee thermos mugs’, in which they were asked to
help derive the potential market volume for pre-designed thermos mugs. The
latter participants were told that the company had already selected the final ther-
mos mug design. As a result, our experimental design clearly distinguishes the
control group from any empowerment strategy.
The procedure started with an initial questionnaire (O1) containing the first
measurement of all variables of interest as well as the two control variables of
buying frequency and attitude towards the product category. Next, we announced
the design process in EG1 and the market research project in CG, respectively.
We then measured the subjects’ perceived impacts on corporate decisions, which
served as a manipulation check. For an effective manipulation, participants in
CG should report a lower level of perceived impact. Afterwards, participants in
EG1 designed the thermos mug (X1), while participants in the control group were
asked to rate three pre-designed thermos mugs. Finally, participants in both
groups answered the last questionnaire (O2 in CG and O3 in EG1), which con-
tained demographics and the second measurement of all variables of interest.
Hypotheses H3 and H4 were tested by comparing EG2 (‘Positive Feedback’)
and EG3 ʻNegative Feedback’ to EG1 ʻEmpowerment’. Participants in EG2 and
EG3 went through the same initial approach as participants in EG1. Specifically,
the process involved obtaining the first measurement of all variables of interest,
a co-creation treatment, and then measuring willingness to pay for the second
time and demographics. Participants in EG2 and EG3 then received a second
treatment containing positive feedback (X2
+) and negative feedback (X2
–),
respectively. The two sessions ran simultaneously and participants were aware
of an experiment in a nearby room to believably communicate this feedback
loop. We claimed that the feedback was an online evaluation of the designs that
were created by the participants in the nearby room. It means that participants
in one room ostensibly rated the designs of the other room and vice versa.
In fact, we manipulated the feedback and randomly assigned the feedback to the
participants. Finally, we measured all variables of interest for the second time
(O5) and the willingness to pay for the third time.
Calculating the change from the first to the second measurement of all vari-
ables of interest in the positive feedback group (EG2) and the negative feedback
groups (EG3), and then comparing it to the changes in the empowerment group
EG1 allowed us to isolate the influence of positive (negative) feedback on the
co-creation effect. Peer feedback’s effect on willingness to pay is examined by
a within-comparison of the second and third measurement in each of the feed-
back groups. If feedback has an influence on the co-creation effect, an increase
(decrease) should occur.

Hair et al. 203
Measures
The operationalization of the constructs draws on measures commonly used in
prior research. Since all measures denote manifestations of the underlying con-
struct, this study uses reflective items (as opposed to formative ones;
Diamantopoulos, Riefler, & Roth, 2008). Most construct measures draw on multi-
item scales. In light of the experiment’s complexity, two constructs were meas-
ured with single items despite known disadvantages with regard to their predictive
validity (Diamantopoulos, Sarstedt, Fuchs, Wilczynski, & Kaiser, 2012; Sarstedt,
Diamantopoulos, Salzberger, & Baumgartner, 2016; Sarstedt, Diamantopoulos, &
Salzberger, 2016). Table A1 provides an overview of all construct measures.
Results
Control Variables
We employed a chi-square test and analysis of variances (ANOVAs), including post
hoc tests, to check whether groups differ concerning their structural composition
(Hutchinson, Kamakura, & Lynch Jr, 2000; Lynch Jr, 1982; Sarstedt & Mooi, 2014).
First, we found that the four groups do not differ significantly concerning gender
and income. Next, and more importantly, there was no evidence of differences in
buying frequencies and, thus, usage habits affecting our results. The same holds true
for participants’ attitudes towards the product category. To summarize, we found no
structural differences between the groups.
Manipulation Check
The analysis shows that the treatment was successful, since taking part in an
empowerment to create process significantly increased the consumers’ perceived
impacts on corporate decisions. Participants in CG (M = 2.78 and SD = 1.11)
report significantly lower levels of perceived impact on corporate decisions
(p < 0.001, F = 6.844 and df = 3, post hoc test) than participants in EG1 (M = 3.64
and SD = 1.22), EG2 (M = 3.70 and SD = 1.38) and EG3 (M = 3.67 and SD = 1.56).
Main Findings
Our analysis of the change in participants’ evaluations of the brand and product-
related constructs supports the first set of hypotheses (Table 2). Empowered
customers display a significantly more favourable brand attitude than non-
empowered customers (H1a). Empowerment to create also significantly enhances
the participants’ willingness to spread positive word-of-mouth (H1b), their enjoy-
ment when using the product (H1c), their willingness to defend the product in
public (H1d) and finally, their willingness to pay (H1e). Analyzing the emergence

204 Journal of Creating Value 2(2)
of psychological ownership during the co-creation process shows that empowered
participants exhibit significantly higher psychological ownership levels compared
to those in the control group (H2).
Table 2. The Co-creation Effect and Increased Psychological Ownership
Change of Dependent Variable Group M SD t-Value
H1a: Attitude towards the brand EG1 0.14 0.46 –1.659*
CG –0.00 0.36
H1b: Word-of-mouth EG1 0.95 1.63 3.71***
CG –1.22 1.20
H1c: Enjoyment of using the product EG1 1.53 1.98 –2.42**
CG 0.67 1.64
H1d: Willingness to defend the product in public EG1 1.36 1.77 –3.34**
CG 0.29 1.49
H1e: Willingness to pay EG1 3.68 5.01 –4.28***
CG –0.06 3.45
H2: Psychological ownership EG1 1.51 1.83 –5.09***
CG –0.04 1.27
Source: Authors’ own.
Notes: * p < 0.10, ** p < 0.05 and ***p < 0.01.
The final set of analyses examines whether adding a positive (negative) feed-
back enhances (diminishes) the co-creation effect. Results in Table 3 show that
receiving positive feedback when taking part in a co-creation process increases
the willingness to pay as well as the willingness to defend the product in public
significantly (H3a). In contrast, negative feedback significantly lowers partici-
pants’ attitudes towards the brand and their willingness to spread positive word-
of-mouth (H3b). However, most importantly, negative feedback significantly
reduces participants’ willingness to pay. Thus, we find partial support for
hypothesis H3. However, in contrast to our hypothesized effect of feedback on
psychological ownership, we find no support for hypothesis H4—peer feedback
does not significantly affect psychological ownership.
Table 3. The Influence of Positive and Negative Feedback
Positive Feedback Negative Feedback
Change of Dependent
Variable Group M SD t-Value Group M SD t-Value
Attitude towards the
brand
EG1 0.14 0.46 –0.857 EG1 0.14 0.46 –3.96***
EG2 0.04 0.75 EG3 –0.20 0.45
Word-of-mouth EG1 0.95 1.63 –1.32 EG1 0.95 1.63 2.16**
EG2 1.34 1.54 EG3 0.33 1.38
Enjoyment of using the
product
EG1 1.53 1.98 –1.12 EG1 1.53 1.98 –0.84
EG2 1.89 1.51 EG3 1.83 1.83
(Table 3 continued)

Hair et al. 205
Positive Feedback Negative Feedback
Change of Dependent
Variable Group M SD t-Value Group M SD t-Value
Willingness to defend
the product in public
EG1 1.36 1.77 –1.75* EG1 1.36 1.77 0.39
EG2 1.96 1.94 EG3 1.23 1.71
Psychological
ownership
EG1 1.51 1.83 –1.51 EG1 1.51 1.83 0.53
EG2 1.98 1.45 EG3 1.33 1.84
Dependent variable Group M SD t-Value Group M SD t-Value
Willingness to pay EG2 1.37 5.43 1.88* EG3 –0.89 3.59 –1.80*
Source: Authors’ own.
Notes: * p < 0.10, ** p < 0.05 and ***p < 0.01.
Discussion
Summary of Results and Managerial Implications
Customer co-creation and customer empowerment strategies are emerging topics
in both marketing practice and research. The shift from traditional value creation
to joint value creation of companies and customers encourages consumers to par-
ticipate in corporate decisions on the product portfolio. However, relatively little
is known about the psychological responses of customers actively engaging in
customer co-creation processes. Prior research has shown that co-creation settings
facilitate positive customer outcomes (Fuchs et al., 2010), which is attributed to
an increase in psychological ownership, that is, perceived feelings of possession
concerning an (in)tangible object (Pierce et al., 2003).
Our study is the first to consider peer feedback’s role in these co-creation set-
tings, thereby addressing the trend of companies allowing open communication
among peer customers (Fuchs & Schreier, 2011; Sawhney et al., 2005). In addi-
tion, we replicate and extend prior findings by employing an empowerment to
create strategy and using an established brand in our experimental setting. We find
that customers who are empowered to create report a more favourable attitude
towards the brand, enjoy using the co-created product more and are more willing
to spread positive word-of-mouth as well as to pay more. As expected, customer
co-creation adds value to the product, as expressed in significantly higher psycho-
logical ownership levels. We conclude that managers can rely on both strategies
to empower customers in order to respond to the shift in value creation.
Regarding the effects of feedback, this study provides first evidence that
managers should be concerned with the possibility of their customers exchang-
ing opinions. We found that receiving positive feedback further increases par-
ticipants’ willingness to pay. However, we could not find support for an increase
in brand attitude or willingness to spread positive word-of-mouth. More
severely, in case of negative feedback, empowering customers seems to back-
fire on the company, since the brand attitude diminishes and willingness to pay

206 Journal of Creating Value 2(2)
declines significantly. We connect feedback’s effect to social influence
(Raghunathan & Corfman, 2006) and conclude that social influence may have
altered the evaluation of the designed product’s quality. Our results also suggest
that social influence does not affect psychological ownership, as it remains
stable in light of positive and negative feedback.
Future Research
Our results show that the co-creation experience ‘turns on’ psychological owner-
ship. But, is it possible to turn it off? And if yes, how? Thus, the question is: Why
is psychological ownership independent from external influences such as feed-
back? Future research should shed further light on this issue. In line with Fuchs
et al. (2010), future research should also analyze the long-term effects of customer
empowerment. Never seeing a favourite or a self-created design being part of the
finally selected products may also be a form of negative feedback. Similarly, it
would be interesting to examine whether receiving no feedback to a design when
other customers have received feedback would also be considered to be negative.
Our results indicate the necessity to further examine the consequences of feed-
back, especially negative feedback, in order to fully capture the potential of cus-
tomer empowerment and to obtain further managerial implications. Finally, future
research should examine the influence of further moderators on customer empow-
erment activities and feedback. For example, considering age-related phenomena,
such as subjects’ future time perspectives (Carstensen, 2006), that recent market-
ing research has investigated (Kuppelwieser & Sarstedt, 2014a, b), would be par-
ticularly promising in this context.
Appendix
Table A1. Overview of Measures
Construct Items
Cronbach’s α
1st
measurement
2nd
measurement
Buying frequency ‘How often do you buy products of
[brand name]?’
1 = never
2 = seldom (once a month)
3 = occasionally (several times a
month)
4 = regularly (once a week)
5 = frequently (several times a week)
-
(Table A1 continued)

Hair et al. 207
Construct Items
Cronbach’s α
1st
measurement
2nd
measurement
Attitude towards
the brand and
product category
From:
Goldsmith,
Lafferty, and
Newell (2009);
Martin and
Stewart (2001)
‘My overall impression of the [brand
name] is …’ and ‘I think thermos
mugs in general are …’
bad/good
unfavourable/favourable
unsatisfactory/satisfactory
0.893 0.887
Psychological
ownership
From:
Fuchs et al.
(2010)
adapted from Van
Dyne and Pierce
(2004)
‘Although I do not legally own this
thermos mug yet, I have the feeling
that it is “my” thermos mug.’
‘The thermos mug incorporates a part
of myself.’
‘I feel that this mug belongs to me.’
‘I feel connected to this thermos
mug.’
‘I feel a strong sense of closeness with
this thermos mug.’
‘It is difficult for me to think of this
mug as mine.’ (rev.*)
0.887 0.869
Word-of-mouth
From:
Fuchs et al.
(2010)
adapted from
Carroll and
Ahuvia (2006)
‘I would recommend the thermos
mug to my friends.’
‘I would “talk this mug up” to others.’
‘I would try to spread the word about
the thermos mug.’
0.814 0.892
Willingness
to defend the
product in public
From:
Fuchs et al.
(2010)
‘If someone said something bad
about the mug, I would be more
likely to defend it verbally than other
products.’
Single item
Enjoyment of
using the product
From:
Fuchs et al.
(2010)
‘Compared to similar mugs from
other firms, it would be more fun to
use the thermos mug of the [brand
name].’
Single item
(Hypothetical)
Willingness to
pay
‘If the [brand name] decided to launch
this thermos mug, what would you be
willing to pay for such a mug?’
–
(Table A1 continued)
(Table A1 continued)

208 Journal of Creating Value 2(2)
Construct Items
Cronbach’s α
1st
measurement
2nd
measurement
Consumers’
perceived impact
on corporate
decisions
From:
Fuchs et al.
(2010)
adapted from
Spreitzer (1995)
‘I see that I have some control in
determining which thermos mug will
be produced by the [brand name].’
‘I have some influence in determining
which products will be sold by the
[brand name].’
0.656 –
Source: Authors’ own.
Note: *rev.: reversed item.
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