Customer-Centric Management Innovation for Enhancing Customer Happiness: A Development of an Integrated Model

Researches on the customer-centric management innovation seems to be quite primitive. Most of them are either conceptual or case-based with very few empirical studies. While the customer-centric management innovation has been widely discussed in the management consulting area for the past decade, the issue has not been tackled vigorously in the academic society. As a result, it is needed to build a firm theoretical framework on this issue. The purpose of this research is to explore key variables of customer-centric management innovation in terms of the following four dimensions - (1) strategic innovation, (2) organizational innovation, (3) product innovation, and (4) operational innovation; and to empirically investigate the influence of the customer-centric management innovation on customers' happiness which consists of economic, emotional, and meaningful happiness during all the phases of the customer activity cycle. This study focuses on establishing a theoretical foundation for the customer-centric management innovation. A hierarchical construct model was developed to derive the concept of customer-centric management innovation from the four different dimensions. The hierarchical construct model in this study proposes that customer-centric management innovation consists of the following four lower-order constructs: i) customer-centric strategic innovation which has also the two lower-order constructs such as offering multi-dimensional values and providing customized solutions to customers, ii) customer-centric organizational innovation with having the four lower-order constructs such as creating diversity within an organization, capitalizing on collective intelligence, guaranteeing employees’ discretionary autonomy, and organizing hybrid structure, iii) customer-centric product innovation with having the four lower-order constructs, i.e., designing human-centered product, designing integrated product and service, product convergence, and open product innovation, and iv) customer-centric operational innovation with the two lower-order constructs such as transforming into customer-oriented operational process and implementing customer-centric information system. This study hypothesized that the customer-centric management innovation with the four dimensions of customer-centric strategic innovation, customer-centric organizational innovation, customer-centric product innovation, and customer-centric operational innovation would have a positive influence on customer happiness. This study surveyed 250 manufacturing and information and communications technology(ICT) firms in Korea for an empirical analysis. This study employed SmartPLS to analyze the influence of the customer-centric management innovation on customer happiness. The analysis results revealed that the four dimensions of customer-centric management innovation were empirically validated to have a positive impact on customer happiness, which in turn resulted in firm performance in a positive way. This study has the following theoretical implications. First, this study proposes that the concept of customer-centric management innovation has multi-level constructs with a hierarchy. That is, this study describes the concept of customer-centric management innovation as the fourth-order construct with the multi-staged hierarchical structure consisting of several lower-order constructs. In addition, this study developed measurement items of the four specific ingredients of the customer-centric management innovation. Hence, this study can serve as a theoretical background of future studies. Second, the concept of customer happiness and its measurement items proposed in this study also seem to provide a theoretical background for future studies. Managerial implications of this research are as follows: This research revealed the impacts of the lower-order constructs of the customer-centric management innovation on customer happiness. Specifically, the two customer-centric product innovation constructs(i.e., open product innovation and designing customer-centered product) and the two customer-centric organizational innovation constructs(i.e., organizing hybrid structure and guaranteeing employees’ discretionary autonomy) have relatively more significant influence on customer happiness than other constructs in this study. On the other hand, the two customer-centric strategic innovation constructs, i.e., providing customized solution and offering multi-dimensional customer values, have relatively less influence on customer happiness. The results help firm managers prioritize the customer-centric management innovation constructs. It suggests firms to have more emphasis on product innovation and organizational innovation to be more customer-centric than strategic innovation. Firms would efficiently achieve their goals for customer happiness by considering these priorities.