Abstract: Customer co-creation, which engages users in product development, has received increasing attention. Our study focuses on the disparities in user participation costs within customer co-creation and constructs models of high and low entry threshold co-creation considering spillover effects. We find that: (1) In environments with high entry thresholds for co-creation, intensified spillover effect from primary to general users may lead to a reduction in the primary user base. To stabilize or expand this group, the firm needs to alleviate this effect through strategic information protection. (2) Conversely, in low threshold co-creation environments, enhancing the spillover effect among primary users can significantly increase corporate anticipated revenues. Additionally, any rise in spillover effects is beneficial for the firm. Therefore, the firm can optimize its profits by regulating various spillover effects to motivate users to exert more customization efforts.

Key words: co-creation, spillover effects, access threshold, user categorization, strategy research