Purpose Customer participation has been recognised as a critical factor in successful new product development (NPD). However, there is scant empirical evidence on how customer participation affects NPD performance. This research attempts to provide a framework to interpret how inter‐organisational relationships mediate the impact of customer participation on NPD performance based on marketing, innovation management and social networks literature. Design/methodology/approach An empirical study of 179 high‐tech firms in Taiwan is analysed by structural equation modelling. Findings The results indicate that the impacts of customer participation as an information resource and customer participation as a co‐developer on NPD performance are mediated by inter‐organisational relationships. Practical implications The results offer a guideline for high‐tech firms that decide to involve customers in NPD activities. In order to improve efficiency and effectiveness, this research suggests that firms build inter‐organisational relationships with customers to foster knowledge sharing, cooperation, and problem solving. However, firms should be aware that product innovativeness may be hindered by such close collaborative relationships. Originality/value The research demonstrates that the contributions of customer participation may not be regarded as inevitable. The authors confirm that research for investigating the linkage between customer participation and NPD performance should consider the mediating roles of inter‐organisational relationships, which may help resolve the conflicting results obtained by researchers on the contributions of customer participation. In addition, the results show that the establishment of close customer‐supplier relationships during NPD cooperation is a key success factor for both efficiency and effectiveness, but has the opposite effect on product innovativeness.
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