In the networked world, firms are recognizing the power of the Internet as a platform for co-creating value with customers. We focus on how the Internet has impacted the process of collaborative innovation—a key process in value co-creation. We outline the distinctive capabilities of the Internet as a platform for customer engagement, including interactivity, enhanced reach, persistence, speed, and flexibility, and suggest that firms can use these capabilities to engage customers in collaborative product innovation through a variety of Internet-based mechanisms. We discuss how these mechanisms can facilitate collaborative innovation at different stages of the New Product Development process (back end vs. front end stages) and for differing levels of customer involvement (high reach vs. high richness). We present two detailed exploratory case studies to illustrate the integrated and systematic usage of Internet-based collaborative innovation mechanisms—Ducati from the motorbike industry and Eli Lilly from the pharmaceutical industry. We derive implications for managerial practice and academic research on collaborative innovation.
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