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The purpose of this paper is to examine how empowering consumers by means of co-designing activities influences both positive and negative consumer engagement with new service innovations.

Two experimental studies tested the proposed hypotheses. Participants were asked to imagine co-designing a hypothetical innovation, and then respond to scales that measured intervening variables. The first study measured participants’ valuation of the innovation as well as the intention to recommend it. The second study partially replicated the first one but measured participants’ perceived severity after a scenario where the innovation failed to deliver its promised performance.

Empowerment triggered a higher sense of engagement through the mediating effects of sense of power and psychological ownership. Subsequently, this effect not only drove more positive evaluations of the innovation but also exacerbated negative evaluations if the service innovation was not delivered successfully.

The current study highlights the importance of adopting a psychological perspective toward engagement and shows a balanced view of empowerment in the context of new service innovations.