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Purpose Nowadays, companies compete and win based on the capabilities they can leverage across their supply chains. With unpredictable and turbulent business environment, supply chains are seeking to customer knowledge as sources of competitive advantage. The purpose of this paper is to empirically test a conceptual framework to investigate the roles of customer leverage (CL) on process innovation and the relationships to performance. Design/methodology/approach Drawing upon the knowledge-based view, this study argues that CL is the sources of firms’ process innovation. This study also posits that process innovation mediates the relationship between CL and performance based on transaction cost economics. This empirical study employed 650 manufacturers across different regions. Findings This study showed that strong association exists between a manufacturing firm’s CL capability and its process innovation and performances. Process innovation play critical mediating roles in absorbing and transforming customer knowledge in supply chains. In a more dynamic market, CL strengthens the positive impacts on process innovation. Research limitations/implications This study further highlights the need to emphasize both strategic and CL capability in dynamic environments as these may be needed to enable the firm to seize market niches that may open up in such environments. Similarly, managers should emphasize CL capability and process changes in competitive environments as they are more difficult to imitate from competitors in regards of new product or services. Practical implications These results extend the limited existing research on global manufacturing context that the customer knowledge are effective sources for increasing innovative processes. The higher the market turbulence, the stronger the pressures for CL demanded by process innovation. The findings also confirm that process innovation plays a mediating role in absorbing and transforming customer knowledge in improving costs and financial measures. This is an important result that highlights the mechanism by which customer knowledge can influence a firm’s bottom line. Originality/value This study examined the linkages between a marketing concept and operations and supply chain management.

Leveraging suppliers and customers, in order to build closer inter-organisational ties, is often highlighted as a competitive priority in global supply chains (SCs). The creation of relational capital (RC) within a firm is a well-researched concept; however, few studies investigated the customer/supplier leveraging mechanisms that build relational capital in SCs. In this study, we propose a model to examine the effects of supplier and customer leveraging on the creation of RC, which impacts innovation performance (IP). The empirical data for this study were drawn from the fifth round of the Global Manufacturing Research Group survey project (data collected from 557 manufacturing plants, in 10 countries). The hypotheses were empirically tested using structural equation modelling. The findings highlight the importance of SC leveraging towards building RC, in order to enhance innovation performance. The results show that supplier and customer leveraging positively impact the RC. In turn, the RC has a significant impact on IP. We found that the effect of SC leveraging directly and indirectly (partial mediated by RC) associates with the innovation performance. These findings are underpinned by the relational view, which argues that the relationships between firms are an important unit of analysis for understanding competitive advantage.

Research suggests that manufacturers increasingly innovate processes to meet customer's green requirements; however, little is known about the impact on performance and the contextual conditions, under which they are effective. Grounded on configuration approach, this study develops taxonomies of manufacturing firms based on the degree of customer's green orientation and process innovation. This study argues that performance differences between these clusters, highlight managerial implications for sustainable development. The empirical data used in this study were drawn from Global Manufacturing Research Group (GMRG) survey project (with data collected from 629 manufacturing firms from nine countries). Our results show that customer green innovation taxonomies influence differently on environmental measures, costs, and financial performance. The study proposes three clusters: Process active, Green minimalist, and Green proactive. The main differences between manufacturers are based on the level of investments in joint green improvement initiatives and customer direct investments in green activities. Firms that belong to the Process active cluster, who are first within the industry to deploy new processes and update the latest process development, gained significant improvement in financial measures such as market share and profits. Whereas Green minimalist cluster lagged behind, Green proactive manufacturers aligned in both capabilities to experience higher payoffs in sustainable performance measures and efficiency. The findings provide a step‐by‐step decision‐making process and offer guidance for supply chain managers who have to stretch their needs to align the innovation processes to enhance their sustainable performance.