With the growing demand for smarter, cleaner, and safer cars, automotive original equipment manufacturers (OEMs) are increasingly seeking novel inventions from innovative new or foreign suppliers. However, not all innovative suppliers are equally valuable for an OEM. When transforming novel inventions into products, OEMs could find it challenging to work with the suppliers with whom they lack trust or have limited shared understanding. In this study, we adopt a social capital perspective to understand how three types of social capital (i.e., structural, relational, and cognitive) influence a supplier's innovation value to the OEM. Hypotheses are tested using a unique data set combining the supply network structure and automotive supplier innovation award. Our results suggest that it is more difficult to obtain innovation value from a new or culturally distant foreign supplier. However, we also found that suppliers whose networks overlap more with the OEM's network are more likely to provide valuable innovations to the OEM, an effect that is stronger for culturally distant suppliers. This study contributes to the supply network and innovation literature by highlighting the importance of understanding the dyadic social capital between the buyer and supplier when evaluating innovation value of a supplier to a buying firm.

A supplier's interorganizational ties can be a source of novelty as well as information leakage risk when a buyer involves suppliers in a new product development project. We use signaling theory to explain how supplier ties affect a purchasing manager's perception of suppliers. Three types of supplier ties are considered: ties with external innovation partners, with customers outside the buying firm's industry, and with the buying firm's competitors. We posit that managers use supplier ties as signals to indicate a supplier's potential in contributing to innovation novelty or information protection. Results from two scenario-based experiments with practicing managers support most of our hypotheses. When innovation novelty is the goal, managers perceive otherindustry customer ties and external innovation ties as positive signals, while competitor ties as a negative signal. When information protection is the goal, all three types of ties are perceived negatively. When both goals are considered, information protection has a greater influence than innovation novelty on the final supplier selection likelihood.