The impact of supplier innovation on buyer innovation and the moderating effects of geographic distance, financial interdependence and technical similarity

Abstract

PurposeThis study aims to examine the extent to which a buying firm can leverage the firm's supplier's innovations to boost the firm's own innovation performance and key moderators to this relationship. Grounded in social embeddedness theory, the authors explore the role of dyadic embeddedness between a buyer and supplier as a facilitator of buyer innovation.Design/methodology/approachNegative binomial regression was used to empirically analyze a large sample of dyadic observations from the USA manufacturing industry. Measures were developed from data acquired from Compustat, LexisNexis and Bloomberg.FindingsThe findings indicate that supplier innovation has a positive impact on a buyer firm's innovation output, particularly when the firms are technically similar and when there is a higher degree of financial interdependence in the buyer–supplier dyad.Originality/valueThis study provides important insights into how supplier firms can facilitate buyer innovation as and how relational factors suggested by social embeddedness theory act to strengthen this effect. Through a theoretical-based empirical examination of supply chain dyads, the findings highlight the importance of financial interdependence and technical similarity when buyers seek to benefit from supplier innovation capabilities.

Supplier innovativeness, supplier relationships, and enterprises' finance constraints

“…Supplier innovativeness (SI). The research of Elking et al (2022) shows that enterprise patent data are not easily manipulated and represent a better way to measure innovativeness. We adopt the number of patent applications of supplier enterprises as a proxy variable for supplier innovativeness.…”

“…Supplier innovativeness is a crucial source of value for sourcing enterprises; when selecting suppliers, enterprises usually choose companies with the potential to innovate and attempt to capitalize on this potential to create value. Supplier innovativeness has been noted as positively impacting the innovativeness output of buyer enterprises (Elking et al, 2022). As an enterprise's innovativeness performance improves, stakeholders increase their assistance to and support of the enterprise.…”

“…In recent years, against the increasing popularity of the concept of supply chain finance and the frequent interruptions in supply and demand relationships, exploring the factors that influence enterprises' financing constraints at the supply chain level has gradually attracted scholars' attention. However, existing studies have only focused on the impact of supplier innovativeness on enterprises' performance (Azadegan & Dooley, 2010), enterprises' innovativeness performance (Du et al, 2023; Elking et al, 2022), and supply chain resilience (Kim & Chai, 2017; Syahchari et al, 2021). However, additional studies are needed on the impact of supplier innovation on enterprises' financing constraints.…”

Leveraging the supply base for innovation: how does supply base management affect innovation performance?

“…, 2022). Different geographical locations of suppliers bring the spatial complexity (Ateş and Memiş, 2021; Elking et al. , 2022).…”

“…Suppliers in different technical fields have become a fertile ground for innovation, providing diversified information and technologies for the focal firm (Sordi et al, 2022). Different geographical locations of suppliers bring the spatial complexity (Ates ¸and Memis ¸, 2021;Elking et al, 2022). If several suppliers can provide the same products or services, the closer they are to the focal firm, the more it can enhance mutual understanding, define common goals and implement joint innovation projects.…”