Interpartner learning, dependence asymmetry and radical innovation in customer-supplier relationships

Purpose This study aims to explore how absorptive and joint learning can foster radical innovation. Furthermore, dependence asymmetry is investigated as a moderator of the effects of these factors on radical innovation. Radical innovation is an important source of any firm’s success. Yet, there has been a dearth of research in the literature on how different types of inter-partner learning cultivate the process of generating such innovation. Design/methodology/approach The authors use a sample of 204 Taiwanese electronics suppliers to test the effects of joint learning and absorptive learning on radical innovation. The empirical analysis adopts a structural equations modeling approach. Findings The authors find that a supplier’s joint learning has a stronger effect on radical innovation than its absorptive learning. However, when accounting for the moderating effect of dependence asymmetry, the analysis shows that absorptive learning does have a significant effect on radical innovation. The effect of joint learning on radical innovation is not moderated by the degree of dependence asymmetry. Practical Implications This study broadens and deepens the understanding of how radical innovation by suppliers can be generated in customer–supplier relationships, and how this is shaped by the power-dependence structure. Originality/value Inter-partner learning; radical innovation; power; dependence.