Linkages between firm innovation strategy, suppliers, product innovation, and business performance : Insights from resource dependence theory

Purpose The purpose of this paper is to use resource dependence theory to hypothesize that a buyer’s innovation strategy enhances supplier innovation focus and a buyer-supplier relationship that supports product innovation. These in turn positively impact buyer product innovation outcomes and business performance. Moreover, it is argued that the buyer-supplier relationship positively moderates the impact of supplier innovation focus on product innovation. Design/methodology/approach Structural equation modeling and hierarchical linear regression are used to test hypotheses. Findings The results support all hypotheses and suggest that company (buyer) age and variables related to buyer engagement with international markets directly influence performance. The results also indicate that the buyer-supplier relationship does not moderate the relationship between innovation strategy and innovation performance. Research limitations/implications This study demonstrates that how a firm builds the conditions to effectively leverage the complementary resources and capabilities of suppliers directly influence innovation outcomes and business performance. Practical implications An important factor in firms achieving their product innovation goals is the selection and management of suppliers that are strategically aligned with regard to innovation. While managers need to develop internal innovation capabilities, partnering with like-minded organizations, and creating conditions for effective cooperation are key drivers of innovation outcomes. Originality/value In contrast to prior research that has examined operational issues, this study shows how the strategic alignment of buyers and suppliers with regard to innovation is an antecedent of product innovation outcomes. Moreover, it adds to a limited literature on supply chain management practices in emerging markets.