Relational capabilities for value co‐creation and innovation in SMEs

Purpose – The purpose of this paper is to examine the relational capabilities developed by small and medium‐sized suppliers in relationships with larger customers and to explore the influences of these relational capabilities on value co‐creation and innovation. Design/methodology/approach – The paper presents a framework to evaluate the types of relational capabilities developed by small and medium‐sized suppliers that enable them to manage in relationships with larger customers in the context of changing relationship requirements in the organic food sector. The methodology employed involves in‐depth case studies of small and medium‐sized UK organic food suppliers working in relationships with large retail supermarket customers. Findings – The findings suggest that the identified set of relational capabilities may be employed by small and medium‐sized suppliers to enable them to inform and support innovation and the implementation of initiatives to create value in the eyes of their current and potential customers and concomitantly enhance their position as preferred suppliers. Research limitations/implications – The findings were based on a small number of case studies of small UK organic food suppliers. Therefore, there is scope for future studies to explore the issues addressed in the paper in wider relationship, network and country settings. Originality/value – The research is among the first to offer a conceptual framework and an empirical contribution linking relational capabilities, value co‐creation and innovation in small and medium‐sized suppliers.