Drawing on social exchange theory, this study develops
a longitudinal theoretical framework of supplier participation
in buyers’ new product development (NPD) activities.
The study focuses on the longitudinal temporal dynamics
of supplier involvement in buyers’ new product development
and postulates that working relations and inter-dependence
impact suppliers’ attitudes toward co-innovation and suppliers’
co-innovation behaviors. Applying this framework to
a 10-year longitudinal dataset from the North American automotive
industry, the drivers of the escalation of supplier involvement
in buyers’ NPD over time and the effect of this
involvement on innovation performance, buyer sales performance,
and supplier sales performance are identified. The
results indicate that buyer–supplier communication, suppliers’
anticipated long-term returns, suppliers’ trust of a buyer, and
supplier–buyer inter-dependence all play a significant role in
changing supplier attitudes toward co-innovation and supplier
involvement in a buyer’s NPD. Further, the study also shows
that supplier involvement in buyer new product development
is mutually beneficial for both the buyer and the supplier as it
increases performance of both parties. Performance returns are
actually greater for suppliers than for buyers. As such, this
study contributes to both relationship management and new
product development literature streams, as well as providing
practical direction to manufacturers as to how they can increase
suppliers’ involvement in their NPD to benefit both
parties.
indicates
that suppliers are likely to invest in buyer-specific
technologies that support suppliers’ efforts to secure future
business from the buyer (Kumar et al. 1995). As such, supplier
willingness to invest in buyer-specific technologies refers to a
supplier’s informal, non-contractual commitments that result
from its confidence that the relationship it has with a buyer
will last at least long enough to realize benefits from its
investments (Anderson and Weitz 1992; Gundlach et al.
1995). This is in opposition to buyer-mandated supplier
Firms that attempt to sustain a positive co-innovation environment
for suppliers over the long term, however, face
substantial challenges. For example, partnering firms often
have different expectations and place different values on partnership
goals (Hamel 1991). As a result, major conflicts of
interest may arise, which could hinder proficiencies that might
otherwise be gained from a partnership activity. On the other
hand, researchers indicate that the length of a buyer–supplier
relationship influences the degree of partnership that develops,
suggesting the longer a supplier has been doing business
with a buyer, the more likely it is that the parties will
engage in joint activities (Lusch and Brown 1996). Firms also
become more proficient at partner involvement in their new
product development (NPD) processes with each additional
involvement experience (Merchant and Schendel 2000;
Sampson 2005). Such opportunities for continuous improvement
have significant implications for supplier involvement in
the new product development processes of buyers who are
highly dependent on supplier innovation.
investments for which the supplier has no option but to
comply.
The business marketing and channel management literature
has been paying increasing attention to understanding
the benefits of building closer buyer-seller
relationships (Ganesan 1994; Morgan and Hunt 1994). Most
of the research has focused on explaining how relational
processes lead to outcomes such as cooperation, satisfaction,
trust, and commitment. Those performance outcomes
are important, but relatively little attention has been directed
to the direct, cost-based economic outcomes of close relationships
with customers. Anderson (1995, p. 348, italics
added) notes that though "the essential purpose for a customer
firm and supplier firm engaging in a collaborative
relationship is to work together in ways that add value or
reduce cost in the exchange between the firms ... [h]ow well
do practitioners or academics understand this event, or the
mechanisms through which it occurs?