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.
Drawing on social exchange theory, this study developsa longitudinal theoretical framework of supplier participationin buyers’ new product development (NPD) activities.The study focuses on the longitudinal temporal dynamicsof supplier involvement in buyers’ new product developmentand postulates that working relations and inter-dependenceimpact suppliers’ attitudes toward co-innovation and suppliers’co-innovation behaviors. Applying this framework toa 10-year longitudinal dataset from the North American automotiveindustry, the drivers of the escalation of supplier involvementin buyers’ NPD over time and the effect of thisinvolvement on innovation performance, buyer sales performance,and supplier sales performance are identified. Theresults indicate that buyer–supplier communication, suppliers’anticipated long-term returns, suppliers’ trust of a buyer, andsupplier–buyer inter-dependence all play a significant role inchanging supplier attitudes toward co-innovation and supplierinvolvement in a buyer’s NPD. Further, the study also showsthat supplier involvement in buyer new product developmentis mutually beneficial for both the buyer and the supplier as itincreases performance of both parties. Performance returns areactually greater for suppliers than for buyers. As such, thisstudy contributes to both relationship management and newproduct development literature streams, as well as providingpractical direction to manufacturers as to how they can increasesuppliers’ involvement in their NPD to benefit bothparties.indicatesthat suppliers are likely to invest in buyer-specifictechnologies that support suppliers’ efforts to secure futurebusiness from the buyer (Kumar et al. 1995). As such, supplierwillingness to invest in buyer-specific technologies refers to asupplier’s informal, non-contractual commitments that resultfrom its confidence that the relationship it has with a buyerwill last at least long enough to realize benefits from itsinvestments (Anderson and Weitz 1992; Gundlach et al.1995). This is in opposition to buyer-mandated supplierFirms that attempt to sustain a positive co-innovation environmentfor suppliers over the long term, however, facesubstantial challenges. For example, partnering firms oftenhave different expectations and place different values on partnershipgoals (Hamel 1991). As a result, major conflicts ofinterest may arise, which could hinder proficiencies that mightotherwise be gained from a partnership activity. On the otherhand, researchers indicate that the length of a buyer–supplierrelationship influences the degree of partnership that develops,suggesting the longer a supplier has been doing businesswith a buyer, the more likely it is that the parties willengage in joint activities (Lusch and Brown 1996). Firms alsobecome more proficient at partner involvement in their newproduct development (NPD) processes with each additionalinvolvement experience (Merchant and Schendel 2000;Sampson 2005). Such opportunities for continuous improvementhave significant implications for supplier involvement inthe new product development processes of buyers who arehighly dependent on supplier innovation.investments for which the supplier has no option but tocomply.
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