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
investments for which the supplier has no option but to
comply.