Paper info

Exhaustion or Learning? Supplier Involvement in Customer Innovation

The paper was published at the 35th IMP-conference in Paris, France in 2019.

We address whether involvement in customer firms’ innovation activities affects suppliers’ own product innovation activities. This issue is important not only for innovation research but also for suppliers’ strategic considerations in their involvement in customers’ innovation activities. Two main strands of the innovation literature are related to this question. One strand emphasises the learning benefits and other positive spill-over effects on suppliers from being involved in their customers’ innovation activities (e.g. Appleyard, 2003; De Jong and Von Hippel, 2009). The other strand views suppliers’ involvement in their customers’ innovation activities as an exhaustive process that reduces rather than enhances their innovation ability (e.g. Boisot, 1995; Möller and Törrönen, 2003; Helper and Sako, 2010). Previous studies on suppliers’ involvement in customers’ innovation activities were primarily case- or sector-specific (e.g. Jean et al., 2014) or tended to treat involvement as a dichotomous decision, thus leaving no room for a discussion on the scope of involvement. By contrast, the literature on customers’ innovation benefits (e.g. Clark, 1989; Eisenhardt and Tabrizi, 1995) illustrates the importance of focusing explicitly on the extent of involvement. Therefore, this study explores the importance of the scope of involvement in customers’ innovation activities. This work contributes to the innovation literature in the following ways: first, it takes the suppliers’ perspective on appropriating benefits from contributing to customers’ innovation, which has received less attention in the literature. Second, compared with the relatively few other studies available, this study takes a broader, cross-industry approach to collaborative innovation. Third, the study explores whether the scope of involvement in customers’ innovation activities matters for supplier firms’ own product innovation activities. The empirical analysis is based on a unique cross-industry dataset focusing on the supplier perspective by mapping suppliers’ relations with their most important customers. This dataset is combined with innovation data from two consecutive Danish innovation surveys.