Supplier traits for better customer firm innovation performance

Abstract

Previous research on embedded ties with suppliers in an innovation context left largely undetermined which supplier traits – apart from the technical and commercial capabilities of the supplier – have a positive impact on the customer firm’s innovation and new product performance and has ignored the need for the customer firm to assess and select suppliers to work with on the basis of a broader and solid assessment of relationship marketing constructs, namely homophily (i.e., similarity) of the supplier and the customer, as well as the supplier’s orientation towards the customer’s customers (i.e., the supplier’s downstream customer orientation). Using dyadic supplier-customer survey data, the proposed model was generally supported. The results suggest that the supplier’s downstream customer orientation and supplier-customer homophily have a significant impact on the customer firm’s new product effectiveness (i.e., innovativeness) and new product efficiency (i.e., project cost and project speed). More innovative products developed in projects with supplier contribution in turn positively influence the market performance and profitability of these products.