Interdependence with suppliers in the innovation ecosystem: the effects of supplier concentration on firm innovation
ISSN: 1750-614X
Article publication date: 11 October 2021
Issue publication date: 25 November 2022
Abstract
Purpose
Based on the strategy and new institutional economic literature, this study aims to explore how different levels of supplier concentration (SC) will be characterized by differences in switching cost and coordinated adaptation in an ecosystem, thereby shaping its research and development (R&D) intensity, innovation performance and innovation efficiency.
Design/methodology/approach
This study adopted a set of panel data of Chinese listed firms in the Growth Enterprise Board and their top five suppliers from 2012 to 2016. A Tobit model is used to test the hypotheses.
Findings
The study finds that SC has an inverted U-shape effect on R&D intensity. This finding implies that firms are more likely to invest in R&D when SC is intermediate level. While it has a U-shape relationship between SC and innovation output, both lower SC and higher SC are more efficient in innovation because of their advantage in low switching cost and better coordinative adaptability, respectively.
Originality/value
The study complements the innovation ecosystem literature by using SC to represent the structure of the interdependence between firms and suppliers in an ecosystem, then examining the correlation between SC and firms’ innovation investment and output, respectively. Second, combining strategy and new institutional economic literature, the non-linear effects of SC on firms’ innovation are found.
Keywords
Acknowledgements
The authors would like to thank the editors and all anonymous reviewers for their helpful comments and suggestions. We gratefully acknowledge the support from the National Natural Science Foundation of China (NSFC, 71932009, 71532003, 72072008), Fundamental Research Funds for the Central Universities(ZY2111).
Citation
Dong, C., Li, X. and Chang, X. (2022), "Interdependence with suppliers in the innovation ecosystem: the effects of supplier concentration on firm innovation", Chinese Management Studies, Vol. 16 No. 5, pp. 1145-1160. https://doi.org/10.1108/CMS-01-2021-0030
Publisher
:Emerald Publishing Limited
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