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Do more concentrated supplier portfolios benefit firm innovation? The moderating roles of financial slack and growth opportunities

Meng Chen (Research Center for Smarter Supply Chain, Business School, Soochow University, Suzhou, China)
Hefu Liu ( International Institute of Finance, School of Management, University of Science and Technology of China, Hefei, China)
Xinlin Tang (Florida State University, Tallahassee, Florida, USA)

International Journal of Operations & Production Management

ISSN: 0144-3577

Article publication date: 28 September 2022

Issue publication date: 10 November 2022

719

Abstract

Purpose

Firms are increasingly depending on supplier portfolios in the quest for firm innovation. However, whether concentrated supplier portfolios are beneficial to innovation remains highly disputed. This study aims to investigate the effect of supplier portfolio concentration on firm innovation and the contingencies that shape this effect.

Design/methodology/approach

The authors build on the knowledge search view to theorize a U-shaped effect of supplier portfolio concentration on firm innovation and further propose that the U-shaped effect is contingent on financial slack and growth opportunities. The authors collected panel data from 1,320 manufacturing firms in China. The negative binomial regression analyses were performed to test the hypotheses.

Findings

Supplier portfolio concentration has a U-shaped effect on firm innovation. This U-shaped effect is weakened and flipped by financial slack but strengthened by growth opportunities.

Originality/value

The findings extend current understandings of the influence of supplier portfolio on firm innovation by clarifying the U-shaped effect of supplier portfolio concentration on innovation and the circumstances under which supplier portfolio concentration is more effective for firm innovation.

Keywords

Acknowledgements

This study is funded by grants from the National Key R&D Program of China (2018YFB1601401) and the National Natural Science Foundation of China (72001155 and 71971202).

Citation

Chen, M., Liu, H. and Tang, X. (2022), "Do more concentrated supplier portfolios benefit firm innovation? The moderating roles of financial slack and growth opportunities", International Journal of Operations & Production Management, Vol. 42 No. 12, pp. 1905-1936. https://doi.org/10.1108/IJOPM-03-2022-0206

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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