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Linkages between firm innovation strategy, suppliers, product innovation, and business performance: Insights from resource dependence theory

Muhammad Shakeel Sadiq Jajja (Suleman Dawood School of Business, Lahore University of Management Sciences, Lahore, Pakistan)
Vijay R. Kannan (Jon M. Huntsman School of Business, Utah State University, Logan, Utah, USA)
Shaukat Ali Brah (Defense Housing Authority, Lahore, Pakistan)
Syed Zahoor Hassan (Suleman Dawood School of Business, Lahore University of Management Sciences, Lahore, Pakistan)

International Journal of Operations & Production Management

ISSN: 0144-3577

Article publication date: 7 August 2017

Abstract

Purpose

The purpose of this paper is to use resource dependence theory to hypothesize that a buyer’s innovation strategy enhances supplier innovation focus and a buyer-supplier relationship that supports product innovation. These in turn positively impact buyer product innovation outcomes and business performance. Moreover, it is argued that the buyer-supplier relationship positively moderates the impact of supplier innovation focus on product innovation.

Design/methodology/approach

Structural equation modeling and hierarchical linear regression are used to test hypotheses.

Findings

The results support all hypotheses and suggest that company (buyer) age and variables related to buyer engagement with international markets directly influence performance. The results also indicate that the buyer-supplier relationship does not moderate the relationship between innovation strategy and innovation performance.

Research limitations/implications

This study demonstrates that how a firm builds the conditions to effectively leverage the complementary resources and capabilities of suppliers directly influence innovation outcomes and business performance.

Practical implications

An important factor in firms achieving their product innovation goals is the selection and management of suppliers that are strategically aligned with regard to innovation. While managers need to develop internal innovation capabilities, partnering with like-minded organizations, and creating conditions for effective cooperation are key drivers of innovation outcomes.

Originality/value

In contrast to prior research that has examined operational issues, this study shows how the strategic alignment of buyers and suppliers with regard to innovation is an antecedent of product innovation outcomes. Moreover, it adds to a limited literature on supply chain management practices in emerging markets.

Keywords

Acknowledgements

The authors gratefully acknowledge the institutional and financial support of the Association of Management Development Institutions in South Asia (AMDISA) that facilitated the collection of data in India.

Citation

Jajja, M.S.S., Kannan, V.R., Brah, S.A. and Hassan, S.Z. (2017), "Linkages between firm innovation strategy, suppliers, product innovation, and business performance: Insights from resource dependence theory", International Journal of Operations & Production Management, Vol. 37 No. 8, pp. 1054-1075. https://doi.org/10.1108/IJOPM-09-2014-0424

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited