Supplier Dependence and Buyer Firm Product Innovation: Theoretical and Empirical Investigations

This study examines how supplier dependence influences buyer firms’ product innovation (BFPI), using content-analytic case study and survey research methods. The content-analytic case study was conducted for theory-building purposes. The case study findings suggest two theoretical propositions regarding (1) the BFPI-inhibiting effect of supplier dependence and (2) the negative interaction effect of supplier dependence and relationalism on BFPI. The logical arguments from the absorptive capacity and exploration-exploitation theoretical lenses were provided to support the internal validity of the two propositions. Survey research was then conducted in the U.S. and Germany to externally cross-validate these propositions. The survey results were largely consistent with those of the content-analytic case study, thus supporting both propositions.