Fostering Innovation through Customer Relationships

Firms are facing highly competitive markets characterized by strong volatility in customer demand, increasingly short product life cycles, and an accelerated pace of introduction of technological innovation. This context obliges companies to increase and reinforce their capacity to develop new products and features. In this article we examine how suppliers can improve their innovativeness through relationships developed with their customers. Using survey data from Canadian manufacturers, we found that supplier innovativeness is associated with the deployment of interaction mechanisms and cultural proximity. Our results also uncover the importance of supplier’s absorptive capacity.