The influence of supplier dependence on exploitation and exploration in innovation: evidence from a resource dependence perspective

Purpose This study investigates the impact of supplier dependence on suppliers’ exploitative and exploratory innovations. Drawing on resource dependence theory, this research demonstrates that two governance mechanisms, relationship tenure and board interlocks with customers, can be used to manage supplier dependence. Design/methodology/approach Using 1,825 observations from listed Chinese firms from 2008 to 2020, we established a unique dataset of buyer–supplier dyads. The hypotheses were tested using zero-inflated negative binomial regression analysis. Findings The findings indicate that greater supplier dependence on major customers has distinct impacts on suppliers’ exploitative and exploratory innovations. We demonstrate that the strategic management of relationship tenure and board interlocks with customers can serve as mechanisms countervailing the negative impact of supplier dependence on exploitative and exploratory innovations. Originality/value These results provide insights into the complex relationship between supplier dependence and innovation, offering practical recommendations for companies to alleviate resource dependence.