Orchestrating resources with suppliers for product innovation

Abstract How orchestrating external, supplier‐provided resources affects product innovation is an important question. While product innovation is essential to achieve a competitive advantage, it is costly as it requires significant investments. It thus puts a severe strain on firm resources, which is particularly critical for resource‐scarce small–medium enterprises (SMEs). Therefore, these firms must combine their own resources with those of external parties, particularly suppliers, to enhance their product innovation. However, knowledge about how orchestrating these resources affects product innovation is limited, because empirical studies on resource orchestration have largely focused on firm‐internal resources; furthermore, there is ambiguity regarding the extent to which drawing on external resources is beneficial. In addition, the conditions that affect the resource orchestration–product innovation relationship remain unexplored. Therefore, we focus on supplier logistics integration (SLI), an important resource orchestration action referring to the orchestration of external, supplier‐provided resources; we draw on the resource orchestration framework and the related work on organizational rigidity to theorize that there is an inverted U‐shaped relationship between SLI and product innovation. Additionally, we suggest that learning orientation and environmental dynamism mitigate rigidities associated with high levels of SLI and thus facilitate the translation of SLI into product innovation. Testing our hypotheses with data from Swedish SMEs supports our theorizing and provides important contributions. Most importantly, we extend the resource orchestration framework to include the focus on external, supplier‐provided resources, thereby advancing our knowledge and understanding of resource orchestration for product innovation in SMEs.