Buyer-Supplier Networks and Innovation: The Role of Technological Knowledge Spillovers

A firm’s buyers are an important source of technological knowledge spillovers. Existing literature has shown that suppliers tend to benefit from innovative buyers. In this study, we uncover a mechanism underlying enhanced supplier innovation performance when buyer innovation is high. Using a panel data of supplier-buyer relationships and the patenting activities of the respective firms, we address the following research questions: How does buyer innovation influence supplier innovation performance? What moderating role does a supplier’s structural position play on the association between buyer innovation and supplier innovation performance? What moderating role does a supplier’s R&D intensity play on the association between buyer innovation and supplier innovation performance? We show that the extent of supplier’s knowledge accumulation from its buyers mediates the relationship between buyer innovation and supplier innovation performance. In addition, we also show that a supplier’s position within its supply network weakens this indirect effect.