Enabling Joint Product Innovation in Buyer–Supplier Relationships: Roles of Buyer Directives, Relational Governance, and Joint Process Innovation

Achieving joint product innovation in buyer-supplier relationships (BSRs) is a critical yet challenging endeavor that requires effective governance. While research has focused on how governance serves as a behavioral mechanism to align incentives and foster knowledge sharing, it has largely overlooked how governance can facilitate the more efficient path of knowledge integration while minimizing costly learning. Using survey data from 348 supplier firms in the sheet metal industry, we find that buyer directives have a positive effect on joint product innovation. We also find that the interaction between buyer directives and relational governance operates indirectly, enhancing joint product innovation by first fostering joint process innovation. This study contributes to BSR governance research in three ways. First, it reframes buyer directives as boundary objects that facilitate knowledge integration rather than as simple behavioral controls. Second, it specifies the role of relational governance in creating the collaborative context necessary for the enactment of these directives. Finally, it identifies joint process innovation as a concrete integrative mechanism linking operational collaboration to product innovation outcomes, challenging the view that they are separate phenomena.