Beyond direct relationships

Abstract

Purpose The purpose of this paper is to investigate whether supplier dependence is related to innovation in supplier firms. Drawing on resource dependence theory, the authors hypothesized that supplier dependence has both positive and negative relationships to the quantity and quality of innovation. Design/methodology/approach The study is based on data collected from US companies. Negative binomial regression analysis was used to test the proposed hypothesis. Findings The authors found that the quantity of innovation of a supplier firm initially decreased and then increased with the extent of the dependence upon major customers. This finding supports the idea that the benefits of supplier dependence mitigate the negative outcomes of dependence upon major customers. Originality/value This study extends the literature on supplier dependence by empirically examining the relationship between supplier dependence and the quantity and quality of innovation within the context of high-technology industries. The authors provide a holistic understanding of the value of the dependent relationship in boosting innovation in the context of supply chain management.