Exploring supplier–supplier innovations within the Toyota supply network: A supply network perspective

Abstract

This article investigates the development of supplier-supplier innovations that occur when two firms that are part of the same supply network co-patent a new product. This study unravels how the structure of the supply network influences each firm's ability to form supplier-supplier innovations with other network members. Specifically, we investigate how supplier degree centrality influences the generation of supplier-supplier innovations, and the extent to which this relationship is moderated by the structural embeddedness of firms in the supply network. Using data from the Toyota supply network, the results reveal that a firm's ability to co-develop supplier-supplier innovations with other network members depends on its number of ties and their direction within the supply network. Although betweenness centrality has no significant moderating effect, closeness centrality, and embeddedness in small world clusters negatively moderate the relationship between supplier degree centrality and supplier-supplier innovations. Additionally, the number of manufacturing plants a firm operates in Japan strengthens the positive effect supplier degree centrality has on the development of supplier-supplier innovations.

Structural characteristics of complex supply chain networks

“…They also help firms form alliances by leveraging their favorable positioning (Gulati, 1999). Interconnectedness in a supply network also enables firms to benefit from a higher degree of supplier–supplier innovation (Potter & Wilhelm, 2020) and increased network learning resulting in, for example, a higher propensity for environmental disclosures (Bellamy et al 2020). Third, research has focused on the role of structural SCN characteristics in ensuring resilience to disruptions ( e.g., Kim et al 2015) as structural properties influence firm performance amid disruptions (e.g., Bode & Wagner, 2015; Choi & Krause, 2006; Craighead et al 2007).…”

“…Choi and Hong (2002) modeled three sample supply networks from interview and archival data for one component within the automotive industry. Kim et al (2011) and Potter and Wilhelm (2020) analyzed these networks using social network metrics such as network size and centrality measures to identify dominant suppliers. Recent studies have explored two‐tier, upstream supply networks with and inter‐supplier relationships (e.g., Dong et al 2020; Lu & Shang, 2017).…”

“…In summary, supply chain researchers have only started examining the topologies of complex, real‐world SCNs (e.g., Brintrup & Ledwoch, 2018; Kim et al 2015; Potter & Wilhelm, 2020), and thus our current understanding of complex SCN topologies is limited (Basole & Bellamy, 2014; Choi & Krause, 2006). Moreover, an important question remains as to what network topologies exist across firms’ SCNs both within and across industries and are thus archetypical (Choi et al 2001).…”

“…Small‐world networks exhibit a low degree of separation, which might increase firms’ vulnerability to disruptive events that otherwise seem far away (Macdonald et al 2018). We build on research that describes today's businesses as being highly interconnected despite the high specialization of firms and the global dimension of supply chains (Brintrup & Ledwoch, 2018; Xu et al 2011), suggesting the relevance of “small‐world” topologies in SCNs (e.g., Basole & Bellamy, 2014; Potter & Wilhelm, 2020). Further, small‐world network properties have been found in business networks that may be similar to SCNs, such as alliance networks (Schilling & Phelps, 2007) or ownership patterns among firms in Germany (Kogut & Walker, 2001).…”

“…Past studies typically have limited the empirical investigation of network structures to a single firm, commonly in the automotive sector (Brintrup et al 2016; Kim et al 2011) or to a narrow part of an SCN, such as the upstream supply network (Dong et al 2020; Potter & Wilhelm, 2020; Sharma et al 2019). SCN research has not provided evidence of whether certain network topologies are unique to a single firm or common within and across industries.…”