Generating Supplier Benefits through Buyer‐Enabled Knowledge Enrichment: A Social Capital Perspective

Abstract

In accordance with the tenets of social capital theory, the knowledge-based view of the firm, and absorptive capacity theory we provide an integrative research model that sheds light on how suppliers can derive benefits from a strong relationship with key buyers. In particular, we examine three research questions that address: (i) the interrelationships among the three dimensions of buyer-supplier social capital (structural, cognitive, relational); (ii) the mechanism through which buyer-supplier social capital can influence supplier performance; and (iii) the contingency factors that influence the key relationships in the main model. We empirically validate the research model using data collected from a North America-based major electronic components distributor (i.e., the buyer) and 166 of its suppliers. The findings of our data analysis indicate that structural and cognitive social capital influence relational social capital. The findings also support that relational social capital allows for the transfer of knowledge from the buyer to the supplier, which in turn leads to greater supplier cost efficiency and innovation. However, the influence of buyer-supplier relational social capital appears to be less important in lengthier buyer-supplier relationships. The analysis also indicates that the benefits derived from a supplier's knowledge enrichment are significantly greater when the supplier possesses greater exploitative capacity. These findings provide important extensions to theory describing buyer-supplier relationships, as well as providing clear prescriptions for suppliers and relationship managers.

Supplier Innovation Strategy and Performance: A Matter of Supply Chain Market Positioning

“…A supplier's investment in innovative capabilities can be a key source of value creation in buyers' product market strategies (Utterback & Suarez, 1993;Christensen, Suárez, & Utterback, 1998;Hult, Hurley, & Knight, 2004;Jean et al, 2012). Correspondingly, it can be a strategic basis upon which a supplier may build a position as a valuable resource provider (Preston, Chen, Swink, & Meade, 2016). However, the supplier should also have the opportunity to capture and benefit from the value created (Pisano & Teece, 2007).…”

Service providers and firm performance: investigating the non-linear effect of dependence

“…Choi and Kim (2008: page 8) being embedded in a larger social structure". In the field of supply chain management, the notion of embeddedness has become an important perspective for analysing the nature of connection and cooperation in dyadic supplier-buyer relationships (Krause et al, 2007Lawson et al, 2008Carey et al, 2011;Preston et al, 2017).…”

“…Together, these arguments suggest that higher levels of dependence of an external service provider may contribute to improving the innovation and cost performance of a servitized manufacturer. Indeed, because of its bridge position between the manufacturer and the customers (Bastl et al, 2012;Finne and Holmström, 2013), the service provider acts as a supplier of customer know-how regarding product improvement possibilities, new functional requirements and market trends (Windahl and Lakemond, 2006;Carey et al, 2011;de Vries et al, 2014;Preston et al, 2017). A service provider that is more dependent on a manufacturer (i.e.…”

“Like Poles Repel While Unlike Poles Attract”: Contextual Performance Effects of Supply Base R & D, Focal Firm R & D, and Commercialization

“…The recent work of Preston et al. () uses a combination of social capital theory, knowledge‐based view of the firm, and absorptive capacity to argue for the opposite effect, i.e., that suppliers benefit due to a focal firm's knowledge enrichment, and relationship building activities. More recently, Mackelprang et al.…”

“…Relying on precepts of relational theory, Azadegan (2011) argued that operational innovation by suppliers can also be value added to focal firms. The recent work of Preston et al (2017) uses a combination of social capital theory, knowledge-based view of the firm, and absorptive capacity to argue for the opposite effect, i.e., that suppliers benefit due to a focal firm's knowledge enrichment, and relationship building activities. More recently, Mackelprang et al (2018) used a mid-range theory of structure-conduct-performance framework, and a secondary dataset of 1,039 supplier-to-customer base observations, to show a similar effect wherein suppliers benefited by being innovative, and by aligning themselves with innovation…”