Global buyer–supplier networks and innovation: The role of technological distance and technological breadth

Abstract

One of the critical challenges of technology management for a firm is managing technological knowledge. This study focuses on available technological knowledge in a firm's global supplier network and examines factors that accrue innovation benefits from such knowledge for a buyer firm. Using absorptive capacity as a theoretical lens, we specifically examine technological distance, technological breadth, and extent of global sourcing, and how these factors interrelate in influencing a firm's innovation performance. The panel data is drawn from various sources (Bloomberg SPLC, PATSTAT Global, and Compustat). Our sample spans four years from 2011 through 2014 and comprises an unbalanced panel of 878 firm‐year observations derived from buyer–supplier relationship data of 246 unique buyer firms. Embedded in this data are 846 unique supplier firms and 9291 dyads (buyer–supplier pairs). The findings confirm the negative association between technological distance and innovation performance, and the positive association between technological breadth and innovation performance. Contrary to expectations, technological distance plays a negative moderating role in the relationship between technological breadth and innovation performance. The results also show that while the extent of a firm's global sourcing has a positive relationship with its innovation performance, the relationship changes with technological distance.

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The impact of carbon neutrality policies on the stock market from a supply chain perspective

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“…Considering that the number of tier-1 suppliers is highly real-time data and depends on relationship disclosure, we believe that small differences in the number of tier-1 suppliers may not be meaningful, so we convert in-degree centrality into a binary variable. The value assigned to focal firms exceeding the median value of tier-1 suppliers in the sample is 1, otherwise it is 0, which represents the relative level of the in-degree centrality (Similar variable processing approach can refer to (Lee et al, 2020;Palit et al, 2022)).…”

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“…Phene et al (2006) indicated a nonlinear relationship between technologically distant knowledge of national origin and breakthrough innovation, while technologically proximate knowledge of international origin has a positive impact on breakthrough innovation. In the study on global buyer-supplier networks and innovation, Palit et al (2022) pointed out that technological distance can pose challenges in recombining knowledge and have a negative impact on innovation performance. Capaldo et al (2017) studied the relationship between technological distance and knowledge maturity, arguing that technological distance reduces the benefits of knowledge maturity because limited familiarity undermines the reliable use of mature knowledge while making it more difficult to retrieve and apply.…”

“…(2006) indicated a nonlinear relationship between technologically distant knowledge of national origin and breakthrough innovation, while technologically proximate knowledge of international origin has a positive impact on breakthrough innovation. In the study on global buyer-supplier networks and innovation, Palit et al. (2022) pointed out that technological distance can pose challenges in recombining knowledge and have a negative impact on innovation performance.…”