A theory of supplier network-based innovation value

• Published in: Journal of purchasing and supply management Vol. 23; no. 3; pp. 153 - 162
• Main Authors: Yan, Tingting, Yang, Sophie, Dooley, Kevin
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.06.2017
• Subjects: Buying company innovation; Customer network; Structural equivalence; Supplier innovation value; Supplier involvement; Supply network; Buying company innovation; Supply network; Customer network; Structural equivalence; Supplier innovation value; Supplier involvement
• ISSN: 1478-4092; 1873-6505
• DOI: 10.1016/j.pursup.2017.02.002

To understand how a supplier helps a buying company create value through innovations, studies have focused on a supplier's internal resources or its relationship with a buying company. Building upon this body of literature, we develop a theory of supplier network-based innovation value in this conceptual paper. This theory explains how a supplier's upstream and downstream value network can be a source of competitive advantage for a buying company. Specifically, it proposes that the levels and types of supplier innovation value is contingent on the configuration of a dual-ego value network, characterized by the locus and degree of buyer-supplier structural equivalence. This theory also explains how a supplier's ties with a buying firm's competitors can pose both opportunity and risk to buying company innovation. This theory contributes to the literature by showing when “seemingly undesirable” suppliers, due to a lack of technical capability or strong relationship with a buying company, might still be valuable to a buying company's innovation. •This paper provides a network-based explanation for how buying firms can extract innovation value from their suppliers’ value networks.•This study develops propositions concerning how different types of structural equivalence, a social network concept, between the buyer’s and supplier’s value networks can lead to different types of supplier innovation value.•The theory also explains how a supplier’s ties with a buying firm’s competitors can pose both opportunity and risk to buyer innovation.