An examination of product innovation and buyer-supplier relationship in Pakistani firms

Abstract

Purpose– The purpose of this paper is to explore the interface between buyers and suppliers in the context of product innovation in an emerging economy. Specifically, it examines the strategic and tactical initiatives necessary to drive inter-organizational alignment and thus positive innovation outcomes. It also examines the impact of organizational characteristics on product innovation.Design/methodology/approach– Using survey data from 191 organizations in Pakistan, a structural equation model of the relationships between buyers’ and suppliers’ strategic focus on innovation, supplier innovation focus, collaborative innovation, and measures of product innovation and market performance is tested. In addition, hierarchical regression analysis is used to identify the impact of various organizational characteristics on product innovation performance.Findings– The results suggest that a firm's product innovation performance is positively influenced by strategic buyer-supplier alignment with regard to product innovation, and the existence of mechanisms that foster inter-organizational collaboration. This in turn has a positive impact on market performance. Product innovation performance is also influenced by a firm's age, the nature of its ownership, and the extent to which it exports its products.Originality/value– The study offers new insight into the role of inter-organizational collaboration as a driver of product innovation. Moreover, it adds to a limited literature on supply chain management in emerging economies generally, and on product innovation in the Indian sub-continent specifically.