Abstract
The ability of a firm to scan its environment for breakthrough innovations and develop new products is increasingly central to business success. However, many firms struggle to develop breakthrough innovations alone, and rely increasingly on their supply base to provide input in processing uncertain and ambiguous technological knowledge. This paper develops a theoretical framework, based in information processing theory, to investigate the effects of breakthrough search behaviors by the buyer firm on their technical proficiency, reliance on supplementary processing capacity with suppliers, and subsequent new product development and financial performance. Using data provided by 111 procurement executives from the United Kingdom, we find support for our hypotheses. Increased breakthrough scanning results in higher firm‐level technical proficiency, and also an increase in knowledge sharing with the firm's suppliers. A combination of a firm's technical capabilities and knowledge exchange with suppliers was found to result in improved new product development performance and financial performance. This study extends the supply relationship management and new product development literatures, and suggests implications for both research and practice.
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