Formalized Problem‐Solving Practices and the Effects of Collaboration with Suppliers on a Firm's Product Innovation Performance

Abstract

This article studies how organizational practices aimed at fostering intra and interorganizational knowledge transfer, absorption, combination, and conversion interact. Specifically, the article examines the effect of formalized problem solving (FPS) practices on the benefits from collaboration with suppliers for product innovation. It argues that FPS practices act as moderators of the relationship between collaborations with suppliers and the benefits from innovation. Also, it argues that the moderating effect varies depending on whether a new product development occurs in the presence or absence of industry‐level knowledge. These expectations are tested on a sample of 1596 French manufacturing firms. Findings suggest that collaboration with suppliers generally improves the firm's innovation performance and that the benefits are higher in the absence of industry‐level knowledge. Additional findings also highlight that FPS practices have an uneven effect on the relationship between collaboration with suppliers and a firm's innovation performance; they do not increase the benefits from collaboration in the presence of industry‐level knowledge and they reduce the benefits in the absence of industry‐level knowledge.