I need you, but do I love you? Strong ties and innovation in supplier–customer relations

Abstract

Research on supplier–customer relationships has attracted a great deal of attention, as such relationships can positively impact firms’ knowledge acquisition and innovation. Within this stream of research, strong ties with customers have been explored with attention to their beneficial and detrimental effects, presenting a paradox to be addressed. To contribute to this debate, we suggest focusing on how tie strength is measured, and accordingly, we return to the seminal definition of tie strength by Granovetter (1973), who defines it as a combination of behavioural and affective components. We acknowledge that the two components have different characteristics and dynamics, which urges us to unbundle the two components and measure their separate impacts on knowledge acquisition and innovation. To further investigate the role of tie strength in innovation, we hypothesize and test the mediating role of knowledge acquisition. We test our hypothesis in vertical partnerships between small- and medium-sized enterprises (SMEs) located in a high-tech cluster and their key customers. We show that the unbundled components of strong ties have a direct positive impact on the knowledge acquisition of high-tech SMEs and an indirect positive impact on innovation, with knowledge acquisition mediating the effect. Our study contributes to the debate on the paradox of tie strength in supplier–customer relations by providing and empirically testing a research approach that might complement the previous approaches and by shedding light on the important role of the affective component of tie strength in knowledge acquisition and innovation.