Just Like Me? How Reciprocal Judgements of Trust Underlie Innovations in Buyer-Supplier Exchanges

Abstract

The cognition underlying buyer-supplier judgments and the symmetry of those perceptions, which influence collaborative innovations, remain understudied. In this study, we examine three specific forms—competence, benevolence, and calculative trust—along with their impacts on tacit knowledge sharing and product and process innovations between buyer and supplier. Based on a sample of 250 buyer-supplier dyads, our results show that the amount and degree of product and process innovations for both parties increase as a function of like-minded perceptions of benevolence and competence, but fail to support the contention that calculative trust supports innovation. Our overarching conceptual model of innovation, which we empirically confirm, demonstrates two additional findings: (1) Technological uncertainty is an important exogenous factor impacting innovation, as it creates opportunities for each firm to improve its competitive positioning through product and process innovations, and (2) tacit knowledge mediates this relationship, as it fosters innovation by enabling the novel recombination of knowledge.