Offshoring innovation: An empirical investigation of dyadic complementarity within SMEs

Ahmad Khraishi,Fahian Huq,Antony Paulraj

doi:10.1016/j.jbusres.2020.06.045

Abstract

Despite scholarly agreement that complementary capabilities are essential to successful collaborations, little is known about how small and medium-sized enterprises (SMEs) manage collaborative innovation through offshoring. Besides, the innovation management literature remains generally silent about when supplier joint actions could work in enhancing offshoring innovation (OI) performance. The purpose of this study is twofold. First, we aim to delineate why supplier’s asset specificity and goal compatibility predict supplier’s complimentary capabilities in OI. Second, we empirically explore the role of supplier joint actions in enhancing OI performance. Based on data collected from 200 SMEs having active OI relationships spanning four developed European countries, our results propose that supplier’s complementary capabilities mediate the relationship between critical relational antecedents (supplier’s asset specificity and goal compatibility) and OI performance. It should be noted, however, that despite their incentivising power, supplier joint actions can be a “double-edged sword” in SMEs’ OI relationships.

Highlights

To study the mediation effects further, we compare the results shown in Table 3 between the total effects of supplier’s asset specificity and goal compatibility on offshoring innovation (OI) performance before and after we introduced supplier’s complementary capabilities
OI differs from typical offshore outsourcing when it comes to motives and characteristics, and in the extensive level of dyadic interactions required, which in turn affects the outcomes of OI relationships
These differences clearly highlight that the outcome of OI depends on how small and medium-sized enterprises (SMEs) choose to access and leverage the offshore supplier's complementary capabilities

Summary

Introduction

Despite extensive research and general scholarly agreement that complementary capabilities are essential to successful offshoring innovation collaborations (Cobena, Gallego, & Casanueva, 2017; Jap, 1999; Mindruta, Moeen, & Agarwal, 2016; Mitsuhashi & Greve, 2009; Nietoa & Santamaria, 2007; Rothaermel & Boeker, 2008; Van Beers & Zand, 2014), the role of suppliers’ complementary capabilities remains underexplored in the case of offshoring innovation (OI) in SMEs (Gusenbauer, Massini, & Fink, 2015; Musteen & Ahsan, 2013). The continuous rise in OI relationships since early 2000s has proven that OI allows buying firms to access and benefit from offshore suppliers and country-specific resources, such as specialised talents, technological advances, and lower innovation costs than in developed countries (Lewin, Massani, & Peeters, 2009; Spithoven & Teirlinck, 2015; Van Beers & Zand, 2014). SMEs must learn how to compensate for their resource disadvantage by increasing the scope and level of interaction with the offshore suppliers (Munjal et al, 2018; van de Vrande et al, 2009)

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Conclusion