The influences of Internet-based collaboration and intimate interactions in buyer–supplier relationship on product innovation

Abstract

With the increasing importance of the Internet in connecting buyer and suppliers, how does Internet-based collaboration affect firm product innovation? This study proposes that Internet-based collaboration positively affects product innovation performance of supplying firms, but too much dependence on it impedes product innovation. That is, Internet-based collaboration has an inverted U-shaped relationship with product innovation performance of supplying firms. This study further posits that face-to-face interaction between buyer and supplier strengthens the positive effect of Internet-based collaboration on product innovation, such that when the degree of face-to-face interaction is high, Internet-based collaboration is associated with better innovation performance. These propositions are tested using data from an original survey data on buyer–supplier relationships in China. The results provide strong supports for the predictions of hypotheses.