Trust, partner selection and innovation outcome in collaborative new product development

Abstract

A key feature of collaboration in general and collaboration for innovation in particular is the existence of trust. Trust is important because it reduces the costs and risks involved in collaboration, while also increasing the overall performance. This article explores the role that trust plays during the selection of suppliers in new product development (NPD), and the outcome that reliance on trust has on the innovation effort. The research involves a case study of two organisations following contrasting approaches to NPD sourcing, but both relying on collaborative, long-term relationships. In both cases, we find goodwill trust as the key variable explaining the reliance on collaboration. We also find that over-reliance on goodwill trust and geographical proximity in selecting NPD suppliers leads to an emphasis on incremental innovation which hampers the ability of both organisations to engage in radical NPD.