Vertical Coopetition: Effect of Supplier Relationship Management Strategies on Supplier Involvement in New Product Development

Abstract

In the complex “vertical coopetition” relationship, this article aims to explore how manufacturers develop supplier relationship management (SRM) strategies to motivate supplier involvement in their new product development (NPD) activities. It investigates the influence of two competitive and cooperative SRM strategies (introducing competition for suppliers and holding supplier shares) on coinnovation performance which is the result of supplier involvement measured in a time-lagged manner. This article used the panel data on the Japanese automobile industry from 1994 to 2016 with fixed-effect negative binomial regression analysis. The results shed light on the inverted U-shaped effect of introducing competition for suppliers and the positive effect of holding supplier shares on coinnovation performance. They also indicate that holding supplier shares can weaken the curved role of introducing competition in coinnovation, but the inverted U-shape persists. Holding a high proportion of a supplier's shares and simultaneously introducing moderate competition for the supplier would be a relatively better strategy for increasing supplier involvement in NPD and coinnovation. The findings provide insights into strategic sourcing and contribute to the interfirm coopetition literature by focusing on vertical buyer-SRM strategies and their roles in supplier involvement in NPD.