A longitudinal analysis of supplier involvement in buyers' new product development: working relations, inter-dependence, co-innovation, and performance outcomes

Drawing on social exchange theory, this study develops a longitudinal theoretical framework of supplier participation in buyers' new product development (NPD) activities. The study focuses on the longitudinal temporal dynamics of supplier involvement in buyers' new product development and postulates that working relations and inter-dependence impact suppliers' attitudes toward co-innovation and suppliers' co-innovation behaviors. Applying this framework to a 10-year longitudinal dataset from the North American automotive industry, the drivers of the escalation of supplier involvement in buyers' NPD over time and the effect of this involvement on innovation performance, buyer sales performance, and supplier sales performance are identified. The results indicate that buyer-supplier communication, suppliers' anticipated long-term returns, suppliers' trust of a buyer, and supplier-buyer inter-dependence all play a significant role in changing supplier attitudes toward co-innovation and supplier involvement in a buyer's NPD. Further, the study also shows that supplier involvement in buyer new product development is mutually beneficial for both the buyer and the supplier as it increases performance of both parties. Performance returns are actually greater for suppliers than for buyers. As such, this study contributes to both relationship management and new product development literature streams, as well as providing practical direction to manufacturers as to how they can increase suppliers' involvement in their NPD to benefit both parties.