Best of Both Worlds: The Role of Supplier Influence Strategies in Customer Adoption of Innovations

Description

Industrial suppliers often proactively deal with demands derived from downstream markets (Hillebrand & Biemans, 2011) and offer supplier-generated innovations to B2B customers. Such a strategy enables suppliers to gain favorable supplier status and reap considerable profits. Also, it contributes to customers’ product innovation and success. For example, Coca-Cola’s pioneering supplier Rexam, who “figured out a way to print eight different designs on the same production line and pack 24 variations on a single pallet”, contributed to Coke’s success in the fizzy drink sector in South America (Geraint 2014). Despite the high relevance of supplier-generated innovation in industrial customers’ product innovation and success, extant literature has largely focused on supplier involvement and collaboration in customers’ new product development (Petersen, Handfield, & Ragatz, 2005; Ragatz, Handfield, & Petersen, 2002; Yeniyurt, Henke Jr, & Yalcinkaya, 2014), largely neglecting suppliers’ role as innovation-initiators. We know little about how customers react to supplier-initiated innovations and how suppliers leverage their capabilities or strategies to gain customer adoption. This research gap is significant given manufacturers in many sectors (e.g., food and beverage, automotive) are increasingly depending on innovations from external stakeholders, particularly suppliers, to deal with intensified competition and technological turbulence.To address these concerns, this research draws on the literature of influence strategy, market orientation, and structural balance theory, to understand how suppliers gain customer adoption (intention) of innovations. We first conceptualize two types of supplier capabilities —downstream marketing capability and technological capability as supplier influence strategies. We further examine how supplier influence strategies induce customer adoption (intention) under certain contextual factors (i.e., dependence, trust), and their relationship performance implications. We focus on an under-researched setting—supplier-initiated innovation and customer adoption in the FMCG industry. To test the model, we collect both qualitative cases regarding supplier-generated innovations and customer reactions, and matched survey data from suppliers and customers in China.This study adds to the understanding of the role of downstream marketing in B2B markets. It extends the notion of market orientation (Jaworski & Kohli, 1993; Narver & Slater, 1990) to the downstream market, and the scope of influence strategies in interfirm relationships (Frazier & Summers, 1984; Frazier & Rody, 1991) to the innovation adoption context. The resultant insights could help practitioners in the B2B context find an alternative solution to the common criticism of ‘marketing myopia’ and ‘difficult-to-justify’ for the existence of the marketing function.