Buyer-supplier Interaction, Ambidextrous Innovations and Manufacturer Performance: The Roles of Competitive Environment, Governance Mechanisms and Interfunctional Coordination

Abstract

In the era of knowledge economy with innovation- and supply chain-driven development, continuously launching products is essential for firms, and supplier knowledge is paramount for these firms to extend their knowledge bases. Buyer-supplier interaction (BSI) describes a relationship process between the focal manufacturer and its supplier, enabling the focal firm to acquire supplier knowledge. In turn, the focal firm can utilize the acquired knowledge to facilitate innovation and enhance performance. The outcomes of BSI can be shaped by external environment, interfirm atmosphere, and internal structures. However, studies on BSI are mainly analytical and yield inconclusive findings. Based on the knowing processes of knowledge-based view, this thesis aims to reveals the interrelationships among BSI, ambidextrous innovations and manufacturer performance. Further based on the contingency perspective of knowledge-based view, information processing theory, and not invented here syndrome, this thesis aims to ascertain the influence of external competitive environment, interfirm governance mechanisms, and internal interfunctional coordination on BSI—ambidextrous innovations links. This thesis builds a holistic conceptual model for BSI and develops specific hypotheses. It adopts an empirical survey to verify hypotheses. The survey data were collected from 182 manufacturing firms and ordinary least squares regression was conducted. The innovative points of this thesis are fourfold.

1) Based on the knowing processes of knowledge-based view, this thesis reveals the inner mechanisms between BSI and manufacturer performance (i.e., BSI—exploitative innovation (EI)—business performance; BSI—exploratory innovation (ER)—innovation performance—business performance), which clarifies the different processes for BSI to enhance manufacturer performance. Previous studies on BSI are mainly conducted in qualitative methods to analyze the BSI and its effects on innovation and performance. A few empirical studies examine the direct link between BSI and performance. These studies yield mixed arguments and findings. This thesis introduces ambidextrous innovations as intermediary processes to investigate the indirect effect of BSI on manufacturer performance. It certifies that the focal firm efficiently utilizes the existing knowledge transferred by BSI to facilitate EI and then enhance business performance directly. Meanwhile, the focal firm effectively utilizes the new knowledge created by BSI to facilitate ER, which relies on the realization of innovation achievements and thus enhances innovation performance and business performance in order. This thesis broadens the theoretical framework for performance implications of BSI, which enables managers to know the specific paths for BSI to enhance manufacturer performance, thus offering targeted resource and managerial supports.

2) From the contingency perspective of knowledge-based view, this thesis ascertains the strengthening effect of competitive intensity in transition economies on BSI—ambidextrous innovations links and the weakening effect of dysfunctional competition on the BSI—ER link, outlines the corresponding external boundary conditions, and combines the studies on competitive intensity and dysfunctional competition. The mixed findings about BSI necessitate the investigation of the influence of context factors. Previous studies qualitatively highlight the influence of competitive environment on the outcomes of BSI in market economies, and it remains unclear whether these qualitative findings are true for the firms in transition economies. This thesis introduces competitive intensity and dysfunction competition coexisting in transition economies as external context factors to investigate their separate influence on BSI—ambidextrous innovations links. This thesis contends that competitive environment increases perceived values of supplier knowledge and potential returns of ambidextrous innovations, which increases the extent to which the focal firm efficiently and effectively utilizes supplier knowledge. It thus finds that competitive intensity strengthens BSI—ambidextrous innovations links. On the contrary, this thesis contends that dysfunctional competition reduces perceived values of supplier knowledge and potential returns of ER, which decreases the extent to which the focal firm effectively utilizes the new knowledge created by BSI. It thus finds that dysfunctional competition weakens the BSI—ER link. These findings organically combine and explain the influence of competitive intensity and dysfunctional competition, while help to reconcile the mixed effects of BSI on innovation. Managers are inspired to emphasize and comprehensively understand the influence of competitive environment in transition economies, while provide them with theoretical and practical guidance, especially for the manufacturing firms located in China, to conduct BSI and ambidextrous innovations to adapt to complex competitive environment.

3) Based on information processing theory, this thesis ascertains the joint strengthening effect of contract and trust on the BSI—EI link, depicts the corresponding interfirm boundary conditions, and broadens the collective function of contract and trust. Although contract and trust as interfirm governance mechanisms have joint strengthening influence on the effects of interfirm activities, there is no empirical evidence. This thesis simultaneously introduces contract and trust as interfirm context factors to investigate their joint influence on BSI—ambidextrous innovations links. This thesis contends that the joint use of contract and trust increases information processing capacities to cope with the information processing requirements caused by BSI, which makes the focal firm efficiently utilize the existing knowledge transferred by BSI to a greater degree. It thus finds that the interplay of contract and trust strengthens the BSI—EI link. This finding broadens the joint use of contract and trust in new product development from the perspective of information processing, while helps to reconcile the mixed effects of BSI on innovation. Managers are inspired to attach importance to the joint use of contract and trust, which should be selectively applied to manage the routine BSI—EI link.

4) Based on not invented here syndrome, this thesis ascertains the weakening effect of interfunctional coordination on the BSI—ER link, builds up the corresponding internal boundary conditions, and confirms the dark side of interfunctional coordination. Previous studies mainly emphasize the bright side of interfunctional coordination, whereas pay scant attention to the close association between interfunctional coordination and the not invented here syndrome pervasive in reality. This thesis introduces interfunctional coordination as the internal context factor and builds upon not invented here syndrome to investigate its bidirectional influence on BSI—ambidextrous innovations links. This thesis contends that interfunctional coordination limitedly increases the focal firm’s absorptive capacities and substantially decreases its internal acceptance to new knowledge, which decreases the extent to which the focal firm effectively utilizes the new knowledge created by BSI. It thus finds that interfunctional coordination weakens the BSI—ER link. This finding clarifies the dark side of interfunctional coordination in new product development and helps to reconcile the mixed effects of BSI on innovation. Managers are inspired to pay more attention to the dark side of interfunctional coordination and prudently control its negative influence on the non-routine BSI—ER link by considering product characteristics and development processes (such as, the modularity policy widely used in reality to reduce interfunctional coordination).

Date of Award	4 Jun 2021
Original language	English
Awarding Institution	City University of Hong Kong
Supervisor	Hongyi SUN (Supervisor), Tao Jia (Supervisor) & Tao Jia (External Supervisor)