Supplier Innovation Drivers: Enabling the creative supplier to award the entire supply chain a competitive edge

The importance of added value stemming from supplier involvement during the innovation process of New Product Development has been highlighted by academics, press releases, and expert opinions. For businesses it is relevant to know how the innovation potential of their supplier can be accessed and developed. The focus of this paper, hence, is to provide a closer examination of the factors that buying firms can apply to encourage their suppliers to contribute value during the innovation process. A theoretical framework based on the findings of previous studies on the topic is developed. The model depicts what happens on both sides of the buyer-supplier relationship. A case study is designed and applied in order to investigate how the hypothesized factors and outcomes relate to reality. For this purpose a dual case design is chosen and implemented with a pair of firms which find themselves in a vivid buyer-supplier relationship with innovation efforts at the time of the study. Following a close examination it is reflected on the findings of the case study in order to transfer the results into managerial as well as research implications. The case study depicts trust as an essential component of the investigated partnership. Trust is seen as the basis for granting autonomy, for sharing information and for investing in the relationship in order to develop long term commitment and for providing lasting value to both parties. Furthermore, formally ensuring commitment as well as providing communication and feedback devices have proven as vitally shaping the relationship of the two cases examined. The resulting innovations have the potential to provide a source of competitive advantage and to improve the cost structure of the entire supply chain