Interpartner learning, dependence asymmetry and radical innovation in customer-supplier relationships

Purpose: This study aims to explore how absorptive and joint learning can foster radical innovation. Furthermore, dependence asymmetry is investigated as a moderator of the effects of these factors on radical innovation. Radical innovation is an important source of any firm’s success. Yet, there has been a dearth of research in the literature on how different types of inter-partner learning cultivate the process of generating such innovation. Design/methodology/approach: The authors use a sample of 204 Taiwanese electronics suppliers to test the effects of joint learning and absorptive learning on radical innovation. The empirical analysis adopts a structural equations modeling approach. Findings: The authors find that a supplier’s joint learning has a stronger effect on radical innovation than its absorptive learning. However, when accounting for the moderating effect of dependence asymmetry, the analysis shows that absorptive learning does have a significant effect on radical innovation. The effect of joint learning on radical innovation is not moderated by the degree of dependence asymmetry. Practical Implications: This study broadens and deepens the understanding of how radical innovation by suppliers can be generated in customer–supplier relationships, and how this is shaped by the power-dependence structure. Originality/value: Inter-partner learning; radical innovation; power; dependence