Supplier's Involvement and Success of Radical New Product Development in New Ventures

Journal of Operations Management, Vol. 26, No. 1, pp. 1-22, January 2008

Posted: 28 Feb 2012

See all articles by Michael Song

Michael Song

Barclays Investment Bank

Anthony Di Benedetto

Temple University

Date Written: 2008

Abstract

Supplier involvement is essential to a new venture seeking to develop a radical innovation. Despite this, prior literature has not adequately addressed supplier involvement in radical innovation, nor what the antecedents to increased supplier involvement are. We build and test a conceptual model of the antecedents and new product performance outcomes of supplier involvement in the development of radical innovation by new ventures. Antecedent variables (supplier's specific investments and the new venture's qualification of the supplier's abilities) are drawn from the transaction cost analysis literature. We include new venture's relative power and new venture's level of commitment to the supplier as contingency conditions. We develop a set of hypotheses relating supplier involvement to radical innovation performance, relating the antecedent variables to supplier involvement, and also testing the interaction effects of the two contingency conditions. We gather data from both new ventures and their major suppliers for 173 recent radical innovation projects, and use hierarchical regression analysis to test our hypotheses. We find that the contingency conditions moderate achieved levels of supplier involvement, and also find a direct relationship between achieved level of involvement and performance. We conclude with theoretical contributions and managerial implications.

Suggested Citation

Song, Michael and Di Benedetto, Anthony, Supplier's Involvement and Success of Radical New Product Development in New Ventures (2008). Journal of Operations Management, Vol. 26, No. 1, pp. 1-22, January 2008. Available at SSRN: https://ssrn.com/abstract=2012666

Michael Song

Barclays Investment Bank ( email )

5 The North Colonnade
London, Canary Wharf E14 4BB
United Kingdom

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