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Corporate Innovation along the Supply Chain

Management Science, Forthcoming

AFA 2015 Boston Meetings

48 Pages Posted: 5 Oct 2014 Last revised: 29 Aug 2017

Yongqiang Chu

University of South Carolina - Darla Moore School of Business

Xuan Tian

Tsinghua University - PBC School of Finance

Wenyu Wang

Indiana University - Kelley School of Business - Department of Finance

Date Written: August 28, 2017

Abstract

In this paper, we document a positive effect of supplier-customer geographic proximity on supplier innovation. To establish causality, we explore plausibly exogenous variation in proximity caused by customer relocations. The positive effect of supplier-customer proximity on supplier innovation is stronger when customers are more innovative themselves, when suppliers and customers are closer in technological space, and when customers' demand accounts for a larger fraction of suppliers' total sales. These findings suggest that the feedback channel and the demand channel are likely underlying mechanisms through which supplier-customer proximity affects supplier innovation. Overall, our paper sheds new light on the real effect of supplier-customer relationship on corporate innovation.

Keywords: Geographic proximity; Innovation; Supply chain

JEL Classification: G31, O31

Suggested Citation

Chu, Yongqiang and Tian, Xuan and Wang, Wenyu, Corporate Innovation along the Supply Chain (August 28, 2017). Management Science, Forthcoming; AFA 2015 Boston Meetings. Available at SSRN: https://ssrn.com/abstract=2505029 or http://dx.doi.org/10.2139/ssrn.2505029

Yongqiang Chu (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

1014 Greene Street
Columbia, SC 29208
United States
803-777-5960 (Phone)

Xuan Tian

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengfu Road
Haidian District
Beijing 100083
China
+86-10-62794103 (Phone)

HOME PAGE: http://xuantian.info/

Wenyu Wang

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

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