Innovation and its Impact on Firm Financial Performance: Empirical Investigations in Buyer-Supplier Relationships
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Author
Date
2018Type
- Doctoral Thesis
ETH Bibliography
yes
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Abstract
Firms increasingly seek to profit from the innovative capabilities of their customers
and suppliers. Extant research on vertical relationships has thus focused extensively on
the outcomes of collaborative innovation. Specifically, many studies explored the
effects of involving customers and suppliers in product development on product
quality, product costs, and development times. However, improvements in these
measures need not necessarily lead to enhanced corporate financial performance.
Collaborations with vertical partners entail the risk that valuable technological
knowledge spills to competitors. Furthermore, collaborations can leave firms
dependent on the assets and technologies of their partners. Hence, the focal firm might
in fact lose out, while its partners and competitors capture most of the value from
innovation. Further research is thus called for that focusses on financial outcomes, and
that thereby advances our understanding of how firms can profit from their own and
their partners’ innovations.
The present dissertation addresses this gap. Through three distinct empirical
investigations, it sheds light on the relationship between innovation and firm financial
performance in the context of buyer-supplier relationships. The empirical
investigations build on a large panel of buyer-supplier relationships obtained from
Compustat North America and the U.S. Patent and Trademark Office (USPTO). The
panel covers the period from 2000 to 2013 and contains, in total, 4306 buyer-supplier
dyads from the U.S. In utilizing panel regressions, the investigations offer robust
findings on (1) how firms can profit from their suppliers’ innovations, (2) on whether
and to which extent component suppliers depend on their buyers’ innovative activities
to earn returns on their own investments in innovation, and (3) on the implications of
absorptive capacity for the value of supplier relations to buying firms. The obtained findings on these three issues provide important contributions to the management
literature and have relevant implications for practice. Show more
Permanent link
https://doi.org/10.3929/ethz-b-000300892Publication status
publishedExternal links
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Publisher
ETH ZurichOrganisational unit
03813 - Wagner, Stephan M. / Wagner, Stephan M.
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ETH Bibliography
yes
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