Collaborative innovation in supply chain systems: Value creation and leadership structure

Bin Shen, Xiaoyan Xu, Hau Ling Chan and Tsan-Ming Choi

International Journal of Production Economics, 2021, vol. 235, issue C

Abstract: In the information age, collaborative innovation in process and product is critically important. In this paper, we study the value of a supply chain innovation in which one upstream supplier and one downstream manufacturer may co-develop a product that includes several innovative elements. The supplier is responsible for process innovation to optimise the production system and reduce unit production costs, and the manufacturer is responsible for product innovation. We study innovation leadership and consider the supplier-led (SL) and manufacturer-led (ML) innovation games. We find that in both SL and ML innovation games, if the manufacturer has sufficient resources and capability to invest in product innovation, the manufacturer is always willing to invest in product innovation, but not the supplier. We identify the value of co-innovation and innovation leadership. We find that the product with higher innovation level will be provided under the ML innovation game. When selling the technological and innovative products (as they usually have a larger profit margin ratio), the manufacturer should invest more in product innovation. When product innovation efficiency is large (small), the manufacturer's profit is convex (concave) in the profit margin ratio. We identify the optimal value creation of joint pricing and innovation in a supply chain and the impacts of “process-product innovation dependence”. Our results (i) highlight the value of manufacturer-led innovation and the importance of considering the product's profit margin ratio in co-innovation, (ii) indicate that the manufacturer should be the leader to invest in product innovation, and (iii) the co-innovated products should be sold at a high profit margin.

Keywords: Collaborative innovation; Platform service; Supply chain innovation; B2B; Supply chain systems (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S092552732100044X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:235:y:2021:i:c:s092552732100044x

DOI: 10.1016/j.ijpe.2021.108068

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().