ENHANCING SUPPLIER’S INVOLVEMENT IN STARTUP’S INNOVATION THROUGH EQUITY OFFERING AND TRUST BUILDING

Michael Song, Ad de Jong, C. Anthony Di Benedetto and Y. Lisa Zhao
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Michael Song: School of Management, Harbin Institute of Technology, Institute for Innovation and Entrepreneurship, Harbin, China
Ad de Jong: Department of Marketing, Copenhagen Business School, Frederiksberg, Denmark
C. Anthony Di Benedetto: Department of Marketing and Supply Chain Management, Fox School of Business, Temple University, Philadelphia, PA, USA
Y. Lisa Zhao: Department of Management, Albers School of Business and Economics, Seattle University, Seattle, WA, USA

International Journal of Innovation Management (ijim), 2019, vol. 23, issue 02, 1-29

Abstract: External partners, such as suppliers, are important in the case of innovation by entrepreneurial startup firms. Due to their limited resources and liability of newness, these startups must rely on outside partners for resources and legitimacy to succeed and indeed to survive. Yet, few studies have specifically examined, or provided guidance on, how startups can increase supplier involvement in their innovation projects. Drawing from Transactional Cost Economics and supplier involvement literature, this study develops a contingency model, in which supplier’s equity share and supplier’s trust moderate the relationship of supplier’s involvement in a startup’s innovation with supplier’s specific investment and startup’s effort in qualification of supplier’s ability. We empirically test the model using data collected from 166 innovation projects of 166 startups. Our results show that supplier involvement is pivotal to startup’s product innovation performance, which is consistent with prior literature on supplier involvement. Interestingly, our results further reveal that supplier’s specific investment and startup’s effort in qualification of supplier’s ability lead to higher levels of supplier involvement only when supplier’s equity share and supplier’s trust are sufficiently high.

Keywords: Supplier involvement; entrepreneurial innovation; transactional cost economics; equity share; supplier trust (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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DOI: 10.1142/S1363919619500130

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