We draw on the Knowledge-Based View (KBV) and the power asymmetry literature to propose that supply base concentration influences a firm’s innovation performance non-linearly, and that structure of the supply base in terms of breadth, depth, and geographical dispersion, and nature of the supply base in terms of collaboration moderate this relationship. Using data from 185 firms spanning six years and eleven industry sectors and implementing a robust empirical procedure that accounts for endogeneity and unobserved firm- level heterogeneity, we find that supply base concentration has an inverted U-shaped relationship with innovation performance. Moreover, breadth positively and geographical dispersion negatively influence this relationship. The results also show that supply base collaboration strengthens the relationship between concentration and innovation performance.
CO Author: Amalesh Sharma, Sourav Bikash Borah, Surya Pathak
Journal: Journal of Business Research
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