Supplier-driven innovation: A source of generating competitive advantage

Abstract

This study analyzes a multinational service and manufacturing company and explores its supplier-driven innovation activities, aiming to determine how they generate competitive advantage. Thus, the main research problem in the study is the following: How does a multinational company enable supplier-driven innovation in order to generate results that increase the competitive advantage of the company?

This question was divided in three sub- questions:.

1. What activities is the company currently doing to improve supplier-driven innovation?.

2. How is supplier innovation impacting cost reduction activities or revenue growth?.

3. How can supplier-driven innovation activities be improved in the company?.

The investigation is carried out as a combination of a literature review and a descriptive embedded case study, with the company's business environment as the general context for the case study. The first question is answered in a qualitative way, through management interviews mainly. The second question is answered in a qualitative and quantitative manner, using business case information and financial reporting from the company in order to quantify the impact of supplier innovation activities in two specific cases. Finally, the third question is answered through a combination of management interviews and literature review in order to propose improvement opportunities.

This study maps some of the key activities that the company is doing in order to enable supplier-driven innovation. Some of these activities are Supplier Development and Innovation workshops, Supplier Day and the Virtual Pilot Factory. At the same time, it also shows that by involving the suppliers in the innovation process, the company is able to achieve financial benefits. Finally, it presents improvement opportunities in the field of supplier-driven innovation regarding the company's strategy, process, structure and culture.

This study is relevant because it highlights the importance of using supplier innovativeness as a way to generate competitive advantage, and provides a framework that can be used to increase supplier-driven innovation.