Supplier Innovativeness And Supplier Pricing: The Role Of Preferred Customer Status

In this article, we study the antecedents of supplier innovativeness and supplier pricing. Based on an extensive literature review, we identify different types of antecedents: (1) 'technical' antecedents, which include the capabilities of suppliers to innovate (such as their level of R&D investment) and (2) 'behavioural' antecedents, which focus on the position of the buyer as a supplier's preferred customer. We hypothesise that the two antecedents influence supplier innovativeness in a positive way. Furthermore, we analyse supplier pricing behaviour. We assume that suppliers' awareness of their capabilities to innovate might provoke them to charge unfair prices, while preferred customer status may reverse this tendency and lead to more benevolent supplier pricing behaviour. We test the conceptual framework using a sample of 166 buyer-supplier relations. We find out that technical and behavioural antecedents can explain supplier innovativeness to a large extent, with the role of preferred customer status striking out. Remarkably, whereas we expected that suppliers who are involved in innovation would be found to charge higher prices for their contributions to newly developed products, our results show that this effect is not statistically significant. The missing link between supplier pricing and supplier innovativeness can encourage firms to engage in collaborative innovation, at all, because buyers do not need to fear being overcharged. Implementing a preferred customer policy can improve the conditions for innovating with suppliers.