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

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  • HOLGER SCHIELE

    ()
    (University of Twente, the Netherlands)

  • JASPER VELDMAN

    (University of Twente, the Netherlands)

  • LISA HÜTTINGER

    (University of Twente, the Netherlands)

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    Abstract

    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.

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    Bibliographic Info

    Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal International Journal of Innovation Management.

    Volume (Year): 15 (2011)
    Issue (Month): 01 ()
    Pages: 1-27

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    Handle: RePEc:wsi:ijimxx:v:15:y:2011:i:01:p:1-27

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    Web page: http://www.worldscinet.com/ijim/ijim.shtml

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    Related research

    Keywords: Open innovation; early supplier integration; pricing; preferred customer; customer attractiveness; supplier innovativeness;

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    Cited by:
    1. Horn, Philipp & Scheffler, Paul & Schiele, Holger, 2014. "Internal integration as a pre-condition for external integration in global sourcing: A social capital perspective," International Journal of Production Economics, Elsevier, vol. 153(C), pages 54-65.

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