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Process innovation similarity with suppliers and bullwhip effect

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  • Qian, Zishun
  • Yan, Tingting
  • Li, Jianbin

Abstract

When a firm and its suppliers engage in similar process innovation, does this affect the firm's operational performance? Although the economic value of process innovation is widely recognized, it remains unclear how process innovation similarity between a firm and its suppliers affects a firm's operational performance. Drawing on organizational learning theory, this study proposes a potential benefit of process innovation similarity in reducing the intra-firm bullwhip effect, defined as the deviation in production variability within a firm in response to demand variability. Using a two-way fixed effect model to analyze a secondary dataset, we find that process innovation similarity with suppliers reduces intra-firm bullwhip, particularly in firms with higher supply base complexity. Moreover, enhanced process integration and improved operational efficiency are likely underlying mechanisms through which process innovation similarity mitigates the intra-firm bullwhip. Our study offers new insights into how firms can benefit from process innovation similarity with the supply base in reducing the bullwhip effect.

Suggested Citation

  • Qian, Zishun & Yan, Tingting & Li, Jianbin, 2025. "Process innovation similarity with suppliers and bullwhip effect," International Journal of Production Economics, Elsevier, vol. 289(C).
    • Handle: RePEc:eee:proeco:v:289:y:2025:i:c:s0925527325002853
    DOI: 10.1016/j.ijpe.2025.109800
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