Strategic Suppliers' Technical Contributions to New Product Advantage: Substitution and Configuration Options

While several studies have identified different firm-specific resources that influence new product advantage, comparatively little research has explored the contribution of supplier’s technical capabilities. Combining resource-based and relational perspectives, in this study a theoretical model is developed that investigates how strategic suppliers’ technical capabilities impact firms’ new product advantage and how firms combine different resources to gain this advantage. The model is tested using detailed survey data collected from 153 inter-organizational NPD projects in the United Kingdom within which a strategic supplier had been extensively involved. Empirical results support our research hypotheses. First, we find that strategic suppliers’ task performance has a significant positive impact on new product advantage. Next, we show that while strategic suppliers’ technical capabilities have a positive influence on supplier task performance, the suppliers’ problem-solving capabilities moderate this relationship. This finding illustrates that suppliers with underdeveloped technical capabilities, often due to a resource constraint, adapt by improving their problem solving capabilities to substitute for their lack of advanced technology. Finally, our data supports our hypotheses related to the positive relationship between absorptive capacity and new product advantage, and the proposed negative moderation of supplier technical capability on this relationship. Based upon these findings, we encourage managers to recognize that strategic suppliers’ with greater technical capabilities perform better regardless of their problem-solving capabilities, but that strategic suppliers with lower technical capabilities may partially compensate (substitute) for their lack of advanced technology, if they have developed their problem solving capabilities. Furthermore, we find that the firm’s development of relationship-specific absorptive capacity is much more important when a strategic supplier is less technically capable. In other words, a firm’s relationship-specific absorptive capacity can, potentially, substitute for low supplier technical capabilities. On the other hand, high supplier technical capabilities do not affect the impact of firms’ absorptive capability on new product advantage. Our findings reinforce recent calls for research on how firms and suppliers can combine different capabilities to achieve superior performance within inter-organizational NPD projects.