The impact of supplier innovativeness, information sharing and strategic sourcing on improving supply chain agility: Global supply chain perspective

Abstract

This study investigates the impact of supplier innovativeness on supply chain collaboration and agility. The paper applies the diffusion of innovation theory to explain how supplier innovativeness has been diffused into the supply chain and how global sourcing moderates the relationship among supplier innovativeness, information sharing, strategic sourcing, and supply chain agility. This research analyzes 272 survey responses from supply and purchasing executives and managers in the manufacturing industry. The research results indicate that supplier innovativeness positively affects information sharing and supply chain agility but has no significant relationship with strategic sourcing. Both information sharing and strategic sourcing play a positive role on improving supply chain agility. This study also offers empirical evidence that impact of supplier innovativeness, information sharing and strategic sourcing on supply chain agility in domestic sourcing become stronger that in global sourcing. This research provides meaningful insights for academics and industry by filling an important gap in the literatures and showing managers the positive impact of supplier innovativeness in order to facilitate collaborations in the supply chain.

Introduction

Innovating in products, organizations, and supply chains is crucial to success and competitive advantage. In supply chains, organizations expect their supply partners to adopt innovation from internal motivation in order to produce various benefits. However, organizations in supply chains also attempt to drive innovation externally, improving the firms’ core competencies and performance and reducing investments and Research & Development (Ellis et al., 2012, McIvor and Humphreys, 2004). More importantly, while suppliers play an important role in effective supply chain management, suppliers are becoming increasingly responsible for encouraging innovation and innovativeness practices such as product and new product development and alliances for fostering innovation, design, and process innovation (Azadegan and Dooley, 2010).

Buyer firms in the supply chain attempt to encourage suppliers to adopt innovation, but supplier innovativeness faces many challenges, such as customer power in the supply chain, cultural and geographical differences, increased business risks, and coordination costs (Henke and Zhang, 2010). The responsibilities that which organization is in charge for driving innovation in the supply chain have created issues between suppliers and buyers regarding that innovation results that benefit supply chain relationships. In addition, forcing innovation on outsourcing companies via buyer companies generates the risk of losing control and crucial knowledge and of reducing capacity (Jean et al., 2012). Suppliers recognize the drawbacks of adopting innovation in the supply chain, which appear to be greater than the benefits suppliers and buyers could hope to gain.

Supplier innovativeness is defined as suppliers’ ability to develop new processes or introduce new products (Azadegan and Dooley, 2010). Supplier innovativeness generates various benefits for manufacturers. Supplier innovativeness positively impacts manufacturers’ performance in cost, quality, delivery, flexibility, and product development (Azadegan, 2011). Supplier innovation helps improve manufacturers’ product technology (Gianiodis et al., 2010). Supplier innovative capability has a significant purchasing role in product development (Wynstra et al., 2003). Supplier innovativeness also increases information processing capability and information fit in the supply chain (Stock and Tatikonda, 2004). Manufacturers with innovative suppliers are better able to respond to changes in environments (Swink and Mabert, 2000). Supplier innovativeness provides various benefits to manufacturers. By examining these benefits throughout the whole supply chain, this research investigates the impact of supplier innovativeness on supply chain collaboration activities such as information sharing, supply chain procurement like strategic sourcing, and supply chain agility.

Supplier innovativeness has expanded throughout the whole supply chain system. However, this innovativeness has been adopted by suppliers as well as buyers and manufacturers at different rates. Therefore, this study applies the diffusion of innovation theory (DOI) to explain the impact of supplier innovativeness in the supply chain. According to Rogers (1995), innovations have been transferred in the system, and individuals are now willing to adopt them. He divides innovators into early adopters, early majority, late majority, and laggards according to their adoption speed. Following this theory, this research applies the information system diffusion model to establish a research framework for the impact of supplier innovativeness on the supply chain system with information sharing, strategic sourcing and supply chain agility.

Prior studies have discussed the impacts of supplier innovativeness on firms. Several studies show the positive link between supplier innovativeness and manufacturers’ performance and relationship performance (Azadegan and Dooley, 2010, Chiesa et al., 2004, Jean et al., 2012, Stock and Tatikonda, 2004). Unlike the previous research, this study attempts to fill the gap in the literature by investigating the role of supplier innovativeness in the whole supply chain, including aspects such as supply chain agility, buyer–supplier relationship, and supply chain collaboration and cooperation. This study examines the relationships among those supply chain practices based on the diffusion model to identify the antecedents of improved supply chain agility in terms of information sharing and strategic sourcing. More importantly, this research also asks how global sourcing influences information sharing and strategic sourcing to improve supply chain agility.

This research contributes to both scholarship and industry. First, this study fills a gap in the operations and supply chain management literature by setting up a research model of the impact of supplier innovativeness on supply chain practices based on the diffusion of innovation theory. Second, the study applies this research framework to global sourcing by investigating its moderating effects on the relationships among supplier innovativeness, information sharing, strategic sourcing, and supply chain agility. Finally, this study informs managers that the impact of supplier innovativeness is positively diffused throughout the supply chain and that manufacturers need to help their suppliers adopt innovation in order to improve supply chain collaboration and agility.