OEM implementation of supplier-developed component innovations: the role of supplier actions

For suppliers to secure a positive return on their investment in the creation of component innovations, they must ensure that original equipment manufacturers (OEMs) implement these component innovations. The objectives of this study are to (1) identify the activities that suppliers undertake to foster innovation implementation, (2) articulate the theoretical mechanisms that mediate the impact of these activities on innovation implementation, and (3) establish the inter-related effects of these mediating theoretical mechanisms on innovation implementation. The results from a survey of 173 supplier–OEM dyads reveal that functional advantage is the theoretical mechanism that mediates the impact of two supplier actions—knowledge acquisition and installation support—on innovation implementation. The results also show that reputational advantage mediates the effect of innovative OEM endorsement and that relational advantage mediates the effects of supplier asset specificity and supplier innovativeness on innovation implementation. In terms of the inter-related effects of the mediating mechanisms on innovation implementation, the results indicate that relational advantage complements the positive impact of functional advantage on innovation implementation. In addition, the results reveal that innovation implementation has a positive impact on the financial performance of component innovations.