Stimulating supplier innovation in a complex and regulated business environment - a dyadic case study

Suppliers have been recognised as critical sources for innovation in the literature. However, less consideration has been given to the suppliers' viewpoint on what motivates them to share their best knowledge with the buying company. Here, we empirically identified ways to increase suppliers' willingness to contribute to the buyer's innovation process, in complex and regulated business environments, where the buyer is highly innovation oriented, but simultaneously reliant on external resources in R&D. The paper is based on an in depth embedded case study, with dyadic data collection. The data was collected during 18 semi-structured interviews at the case company, in the nuclear power industry, and its three key suppliers of mechanical engineering and manufacturing. The results show that mutual understanding of each counterparts' interests and business, systematic project and knowledge management practices, a proper balance between project control and freedom to innovate and buyer's sufficient technical know-how are decisive for successful supplier innovation. Furthermore, suppliers can be highly committed to collaboration event though they are not fully satisfied with the buyer. Six propositions are presented based on the empirical findings and the enfolding theory.