Enhancing Supplier's Involvement in Startup's Innovation through Equity Offering and Trust Building

Michael Song, Ad de Jong, C. Anthony Di Benedetto, Y. Lisa Zhao

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

External partners, such as suppliers, are important in the case of innovation by entrepreneurial startup firms. Due to their limited resources and liability of newness, these startups must rely on outside partners for resources and legitimacy to succeed and indeed to survive. Yet, few studies have specifically examined, or provided guidance on, how startups can increase supplier involvement in their innovation projects. Drawing from Transactional Cost Economics and supplier involvement literature, this study develops a contingency model, in which supplier's equity share and supplier's trust moderate the relationship of supplier's involvement in a startup's innovation with supplier's specific investment and startup's effort in qualification of supplier's ability. We empirically test the model using data collected from 166 innovation projects of 166 startups. Our results show that supplier involvement is pivotal to startup's product innovation performance, which is consistent with prior literature on supplier involvement. Interestingly, our results further reveal that supplier's specific investment and startup's effort in qualification of supplier's ability lead to higher levels of supplier involvement only when supplier's equity share and supplier's trust are sufficiently high.
External partners, such as suppliers, are important in the case of innovation by entrepreneurial startup firms. Due to their limited resources and liability of newness, these startups must rely on outside partners for resources and legitimacy to succeed and indeed to survive. Yet, few studies have specifically examined, or provided guidance on, how startups can increase supplier involvement in their innovation projects. Drawing from Transactional Cost Economics and supplier involvement literature, this study develops a contingency model, in which supplier's equity share and supplier's trust moderate the relationship of supplier's involvement in a startup's innovation with supplier's specific investment and startup's effort in qualification of supplier's ability. We empirically test the model using data collected from 166 innovation projects of 166 startups. Our results show that supplier involvement is pivotal to startup's product innovation performance, which is consistent with prior literature on supplier involvement. Interestingly, our results further reveal that supplier's specific investment and startup's effort in qualification of supplier's ability lead to higher levels of supplier involvement only when supplier's equity share and supplier's trust are sufficiently high.
LanguageEnglish
Article number1950013
JournalInternational Journal of Innovation Management
Volume23
Issue number2
Number of pages29
ISSN1363-9196
DOIs
StatePublished - Feb 2019

Bibliographical note

CBS Library does not have access to the material

Keywords

  • Supplier involvement
  • Entrepreneurial innovation
  • Transactional cost economics
  • Equity share
  • Supplier trust

Cite this

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title = "Enhancing Supplier's Involvement in Startup's Innovation through Equity Offering and Trust Building",
abstract = "External partners, such as suppliers, are important in the case of innovation by entrepreneurial startup firms. Due to their limited resources and liability of newness, these startups must rely on outside partners for resources and legitimacy to succeed and indeed to survive. Yet, few studies have specifically examined, or provided guidance on, how startups can increase supplier involvement in their innovation projects. Drawing from Transactional Cost Economics and supplier involvement literature, this study develops a contingency model, in which supplier's equity share and supplier's trust moderate the relationship of supplier's involvement in a startup's innovation with supplier's specific investment and startup's effort in qualification of supplier's ability. We empirically test the model using data collected from 166 innovation projects of 166 startups. Our results show that supplier involvement is pivotal to startup's product innovation performance, which is consistent with prior literature on supplier involvement. Interestingly, our results further reveal that supplier's specific investment and startup's effort in qualification of supplier's ability lead to higher levels of supplier involvement only when supplier's equity share and supplier's trust are sufficiently high.",
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Enhancing Supplier's Involvement in Startup's Innovation through Equity Offering and Trust Building. / Song, Michael; de Jong, Ad; Di Benedetto, C. Anthony; Zhao, Y. Lisa.

In: International Journal of Innovation Management, Vol. 23, No. 2, 1950013, 02.2019.

Research output: Contribution to journalJournal articleResearchpeer-review

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T1 - Enhancing Supplier's Involvement in Startup's Innovation through Equity Offering and Trust Building

AU - Song,Michael

AU - de Jong,Ad

AU - Di Benedetto,C. Anthony

AU - Zhao,Y. Lisa

N1 - CBS Library does not have access to the material

PY - 2019/2

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N2 - External partners, such as suppliers, are important in the case of innovation by entrepreneurial startup firms. Due to their limited resources and liability of newness, these startups must rely on outside partners for resources and legitimacy to succeed and indeed to survive. Yet, few studies have specifically examined, or provided guidance on, how startups can increase supplier involvement in their innovation projects. Drawing from Transactional Cost Economics and supplier involvement literature, this study develops a contingency model, in which supplier's equity share and supplier's trust moderate the relationship of supplier's involvement in a startup's innovation with supplier's specific investment and startup's effort in qualification of supplier's ability. We empirically test the model using data collected from 166 innovation projects of 166 startups. Our results show that supplier involvement is pivotal to startup's product innovation performance, which is consistent with prior literature on supplier involvement. Interestingly, our results further reveal that supplier's specific investment and startup's effort in qualification of supplier's ability lead to higher levels of supplier involvement only when supplier's equity share and supplier's trust are sufficiently high.

AB - External partners, such as suppliers, are important in the case of innovation by entrepreneurial startup firms. Due to their limited resources and liability of newness, these startups must rely on outside partners for resources and legitimacy to succeed and indeed to survive. Yet, few studies have specifically examined, or provided guidance on, how startups can increase supplier involvement in their innovation projects. Drawing from Transactional Cost Economics and supplier involvement literature, this study develops a contingency model, in which supplier's equity share and supplier's trust moderate the relationship of supplier's involvement in a startup's innovation with supplier's specific investment and startup's effort in qualification of supplier's ability. We empirically test the model using data collected from 166 innovation projects of 166 startups. Our results show that supplier involvement is pivotal to startup's product innovation performance, which is consistent with prior literature on supplier involvement. Interestingly, our results further reveal that supplier's specific investment and startup's effort in qualification of supplier's ability lead to higher levels of supplier involvement only when supplier's equity share and supplier's trust are sufficiently high.

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KW - Transactional cost economics

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