The effects of inter-industry and country difference in supplier relationships on radical innovations

Abstract

Radical innovations are critical driving forces for firms to engage in corporate growth and new business development. Innovating firms are increasingly generating new knowledge in collaboration with partners. In this paper, we analyze how the knowledge differences between the innovating firms and their suppliers in Canada are likely to result in radical innovations that are new to the world. The knowledge difference is decomposed into two dimensions: the industrial dimension and the geographic dimension in national context. Using the Canadian Innovation database, we found the inter-industry difference has a positive effect and the country difference has a negative effect on the likehhood of generating radical innovation. The findings of is paper suggest t at or generating r ica innovation, it is important not only to search for suppliers from different industries to get access to various complementary external knowledge sources but also to find suppliers from the same or nearby countries for the sake of communication and coordination.