The Bright Side & Dark Side of

Embedded Ties in B2B Innovation

Group 10
Based on Research Paper by-
Corine S. Noordhoff
Kyriakos Kyriakopoulos
Christine Moorman
Pieter Pauwels
Benedict G.C. Dellaert
Do embedded ties with customers help or hurt
supplier innovation?
Embedded ties interact with supplier and customer
innovation knowledge to influence supplier innovation

Role of relational & governance mechanism

Embedded ties are defined as a close and reciprocal
relationship between a customer firm and a supplier
firm (Uzzi & Lancaster, 2003)
Theory
The conflicting effects of embedded ties on innovation
The impact of supplier and customer innovation knowledge
on supplier innovation
Embedded ties strengthen impact of supplier innovation
knowledge
When embedded ties weaken impact of customer innovation
knowledge
When embedded ties strengthen impact of customer
innovation knowledge
Impact of innovation on supplier performance


The conflicting effects of embedded ties on
innovation
Close and reciprocal relationship between customer
firm and supplier firm

Improve relational and business process outcomes

Extend of firms building innovation strategies

Does embedded ties help or hurt supplier innovation?

Embedded Ties
Supplier Innovation Knowledge: The Bright Side
(Hypothesis #1)
Motivation for supplier to own market knowledge
Early Learning Opportunity for supplier to test its
ideas early in innovation process

Customer Innovation Knowledge: The Dark Side
(Hypothesis #2)
Increased worry of partner opportunism
Increased perceptions of knowledge redundancy



Customer Innovation Knowledge: The Bright Side
Long term relationship(Hypothesis #3)
Less worry of opportunism
Increase partners confidence in quality of knowledge

Relationship Formalization(Hypothesis #4)
Governance mechanism for Transparency
Reduce likelihood of partner knowledge redundancy

Customer Relationship specific investments
(Hypothesis #5)
Reduce customer Opportunism
Quality of customer insights improved








Impact of innovation on supplier performance
Nomological Validity of predicted relationships

Prior result linked to innovation to firm performance

Relationship between supplier innovation and
performance
Method of Study
Cross Sectional Survey methodology
SAMPLE

MEASURES

MEASURE VALIDATION

COMMON METHOD BIAS TEST

MODEL AND ESTIMATION

Results
Tests of Hypothesized Relationships
Wald Test of Model
Hypothesis (H1) predicts positive interaction between SIK and ET
Hypothesis (H2) predicts negative interaction between CIK and ET
Hypothesis (H3) predicts positive and significant effect of ET x CIK x LENGTH
Hypothesis (H4) predicts positive and significant effect of ET x CIK x FORM
Hypothesis (H5) predicts positive and significant effect of ET x CIK x CINVEST

Mediation Process Validation : The Role of knowledge redundancy and Opportunism
Japs Supplier Opportunism Scale
Effect of ET x CIK interaction on supplier innovation
Effect of ET x CIK interaction on length , formalization and customer investments

Supplier Innovation and Firm Performance
Supplier Innovation has direct positive effect on supplier strategic advantage
Supplier Innovation has direct negative effect on supplier financial performance
Supplier Strategic Advantage has direct positive effect on supplier financial
performance
Positive Total effect of innovation on financial performance



Discussion
The effect of embedded ties

Opportunism as a dark side mechanism

Knowledge Redundancy as a dark side mechanism

The effect of supplier innovation knowledge

Innovation and co-creation

Role of networks

Toward a theory of innovation relationships

Generalised Findings
Managerial Implications
Manage all facets of joint innovation relationships

Invest in supplier innovation knowledge

Reduce the risks of working with smart customer

Manage the benefits of Time

Add value as a lead user

Look to the strategic benefits of joint innovation
Conclusion
Joint Innovation increasingly common strategy
Important contingencies determine when building
embedded relationships with customers pays off-
Customers Innovation Knowledge
Relational and Governance safeguards by suppliers
Level of relationship formalization and investments
Customer Opportunism
Length and formalization of relationship
Owning Innovation Knowledge is always a benefit for
suppliers

THANK YOU