The impact of innovation strategies on the relationship between supplier integration and operational performance

The purpose of this paper is to investigate whether implementing certain innovation strategies and adopting a portfolio of innovations improve the relationship between supplier integration (SI) and operational performance (OP). The authors test several research hypotheses by using a data set of 173 firms. Data were collected by interviewing managers, presidents and directors, from ten European countries and across nine different industries. The authors use structural equation modeling to estimate the relationships between SI and OP. The authors apply multi-group analysis to test the effects of certain innovation strategies and a portfolio of innovations on these relationships. Findings – The authors show that SI improves internal OP but has no direct effect on external OP. The latter can only be improved through well-performing internal operations. The adoption of an incremental product innovation strategy improves the relationship between internal and external OP and leads to more effective SI. Other types of innovations do not help in improving the impact of SI on OP. Finally, the adoption of a portfolio of innovations does not enhance the influence of SI on OP. Thus, firms should focus on a small number of innovations rather than expanding their innovation portfolio to improve the effectiveness of SI on OP. Practical implications – When firms aim to improve the impact of SI on OP, they should concentrate on incremental product innovations. Other strategies obtained by combining process, incremental and radical innovations are not adequate for that purpose. An expanded portfolio of innovations does not improve the effect of supplier innovation on OP. This research suggests how the impact of SI on OP can be improved by adopting certain innovation strategies and without diversifying the portfolio of innovation projects.