Supplying Innovation?: Investigating Impact of Suppliers on Innovation in IT Firms

Although IT has been widely recognized as one of the most important determinants of the innovation in firms yet the determinants of innovation within IT firms are very poorly understood. Higher cooperation with various players is widely believed to be an important determinant of innovation productivity. The players include suppliers, clients, competitors, universities etc. Amongst these supplier is a very intriguing class of partners more so because of its importance for manufacturing firms and almost a negligible presence in IT literature. We attempt to understand what impact a closer cooperation with suppliers has in innovation productivity in IT firms. Literature from traditional manufacturing firms’ domain indicates that suppliers are very integral to innovation processes at a firm. Our research drawing from data of Chinese firms finds that suppliers are indeed a very critical determinant of IT innovation as well. The results from this paper sheds considerable light on suppliers and their integral role for IT firms’ innovation development.