Supplier traits for better customer firm innovation performance

Previous research on embedded ties with suppliers in an innovation context has ignored the need for customer firms to assess and select suppliers on the basis of market orientation strategies and relationship marketing attributes. To address this void, this study investigates the effects of suppliers' downstream customer orientation and supplier–customer homophily (i.e., similarity of the supplier and the customer) on the customers' innovation performance. Data pertaining to new product development projects with contributions from supplier firms was collected on both sides of the supplier–customer dyad. The analysis shows that downstream customer orientation and supplier–customer homophily have a significant impact on the customer firms' new product efficiency (i.e., project cost and project speed) and new product effectiveness (i.e., innovativeness), which in turn positively influence new product performance in terms of profitability, market share, and growth.