Environmental Factors Affecting Innovation Strategies of Companies: Customers and Suppliers Effect

We aim to identify the effect of customer characteristics, the effect of supplier characteristics and the effect of firm specific features on innovation level of firms. As the dependent variable has binary values, whether the firm makes innovation or not, the effects of independent variables on innovation activities are analysed by using binary logistic regression model. We have the following results from the earlier analysis of the data. The firms’ motivation for innovation is mainly affected by their customer's and supplier's characteristics. Specifically, we found that if the spans of the customer and supplier increase, firms are more likely to innovate. Furthermore, if the turnover is generated by few companies, firms are less likely to make product innovation. Likewise, if the firms have higher number of customers and suppliers, the innovativeness levels of the firms become higher.