The Effect of Relation-Specific Investments in the Supply Chain Triad on Innovation Performance

Abstract

Using a comprehensive survey, this paper analyzes the effect of committed and heavy supply chain relationships characterized by high levels of relation-specific investments in innovation performance in Hungary, an emerging economy in Eastern Europe. For this research, we carry out a two-step analysis. First, we investigate the effect of Relation Specific Investments (RSI) on four different innovation-related performance dimensions of a focal firm. In contrast to previous research, we did not limit our analysis to the dyadic relationship level, but rather, we analyzed the triadic supply chain relationships. Uniquely, this paper conceptualizes and measures innovation performance in a complex way, both product and process, but also analyzes incremental and radical innovations. As a second step, the effect of internationalization on the focal firm is tested. Triad level RSI has a positive effect on all innovation related performance dimensions. A test of the moderation effect produced mixed results, indicating the need to treat innovation in a complex, sophisticated way in future research.