Innovation Generation in Business-to-Business Markets: A Conceptual Model and Research Propositions

Researchers have always been interested in understanding the various dimensions of innovation generation. Although innovation was originally thought to originate from the producer, in recent years, a number of researchers have questioned the traditional notion of a producer as the sole originator of innovations. The locus of innovation is now thought to more widely encompass producers, resellers, consumers, and others publics associated with an organization. Innovation generation has been recognized as an outcome of interaction betweenthe firm and various entities outside the firm. Supplier involvement and alliances are increasingly seen as a route to faster innovation generation in business markets. Clearly, business-to-business settings provide an important opportunity for interaction between buyer and seller. Despite this realization, there has been no formal research focusing on innovation generation in businessto-business relationships. To alleviate this important gap in the literature, this article focuses on developing a conceptual model of innovation generation in business-to-business markets. We advance several research propositions based on an integration of a wide array of literature in related areas. We discuss the managerial implications of these propositions and delineate future research directions. INNOVATION GENERATION IN BUSINESS-TO-BUSINESS MARKETS: A CONCEPTUAL MODEL AND RESEARCH PROPOSITIONS INTRODUCTION The role of innovation in organizational growth and survival has been well recognized by companies, trade organizations, and government agencies. Therefore, understanding the various dimensions of innovation has been an important area of scholarly inquiry and managerial writing for a long time. A significant domain of that investigation has focused on factors influencing innovation generation and the innovation generative process itself (e.g., Chandrasekaran et al. 1999). Although innovation was originally thought to be, and conceptualized as, originating typically from the producer, in recent years, a number of researchers have questioned the traditional notion of a producer being the sole originator of innovations. For example, von Hippel (1988) demonstrates that customers/users can be an important source of innovation. More broadly, the locus of innovation is now thought to be much wider to encompass producers, resellers, consumers, and others publics associated with an organization (Hakansson 1987; von Hippel 1994). Innovation has been recognized as an outcome of interaction between various entities in the form of supplier customer relations and other forms of alliances (Dodgson and Rothwell 1994; Arujo 1998). In other words, innovation is now recognized as an interactive endeavor in contrast to the traditional lone innovator in the Newtonian mould (Hakansson 1987; Nonaka and Takeuchi 1995). Innovation generation in an increasingly complex technological regime is seen as a multidisciplinary activity spanning a multiplicity of organizations, circumstances, and settings (LeonardBarton 1995; Nonaka and Takeuchi 1995). Innovation generation and knowledge creation is widely recognized as consisting of invention or idea generation followed by introduction and exploitation into a socially usable product or process (Leonard-Barton 1995; Nonaka and Takeuchi 1995; Roberts 1987; Tushman and Moore 1988). A substantial part of the innovation process occurs in business markets between buyers/users and sellers/manufacturers (Hakansson 1987; Lundvall 1985a and 1985b; von Hippel 1988) in the supply chain.