The influences of Internet-based collaboration and intimate interactions in buyer-supplier relationship on product innovation

With the increasing importance of the Internet in connecting buyer and suppliers, how does Internet-based collaboration affect firm product innovation? This study proposes that Internet-based collaboration positively affects product innovation performance of supplying firms, but too much dependence on it impedes product innovation. That is, Internet-based collaboration has an inverted U-shaped relationship with product innovation performance of supplying firms. This study further posits that face-to-face interaction between buyer and supplier strengthens the positive effect of Internet-based collaboration on product innovation, such that when the degree of face-to-face interaction is high, Internet-based collaboration is associated with better innovation performance. These propositions are tested using data from an original survey data on buyer-supplier relationships in China. The results provide strong supports for the predictions of hypotheses.