Joint information sharing governance in buyer-supplier relationships: The role of partnership and monitoring in acquiring useful supplier innovations

Abstract

Joint information sharing is considered fuel for new knowledge creation and innovation. However, within buyer-supplier relationships, this sharing activity has also been found to have a double-edged effect or a dark side. Given this dark side of joint information exchange, buyers may not obtain the desired results, including an increasing number of useful product/process innovations from the supplier. In the worst-case scenario, buyers may even have to face other repercussions in the form of loss of crucial intellectual assets as well as bargaining power. Accordingly, the activity of information exchange targeted at innovating products and processes needs to be governed through appropriate mechanisms to not only prevent all forms of exploitation but also create a productive and healthy relationship between the partners. Against this backdrop, this study aspires to examine the contingent role that partnership and monitoring play in negating the dark side of joint information exchange. Through the analysis of survey responses from 228 large and small manufacturing firms in Germany, we found that the effects of partnership and monitoring vary depending on the type of innovation received from the supplier. These results have important implications for theory and practice. While on the one hand, they fill the much-needed gap of understanding governance mechanisms, on the other hand, they provide managers with an important set of findings that can be used to better manage the process of innovation within dyadic supply chain relationships.