Use or nonuse? The role of possessed power and realized power on innovation

Abstract

Power is a central element and salient research topic within supply chain management, and it is also regarded as a key attribute influencing innovation in the supply chain. However, there are still disputes about the consequences of power and whether it should be used. Given this, we examine the relationship between power and innovation, and attempt to explore how to use power to improve innovation performance. In order to better understand power and its influence, we distinguish between possessed and realized power. Using the panel data collected in the Chinese high-technology companies (2014–2018) and controlling for contingencies, we found that there are positive relationships between possessed power and exploitation, exploration, especially the collaborative innovation of them, and these relationships are negatively moderated by financial slack. Surprisingly, we find inverted U-shaped relationships between realized power and exploitative, explorative and collaborative innovation. That is, the excessive use of power begins to show diminishing innovation returns. These findings offer new insights into power and its use in supply chain relationships by distinguishing possessed and realized power, and enrich the literature on supply chain management and innovation.