Emerging Economies of Southeast Asia: Achieving and increasing radical innovations through collaborating with buyers and suppliers by fostering trust: the Case of Viet Nam

Abstract

ABSTRACT Radical innovation in product and services have become more important for firms to gain competitive advantages and stay ahead in the competition. In the supply chain, more and more suppliers endeavour to collaborate with buyers in order to develop new products and services. Trust is believed as a determinant of successful collaboration for innovation. Therefore, the purpose of this research note is to investigate the relationship between suppliers’ trust in buyers and supplier-buyer collaboration and how this relationship relates to radical innovation in the context of a developing country. This research note is based on a quantitative approach to analyse the data of 225 firms in Vietnam- as a developing country. The proposed model is tested with exploratory factor analysis (EFA), confirmatory factor analysis (CFA) and structural equation modelling (SEM). Findings show that suppliers’ trust in buyers can facilitate information sharing, joint decision making, and benefit/risks sharing among them. Furthermore, our results indicate that collaboration between supplier and buyers in sharing information, joint decision-making process can result in radical innovation. The results also confirmed that supplier’s trust in buyers can lead to radical innovation through information sharing and joint decision making. The findings of this study have an implications for developing the long-term relationship between suppliers and buyers and help firms to achieve radical innovation in emerging economies. By having trust in buyers, suppliers can save time and efforts in communicating with buyers. Also, managers can encourage buyers to take part in the creative process to develop new products and services and help firm to gain the sustainable competitive advantages. This study also contributes to the literature by providing a theoretical model of successful supply chain collaboration and radical innovation, which can be applied in the context of developing countries. This study investigates the role of supplier’s trust in the supplier-buyer collaboration in the context of a developing country to achieve radical innovation. Our study emphasizes the role of trust in the implementation process of collaboration in which suppliers and buyers share information, risk, and benefit and jointly make decisions on developing new products and services.