Overlapping suppliers with competitors: a double-edged sword for firm innovation

Abstract

Purpose This study examines a prevalent yet under-researched phenomenon in supply chain management – the presence of suppliers shared with competitors – and its implications for manufacturer innovation. Through the theoretical lens of brokering behavior, we explore the effect of overlapping suppliers on focal manufacturers' innovation and the moderating role of their relationship with the focal manufacturer. Design/methodology/approach Drawing on panel data on 907 North American manufacturers, comprising 5,428 firm-year observations from 2003 to 2023, we construct a dataset of focal firms and their competitors' first-tier supplier networks and quantify the proportion of suppliers that overlap with those of each manufacturer's competitors. We employ a zero-inflated negative binomial regression to conduct our empirical analysis. Findings The proportion of overlapping suppliers with competitors has an inverted-U-shaped effect on manufacturers' innovation, balancing the benefits of conduit and tertius iungens against the costs of tertius gaudens behavior. The duration of the buyer-supplier relationship and the partnership between the manufacturer and its overlapping suppliers moderate the inverted U-shaped relationship. Specifically, a longer relationship flattens the curve, whereas a stronger partnership shifts the peak upward and to the right and steepens the curve. Originality/value We contribute to the literature on supply network innovation by offering new insights into the inverted-U-shaped effects of overlapping suppliers on manufacturer innovation from a brokering perspective. We also contribute to the network broker literature by uncovering the role of brokering behavior in other alters.