Drawing on absorptive capacity theory, this study explores the impacts of supply visibility and demand visibility on product innovation (i.e. exploratory and exploitative innovation), and it examines how supplier integration, customer integration and internal integration mediate these impacts.
The authors employ empirical survey data from 200 Chinese manufacturers and use structural equation modeling to test the proposed relationships.
The results show that supply visibility is positively related to supplier integration and internal integration and that demand visibility is positively related to customer integration. Furthermore, only customer integration and internal integration positively relate to exploratory and exploitative innovation.
First, this study emphasizes that supply visibility and demand visibility are important sources of a firm's innovation performance and that supply chain integration increases focal firms' capability of exploiting information and facilitates product innovation. Second, the study shows that supply visibility and demand visibility have distinct effects on three dimensions of supply chain integration and exploratory and exploitative innovation. The study also provides significant managerial guidelines for effectively leveraging supply chain visibility and integration in the promotion of product innovation.
