Strengthening the Innovation Chain: The Role of Internal Innovation Climate and Strategic Relationships with Supply Chain Partners

In this study, we use blended theoretical arguments from resource dependence theory, social capital theory, and the knowledge‐based view to posit that supply chain partner innovativeness enhances a firm's innovation strategy which in turn positively influences innovation performance. In addition, we argue that the effect of supply chain partner innovativeness on product innovation strategy could be further enhanced by innovation climate and having strategic relationships with key supply chain partners. Using data collected from 207 manufacturing firms in Australia, the findings show that key supply chain partner innovativeness has a positive effect on product innovation strategy. Further, the effect of supply chain partner innovativeness on innovation strategy is enhanced when firms have stronger strategic relationships with their key supply chain partners. Finally, we find that the joint influence of innovation climate and strategic relationships with key supply chain partners enhances the effect of supply chain partner innovativeness on innovation strategy. The theoretical and practical implications of the study are discussed.