Building supply chain relational capital: The impact of supplier and customer leveraging on innovation performance

Leveraging suppliers and customers, in order to build closer inter-organisational ties, is often highlighted as a competitive priority in global supply chains (SCs). The creation of relational capital (RC) within a firm is a well-researched concept; however, few studies investigated the customer/supplier leveraging mechanisms that build relational capital in SCs. In this study, we propose a model to examine the effects of supplier and customer leveraging on the creation of RC, which impacts innovation performance (IP). The empirical data for this study were drawn from the fifth round of the Global Manufacturing Research Group survey project (data collected from 557 manufacturing plants, in 10 countries). The hypotheses were empirically tested using structural equation modelling. The findings highlight the importance of SC leveraging towards building RC, in order to enhance innovation performance. The results show that supplier and customer leveraging positively impact the RC. In turn, the RC has a significant impact on IP. We found that the effect of SC leveraging directly and indirectly (partial mediated by RC) associates with the innovation performance. These findings are underpinned by the relational view, which argues that the relationships between firms are an important unit of analysis for understanding competitive advantage.