Sourcing for high technology innovation: Engaging to absorb knowledge pre-contract

Abstract

This study investigates how firms can identify, access, and capitalize on viable innovation in the high technology supply market during the pre-contractual phase of relationships. The industrial landscape is changing rapidly due to technological advancements like automation and electrification, leading traditional industries to explore new avenues for knowledge and partner selection. However, identifying, assessing, and trusting suppliers with whom firms can enter a relationship is a complex task. Therefore, the study adopts the absorptive capacity perspective for conceptualizing the supplier selection process, focusing on the pre-contractual phase. Based on two in-depth case studies in the automotive industry, we find that supplier selection can be assisted with higher levels of engagement, coordination, and alignment internally with different firm stakeholders and externally with the larger supply market. This study illustrates that new actors bring disruptive innovation into the automotive industry, and the knowledge is absorbed during supplier selection, facilitated by fostering higher levels of engagement, coordination, and alignment both internally among various stakeholders within the firm and externally within the broader supply market. This study significantly advances the understanding of supplier selection practices in the context of high technology innovation. The theoretical contributions made through our empirical investigations enhance the knowledge base on sourcing strategies, shed light on the complexities of supplier selection, and offer practical implications for firms aiming to navigate the rapidly changing landscape of technological advancements.