Cross-Tier Supplier Collaboration on Buyer Firm Innovation Performance: The Moderating Role of Geographic Distance and Relationship Longevity

Abstract

The supply base is increasingly recognized as a critical enabler of firm innovation. While existing research has linked direct collaboration with suppliers to superior innovation performance, it has largely overlooked the relational dynamics occurring further upstream in the supply chain. We introduce the concept of cross-tier supplier collaboration—strategic alliances between first- and lower-tier suppliers (i.e., suppliers' suppliers) within a focal firm's supply chain focused on sharing or co-developing resources—and explore how this not-so-visible collaboration serves as a source of superior innovation for the buyer firm. Drawing on the extended resource-based view (ERBV), we construct and analyze a large panel dataset compiled from multiple archival data sources of public manufacturers, their first-tier suppliers, and lower-tier suppliers. The empirical analysis reveals that cross-tier supplier collaboration enhances buyer firm performance in terms of innovation efficiency. This positive relationship is strengthened when first- and lower-tier suppliers have long-term relationships but is weakened when these suppliers are geographically distant from each other. This study and its discoveries make a valuable contribution to the theories and literature on extended supply base and firm innovation while also providing practical guidance for managerial sourcing decisions.