Product and Process Innovation: Evaluating Supplier Diversity and Geographic Proximity in Importing by Non‐MNEs

ABSTRACT This work aims to clarify the role of intermediate imports on the innovation performance of non‐multinational enterprises (non‐MNEs) by examining the geographic proximity and diversity of international suppliers. Firstly, it has been argued that importing from nearby suppliers will contribute more to innovation performance than distant suppliers. Secondly, it is postulated that importing from several foreign suppliers will contribute more to innovation performance than importing from only one supplier. The analysis was conducted in the country of Spain, where, as in many other developed countries, intermediate imports have registered an upward trend in recent years. Using the ESEE (Spanish Survey on Business Strategies) database from the period 2006 to 2018, a joint analysis of product and process innovations was conducted. The empirical findings of 2000 Spanish non‐MNEs support the theoretical arguments. The results highlight the relevance of studying both product and process innovations and the importance of knowing their causes to improve innovation performance. Moreover, the results provide a basis for understanding the importance of geographic location when choosing foreign suppliers.