Impact of competition in supplier networks on buyer’s recombinant creation capability

Purpose Buyer firms increasingly pursue recombinant creation, the ability to create innovative products and services by combining existing knowledge, technologies, or resources in novel ways. These firms source and recombine ideas from their suppliers to enhance this capability while maintaining a complex competitive supplier network. This study examines the impact of supplier–supplier (S–S) and buyer–supplier (B–S) competition within such networks on a buyer firm’s recombinant creation capability. Design/methodology/approach Novel metrics are proposed to quantify S–S and B–S competition. Drawing on a dataset of 517 publicly listed Chinese firms across five manufacturing industries from 2000 to 2016, this study conducts empirical analyses using two-way fixed-effect negative binomial (NB) regressions. Findings The analyses reveal a positive effect of S–S competition and a U-shaped effect of B–S competition on a buyer firm’s recombinant creation capability. Furthermore, this study finds a negative interaction effect between the two on a buyer firm’s recombinant creation capability at low levels of B–S competition. Originality/value This study enriches the literature on supplier networks and innovation by revealing the nuanced and complex mechanisms through which S–S and B–S competitions shape a firm’s ability to integrate and recombine diverse knowledge. It also advances the “knowledge recombination perspective” by identifying supplier network competition as a critical determinant of a buyer firm’s recombinant creation capability, which is essential for achieving breakthrough innovations.