Can firm innovativeness affect performance? The role of external involvement

Abstract

This research attempts to complement ongoing discussions on the effects of firm innovativeness on performance and explain the role of external involvement in the relationship between firm innovativeness and performance in B2B settings. More importantly, we investigate the effect of supplier involvement, customer involvement, and the interaction of both in the process of innovativeness, and explain how customer involvement and supplier involvement take effects in B2B settings. Using the perspective of organizational information processing theory, we apply the hierarchical regression to examine the moderation effects of external involvement on the relationship between firm innovativeness and performance. Findings show that in B2B settings customer involvement strengthens the positive effects of firm innovativeness on performance, whereas supplier involvement weakens the positive effects of firm innovativeness on performance. We also find that the interaction of customer involvement and supplier involvement weakens the positive effects of firm innovativeness on performance in B2B settings. These conclusions contribute to the knowledge of external involvement and firm innovativeness in B2B settings, and provide theoretical contributions and managerial insights for both academics and practitioners.