Supply Chain Contingencies: The Effects of Up-Stream Directives on Supplier's Innovation Performance

Firms are increasingly organized in supply chains to increase value at less cost to the supply chain as a whole. Recently, firms have expanded their routine processes of the supply chain to innovation processes. An improved transfer of information and collaboration across partners augments innovation in the supply chain. Downstream partners provide timely information about customer preferences and new trends. Upstream partners can provide knowledge of new technological solutions earlier. The coordination of the new product development process along the supply chain is difficult. Suppliers face upstream directives set by original equipment manufacturers who strive to improve the coordination of multiple suppliers' innovation components; yet, the performance implications of upstream directives are unexplored. This article opens the black box of upstream directives. It shows that upstream directives can improve innovation although at casual glance might distract from creative work and as such hamper innovation.