Upgrading Innovativeness of Supply Chain Partners in Asia - A Case Study of SKF in China and Korea

Abstract: The globalized nature of today’s market has put pressure on MNCs to find new ways to survive and innovation has been identified as a key source for improving a MNCs competitive advantage. However, due to the increased complexity of new innovations it is hard for a single MNC to act alone, as such there is a need to leverage external sources of innovation strategically. This thesis builds on previous studies which have identified the ability to use the supply chain for strategic innovation. The purpose of the study is to explore factors that will upgrade the innovativeness of a MNC’s supply chain partners in order to improve the MNCs competitive advantages. The study is based on a theoretical framework that covers supply chain management, knowledge and relationship management and has been conducted through a case study of a Swedish MNC together with its’ suppliers in China and Korea. The findings show that the supplier’s innovative climate and the strategic relations between the supplier and the MNC have a direct impact on the innovativeness. The findings also reveal that a MNC is indirectly able to improve the supplier’s innovative climate through strategic relations.