Managing Supplier Innovation: A Case Study of the Wind-Turbine Industry

Abstract: Having reliable supplier relationship is one of the main sources for companies’ open innovation strategy, exploring and raising the level of innovativeness. Consequently, managing open innovation is a crucial challenge for managers, particularly in many high tech industries, where the interests of buyer and supplier change constantly. Moreover, in line with modularization process of components in an almost matured wind turbine industry, it is essential to understand that configuring the supplier network is a dynamic process where suppliers always strive for climbing up the value chain for gaining larger volume of business. Hence, managers must govern buyer-supplier relationship by utilizing various tools such as appropriate safeguards as well as well-defined management structure in order to minimize the risks, reach outside the firm’s internal boundaries, create initiatives for innovation generation, have the right posture to each supplier relationship and finally absorb innovation opportunities in each sourcing activity by solving problems with various degrees of complexities through interaction across distinct relationships with various degrees of innovation potential. Additionally, a suitable sourcing strategy is a pre-condition mechanism to efficiently absorb all sources of innovation, devote the limited resources in most efficient way, become a pioneer in term of innovation generation in the entire value chain and finally achieve sustainable competitive advantage. Hence, in the buyer’s dominated wind turbine industry, managers shall take the opportunity within their outsourcing strategy framework to identify new potential suppliers for involvement in an early stage of innovation generation process and thus absorbing new ideas for innovation generation in the entire value chain.