Cooperation with suppliers, firm size and product innovation

The purpose of this paper is to analyze the effect of technological cooperation with suppliers (TCS) and the firm size on propensity to develop product innovations and on propensity to radical innovations.

The study uses data from Business Strategies Survey (ESSE in Spanish). The final sample was composed by 1,952 companies representing the Spanish manufacturing industries. Some control variables were introduced: age, propensity to export and sector technological intensity level. Logistic regression analyses were adopted to analyze the data.

The results indicate that those firms that cooperate technologically with suppliers have a greater propensity for product innovation and, specifying, for radical innovations; and the larger firm size, greater the propensity to product innovations. However, radical product innovations depend of some characteristics of firms and environment.

The sample just focusses on Spanish manufacturing companies. Small firms will benefit more from the TCS.

Some characteristics of firms and environment can originate some rigidity and take a more conservative attitude. In this sense, large and small firms, as well as, the oldest firms have a more conservative attitude when they carry out radical product innovations.

The study contributes to product innovation literature and also to the debate regarding firm size and innovation. It distinguishes between radical and incremental innovations. Indeed, some characteristics of firms (such as size or age) and environment should be considered when the firms carry out the innovation process.