Buyer power and suppliers' incentives to innovate


Köhler, Christian ; Rammer, Christian


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URL: https://ub-madoc.bib.uni-mannheim.de/32560
URN: urn:nbn:de:bsz:180-madoc-325603
Document Type: Working paper
Year of publication: 2012
The title of a journal, publication series: ZEW Discussion Papers
Volume: 12-058
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: L11 , O31,
Subject headings (SWD): Deutschland , Nachfragemacht , Lieferanten-Kunden-Beziehung , Innovation , Lieferant , ökonomischer Anreiz
Keywords (English): Innovation , Buyer power
Abstract: Buyer power is widely considered to decrease innovation incentives of suppliers. However, there is little empirical evidence for this statement. Our paper analyses how buyer power influences innovation incentives of upstream firms while taking into account the type of competition in the downstream market, namely price and technology. We explore this relationship empirically for a unique dataset containing 1,129 observations of German firms from manufacturing and service sectors including information on the economic dependency of firms from their buyers. Using a generalised Tobit model, we find a negative effect of buyer power on a supplier’s likelihood to start R&D activities. This negative effect is mitigated if the supplier faces powerful buyers operating under strong price competition. There is also weak evidence for a negative effect of buyer power on suppliers’ R&D intensity if the powerful buyer operates under strong technology competition.

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Köhler, Christian ; Rammer, Christian (2012) Buyer power and suppliers' incentives to innovate. Open Access ZEW Discussion Papers Mannheim 12-058 [Working paper]
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