Can supplier innovations substitute for internal R&D? A multiple case study from an absorptive capacity perspective

Matti Pihlajamaa, Riikka Kaipia, Julius Säilä, Kari Tanskanen

Research output: Contribution to journalArticleScientificpeer-review

12 Citations (Scopus)
145 Downloads (Pure)


Prior literature suggests that significant internal R&D resources are needed to leverage suppliers for innovation and that external knowledge sources can be used to complement the internal knowledge base. Based on the analysis of four inbound open innovation projects at Fortum, a multinational energy utility company, we argue that companies with low R&D intensity may adopt an alternative approach which aims at substituting - not merely complementing - internal R&D with external innovations. We adopt the absorptive capacity perspective while investigating the cases and focus on four distinct capabilities: acquisition, assimilation, transformation, and exploitation. We find that the substitution approach consists of short-term research on new technological areas in order to gain the ability to identify and evaluate alternative technologies, as well as joint business models and operations based on complementary capabilities between the parties. The cases also suggest that the innovation process requires significant collaboration and the buying company's supplier management capabilities may improve the success of inbound open innovation projects of this type.
Original languageEnglish
Pages (from-to)242-255
JournalJournal of Purchasing and Supply Management
Issue number4
Early online date26 Aug 2017
Publication statusPublished - 26 Oct 2017
MoE publication typeA1 Journal article-refereed


  • Absorptive capacity
  • Supplier innovation
  • Open innovation
  • Multiple case study
  • R&D intensity

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