Conclusions

Although the literature suggested that geographical distance has a negative effect on innovation, this study finds no difference in the level of supplier product innovation or supplier TTM between firms that purchase globally and those that do not, even though firms purchasing globally are significantly more likely to declare product innovation a priority for their purchasing departments. A conclusion to draw is that just purchasing globally does not automatically translate into higher, or lower, innovation. However, companies that source globally are significantly better at translating supplier integration and proficiency in supplier integration into higher levels of product innovation actually sourced from suppliers, as well as shorter TTM. These findings are not related to purchasing volume, meaning smaller firms have the same potential for leveraging their purchasing department's proficiency and the use of supplier integration when purchasing globally as larger firms. It can therefore be concluded that global purchasing is beneficial for product innovation, provided that the firms possess adequate proficiency in supplier integration and apply appropriate supplier integration tools.

This paper contributes to the discussion of potential advantages and disadvantages of global purchasing. First, the paper provides an explanation for the ambiguous results of previous research. Product innovation does not depend on whether firms are purchasing globally or not, it depends on how they purchase. This paper has shown that when purchasing globally, the role of the purchasing department becomes crucial for product innovation. The proficiency and activities of the purchasing department largely determine the success, in terms of supplier product innovation, of global purchasing.

The implication is that when companies purchase globally, they must have a highly developed purchasing department in order to sustain a high level of innovation. For firms purchasing only regionally, the role of the purchasing department is diminished, at least in terms of contributing to innovation. Contrary to our expectations, global purchasing does not need to have a negative impact on TTM either, with the same caveats: that the purchasing department possesses enough proficiency in supplier integration and that they indeed integrate their suppliers.

This paper has identified several key factors for achieving higher levels of supplier product innovation and shorter TTM from suppliers when purchasing globally. The impact is very weak or nonexistent for firms purchasing regionally. As mentioned in the discussion, factors other than those included in this paper play a bigger role in leveraging supplier product innovation for these firms. Exploring this issue is an area ripe for further research.