Product change intensity in the personal computer industry:: A study of firm-supplier innovation

In this paper, we develop a conceptual model to investigate external factors deemed to be critical to the frequency by which a firm releases new products - a phenomenon we refer to as change intensity. Using data collected through a cross-sectional survey administered to 55 firms in the personal computer (PC) industry, and employing hierarchical regression, we examine the relationship between the rates of change in suppliers' component innovations and manufacturers' product innovations, and how that relationship is affected (moderated) by firm-supplier relationship closeness and competitive rivalry. Our results show that a firm's rate of product change is positively related to its key supplier's rate of component change. The results further suggest that the linkage between a firm's innovation frequency and that of its key supplier's is stronger for firms that have closer relationships with their suppliers and for firms that perceive themselves as facing higher levels of competitive rivalry. The study demonstrates the critical role played by suppliers in driving innovation in the PC industry, while also underscoring the importance of formal or informal alliances with suppliers and industry competition in fostering high product change intensities. More research is needed to determine if these findings are limited to the fast-moving PC industry.