Learning by Supplying
Abstract: How do firms build capabilities and resources to generate and sustain competitive advantage? This question lies at the very heart of strategic management and has long pre-occupied scholars and practitioners alike. A common thread running through much of the research to date is a focus on learning: learning by doing, learning by exporting, learning from competitors, users, or alliance partners. In this paper we focus attention on another locus of learning that has recently garnered significant interest among practitioners, but which has received less attention from academics: learning by supplying. By compiling an unusually detailed multi-year panel dataset on supply relationships in the mobile telecommunications handset industry, we are able to address the following questions: What factors contribute to a firm’s ability to ‘learn by supplying’ and build technological and market capabilities? Does it matter to whom the firm supplies? Is it more beneficial to supply to market leaders or to team up with market laggards? Must the supplier be actively involved in product design to effectively learn from its customers, or is manufacturing the key locus of learning? How does a supplier’s own initial resource endowment and capabilities play into the dynamic? Our empirical analysis yields several interesting findings that have potentially important implications for theory and practice, and that suggest interesting directions for further study.
