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Sourcing practices and innovation: Evidence from the auto industry on the sourcing relationship as a dynamic capability

Abstract This research uses the dynamic capabilities (DC) framework to analyze innovation efforts in the auto industry to understand the linkages between sourcing relationships and innovation. The DC framework provides a look at several capabilities within the relationships that facilitate innovation processes such as robust bi-directional information flows and learning processes centered on the relationships. To examine the innovation processes, the author conducted fourteen interviews and examined a variety of secondary source materials for a comparative analysis of three case studies. The research supports the view that sourcing relationships are dynamic capabilities which enable firms to develop resource synergies from the internal and external environment. Viewing these relationships as dynamic capabilities leads to the conclusion that investing in relational resources can contribute to competitive advantage for the firm.