Does Inter-Firm Learning and Trust Promote Firm Innovativeness?

Abstract

This paper elaborates on a theoretical framework that assesses the effects of inter-firm trust and learning on firm’s subsequent innovation output. We argue that joint problem solving arrangements play an intermediate role in firm innovativeness by promoting the sharing of complex and difficult-to-codify knowledge and information. Using survey data from a sample of 194 firms from the mainland of China, we find that inter-firm trust and learning have positive impacts on both buyer innovativeness and seller innovativeness. It is also found that there is a positive interactive relationship between trust and learning. Furthermore, their inter-effect and complementarity facilitate innovativeness by promoting joint problem solving at the firm level. Based on these findings, theoretical and managerial implications are discussed.