Industrial innovation, corporate governance and supplier-customer relationships

Purpose - The purpose of this paper is to explore the linkage among three factors - shareholder-manager relationships (or corporate governance), customer supplier relationships, and innovation, for two groups of UK firms in the speciality chemicals and electrical equipment industries. Design/methodology/approach - This research was exploratory. In total, 12 companies were studied in depth. The level of innovation was measured through a questionnaire and interviews were carried out with managers, important customers and suppliers. A comparison of management practices was established between the more and the less innovative companies. Findings - This research finds a close connection between shareholder-manager relationships, customer and supplier relationship management and innovation. The firms subject to arms-length relationships with shareholders (as UK-based public limited companies) had more distant relationships with suppliers and customers and poorer innovative performance. Research limitations/implications - The validity and reliability of the conclusions require the undertaking of quantitative studies. Other aspects apart from those explored could affect the level of innovation of companies. Practical implications - In the more innovative companies, strategic and investment plans tend to look to the long-term (five years plus). And, customers and suppliers are involved from the beginning in the development of new products and production processes. Lack of shareholder engagement strongly inhibits "long-termist actions", which include the development of such close relationships with customers and suppliers. Originality/value - This paper is the first to look at the possible link between corporate governance, customer and supplier relationship management and the level of innovation and has research and practical implications.