Out-in, in-out buyer quality innovation pathways for new product outcome: empirical evidence from the Chinese consumer goods industry

In today’s dynamic environment, quality innovation and new product development (NPD) are the key factors in gaining competitive advantage. However, the quality innovation process is a complex procedure, because it may combine internal and external resource requirements to meet customer expectations. This paper reviews two quality innovation pathways and their respective NPD performances based on the joint supplier-buyer relationship within the fast consumer goods (FCGs) industry. Specifically, we study buyers’ quality innovation potential using ‘out-in,’ which is the identification of quality innovative suppliers, and ‘in-out,’ which is buyers’ quality knowledge transfer ability to suppliers. Our dyadic data from both buyers and suppliers reveal that the supplier’s innovation ability and passion is the dominating factor, irrespective of quality innovation pathways, in the context of the Chinese consumer goods industry. However, cooperative attitude and the cost reduction ability of suppliers are the differentiating factors.