Value Transparency in Supply Relationship: An Innovation Systems Approach

Adopting an innovation systems approach, this paper addresses how institutions in supply markets (in the institutional economics sense of informal constraints and formal rules) influence the innovation process between firms. Within an innovation system, institutions may contain the ability not only to support but also to restrain the co-ordination of knowledge and skills in inter-organisational relationships. The paper proposes that value transparency, characterised as a relationship resource, is an alternative to existing institutions (such as openbook negotiation) which appear to have failed to adapt to the changing nature of product and process technologies.