Release capacity in the vendor selection process

a r t i c l e i n f o This study draws from the knowledge theory of the firm to introduce the release capacity concept to the vendor selection process. The study proposes that suppliers' release capacity – a form of knowledge diffusion that describes the transmission of a sense of a supplier's tacit knowledge to manufacturers – influences their performance during vendor selection. The authors identify two release capacity dimensions: visualization, during which knowledge is embedded and diffused through a visual encoding process, and socialization, during which a sense of the supplier's knowledge is released through a social construction process. The authors use data from the equipment supply industry to empirically test their predictions. The findings show that the release capacity dimensions affect the market's aggregate responses during the formation of consideration sets and preferences. These findings contribute to integrating developments on the source side of the knowledge diffusion process with the vendor selection research tradition. Knowledge is one of the most fundamental firm assets (Grant, 1996a). According to the knowledge-based view, firms exist because they are superior to markets in sharing and transferring knowledge Developing knowledge internally is, however, a complex task. Like other resources, knowledge accumulates through effortful, long-lasting, path-dependent processes that require specialization (Day, 1994; Spencer, 2003). If a manufacturer specializes in a few knowledge domains, this specialization may weaken its capability to master other knowledge domains that the business requires. Manufacturers therefore rely on suppliers who are knowledgeable in domains that lie outside their own specialization pathway, but are still critical for their value system (Moeller & Svahn, 2006; Wuyts, Stremersch, Van den Bulte, & Franses, 2004). For example, in the digital photography industry , Nikon strives to excel in optical performance, low-light image capturing , and image processing, but relies on external suppliers for some high-capacity sensors, which cameras need to capture image details. Manufacturing these components require fine-grained knowledge advancements , which Nikon engineers do not necessarily target, but which suppliers with a more specific focus on electronics, like Sony, do. A key question arises from this reasoning: How can a manufacturer with a gap in a given knowledge domain understand how much a supplier knows of that domain? On what basis would this manufacturer assess the supplier's knowledge during vendor selection? On the demand side, scholars have addressed this problem by suggesting that manufacturers " need to make in order …