The effect of supply base management in overcoming the tension between exploitation and exploration - The impact of new and long-term suppliers

Interest in ambidexterity highlights supplier contribution as vital to innovation. However, ambidexterity is not a viable approach in all contexts. Resource scarcity, industry factors and risk aversion can limit potential. This research therefore aims to detect the influence of long-term and new suppliers on only exploitation and is centred on a single case study in the oil and gas industry. Building on this, the study seeks to clarify the concepts of supply base rationalisation in attaining beneficial long-term relationships and questions this concept as an impediment to innovation if it overlooks contribution of new suppliers. Therefore, it intends to fill the gap in the interrelation between supply base rationalization and innovation, as they are mostly studied in isolation. So far, research associates long-term suppliers with exploitation and new suppliers with exploration. In contrast, the finding suggests that both new and long-term supplier relationships exploit opportunities to their best potential. In addition, effective supply base rationalization helps to achieve synergistic long-term relationships with best-in class suppliers.