The Effect of Early Supplier Involvement on Firm Performance through Teamwork and New Product Development

Manufacturing companies in Indonesia experienced the most severe growth due to the impact of
the coronavirus pandemic (Covid-19). The effect of the pandemic resulted in companies reducing
production capacity by reducing the use of utilities owned by the company. This study examines the
effect of early supplier involvement on firm performance through teamwork and new product
development. This research surveyed 55 companies from 104 manufacturing companies with more
than 100 employees in East Java, Indonesia. The data collection used a questionnaire designed with
a five-point Likert scale. Data analysis used SmartPLS version 3.0 to assess the measurement model
and examine the hypothesis. This study developed nine hypotheses, which indicated that eight
hypotheses were supported, and one hypothesis was rejected. Early supplier involvement affects
teamwork, new product development, and firm performance. Furthermore, teamwork affects new
product development and firm performance. Moreover, new product development affects firm
performance. In addition, early supplier involvement indirectly affects firm performance through
new product development and teamwork, respectively and simultaneously. These findings provide
an insight for manufacturing management to consider early supplier involvement in developping
new products and enhancing firm performance. This research will enrich the supply chain
management theory, focusing on product development as the competitiveness of companies that are
changing rapidly.