While there have been ample empirical evidence showing that suppliers in emerging economies may develop technological capabilities by learning directly from their customers and competitors alike, we consider these suppliers’ technological capability development through a second-order learning by supplying – to learn indirectly from their foreign counterparts via shared customers at home when first-order learning is unfeasible. Combining qualitative interviews with literature on organizational learning along supply chains, we hypothesize that supplying to local customers who also import from the suppliers’ foreign competitors may significantly improve their technological capabilities. We also speculate that such a process is moderated by R&D investments of the suppliers and tie strength with their customers, as well as the institutional environment. The empirical analysis based on Chinese import data of the manufacturing industry from 2005 to 2015 confirms our conjectures. We contribute to both literatures on supply chain management and organizational learning by theorizing and empirically testing the second-order learning by supplying. Our findings also convey important practical implications vis-à-vis capability development of local suppliers and policy instruments on cross-border supply chain management.
