Abstract: Enterprises increasingly depend upon the innovation of supply chain partners to deliver additional value to customers with ever shifting preferences.This paper discusses the impact of R&D organizational structure on the utilization of supplier and customer innovation. Although both suppliers and customers are members of the supply chain, they are differ significantly in the type of knowledge they can provide and how easily it can be accessed. Enterprises need to match the organizational structure of R&D with the strategy of external knowledge source.The results from listed manufacturing companies in china show that: compared with customer innovation, supplier innovation has a more significant promoting effect on enterprise innovation performance. Centralized r&d organization helps manufactures’ absorption of supplier innovation performance and enhance the positive effects of innovation performance between them. Decentralized R&D organization increase the manufacturers’ capacity to leverage customer innovation .