A Longitudinal Study of the Influence of Alliance Network Structure and Composition on Firm Exploratory Innovation

This study examines the influence of the structure and composition of a firm's alliance network on its exploratory innovation. In a longitudinal investigation of 77 telecommunications equipment manufacturers, I find the technological diversity of a firm's alliance partners increases its exploratory innovation. I also find that network density among a firm's alliance partners strengthens the influence of diversity. These results suggest the benefits of network closure and access to diverse information can coexist in a firm's alliance network and the combination of the two increases exploratory innovation.

[1]  Gerrit Rooks,et al.  How Inter-firm Co-operation Depends on Social Embeddedness: A Vignette Study , 2000 .

[2]  Frank Bodman,et al.  The Origins of Genius , 1950 .

[3]  Sevgin Eroğlu,et al.  Book Review: The Knowledge Link: How Firms Compete through Strategic Alliances , 1993 .

[4]  A. Jaffe Technological Opportunity and Spillovers of R&D: Evidence from Firms&Apos; Patents, Profits and Market Value , 1986 .

[5]  B. Kogut The network as knowledge : Generative rules and the emergence of structure , 2000 .

[6]  S. Page Prologue to The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies , 2007 .

[7]  Jeffrey H. Dyer,et al.  The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage , 1998 .

[8]  K. Pavitt,et al.  The technological competencies of the world''s largest firms , 1997 .

[9]  Andrew B. Hargadon,et al.  Technology brokering and innovation in a product development firm. , 1997 .

[10]  Markku V. J. Maula,et al.  Explorative and Exploitative Learning from External Corporate Ventures , 2005 .

[11]  Stanley Wasserman,et al.  Social Network Analysis: Methods and Applications , 1994 .

[12]  Bart Nooteboom,et al.  Innovation and inter-firm linkages: new implications for policy , 1999 .

[13]  G. Pisano Using Equity Participation to Support Exchange: Evidence from the Biotechnology Industry , 1989 .

[14]  J. MacKinnon,et al.  Estimation and inference in econometrics , 1994 .

[15]  D. Teece Competition, Cooperation, and Innovation Organizational Arrangements for Regimes of Rapid Technological Progress , 1992 .

[16]  Zi-Lin He,et al.  Exploration vs. Exploitation: An Empirical Test of the Ambidexterity Hypothesis , 2004, Organ. Sci..

[17]  A. Kleinknecht,et al.  Innovative output, and a firm's propensity to patent.: an exploration of CIS micro data , 1999 .

[18]  H. Greve Exploration and exploitation in product innovation , 2007 .

[19]  Rita Gunther McGrath,et al.  Real options reasoning and a new look at the R&D investment strategies of pharmaceutical firms , 2004 .

[20]  L. Argote Organizational Learning: Creating, Retaining and Transferring Knowledge , 1999 .

[21]  S. Ghoshal,et al.  Markets, Firms, and the Process of Economic Development , 1999 .

[22]  Anna Stafsudd,et al.  Managing network resources: alliances, affiliations and other relational assets , 2009 .

[23]  Rachelle C. Sampson Experience effects and collaborative returns in R&D alliances , 2005 .

[24]  V. Buskens,et al.  Embedded trust: Control and learning , 2002 .

[25]  Walter W. Powell,et al.  Knowledge Networks as Channels and Conduits: The Effects of Spillovers in the Boston Biotechnology Community , 2004, Organ. Sci..

[26]  Daniel A. Levinthal,et al.  Exploration and Exploitation in Organizational Learning , 2007 .

[27]  I. Nonaka A Dynamic Theory of Organizational Knowledge Creation , 1994 .

[28]  E. Layton Technology as Knowledge , 2023 .

[29]  Karin Fladmoe-Lindquist,et al.  Breakthrough innovations in the U.S. biotechnology industry: the effects of technological space and geographic origin , 2006 .

[30]  Daniel A. Levinthal,et al.  A model of adaptive organizational search , 1981 .

[31]  David Obstfeld Social Networks, the Tertius Iungens Orientation, and Involvement in Innovation , 2005 .

[32]  E. von Hippel,et al.  Sources of Innovation , 2016 .

[33]  Fangcheng Tang,et al.  Network Structure and Knowledge Transfer , 2007, International Conference on Computational Science.

[34]  Salvatore Parise,et al.  Alliance portfolios: Designing and managing your network of business-partner relationships , 2003 .

[35]  R. Gulati,et al.  Does familiarity breed trust? Revisiting the antecedents of trust , 2008 .

[36]  Peter J. Lane,et al.  Relative absorptive capacity and interorganizational learning , 1998 .

[37]  R. Gulati,et al.  The Architecture of Cooperation: Managing Coordination Costs and Appropriation Concerns in Strategic Alliances , 1998 .

[38]  J. Johanson,et al.  Creating value through mutual commitment to business network relationships , 1999 .

[39]  Michael W. Mehaffy,et al.  At Home In The Universe The Search For The Laws Of Self Organization And Complexity , 1996 .

[40]  Toby E. Stuart,et al.  Network Effects in the Governance of Strategic Alliances , 2006 .

[41]  R. Gulati,et al.  Guest editors’ introduction to the special issue: strategic networks , 2000 .

[42]  Toby E. Stuart Network Positions and Propensities to Collaborate: An Investigation of Strategic Alliance Formation in a High-Technology Industry , 1998 .

[43]  Atul Nerkar,et al.  Old Is Gold? The Value of Temporal Exploration in the Creation of New Knowledge , 2003, Manag. Sci..

[44]  Dean M. Behrens,et al.  Redundant governance structures: an analysis of structural and relational embeddedness in the steel and semiconductor industries , 2000 .

[45]  Jonghoon Bae,et al.  Partner substitutability, alliance network structure and firm profitability in the telecommunications industry , 2004 .

[46]  Lori Rosenkopf,et al.  Overcoming Local Search Through Alliances and Mobility , 2003, Manag. Sci..

[47]  Joel A. C. Baum,et al.  Don't go it alone: alliance network composition and startups' performance in Canadian biotechnology , 2000 .

[48]  Mary J. Benner,et al.  Process Management and Technological Innovation: A Longitudinal Study of the Photography and Paint Industries , 2002 .

[49]  J. Coleman,et al.  Social Capital in the Creation of Human Capital , 1988, American Journal of Sociology.

[50]  Jitendra V. Singh Performance, Slack, and Risk Taking in Organizational Decision Making , 1986 .

[51]  David M. Kreps Corporate culture and economic theory , 1990 .

[52]  Gerard Delanty The Foundations of Social Theory , 2009 .

[53]  M. Kotabe,et al.  The role of strategic alliances in high‐technology new product development , 1995 .

[54]  María García‐Vega Does technological diversification promote innovation?: An empirical analysis for European firms , 2006 .

[55]  D. Mowery,et al.  Strategic alliances and interfirm knowledge transfer , 1996 .

[56]  R. Gulati Does Familiarity Breed Trust? The Implications of Repeated Ties for Contractual Choice in Alliances , 1995 .

[57]  A. Zaheer,et al.  Bridging ties: a source of firm heterogeneity in competitive capabilities , 1999 .

[58]  Curba Morris Lampert,et al.  Entrepreneurship in the large corporation: a longitudinal study of how established firms create breakthrough inventions , 2001 .

[59]  Toby E. Stuart,et al.  Local search and the evolution of technological capabilities , 2007 .

[60]  B. Kogut,et al.  Technological Platforms and Diversification , 1996 .

[61]  S. Ghoshal,et al.  Social Capital, Intellectual Capital, and the Organizational Advantage , 1998 .

[62]  T. Khanna,et al.  Do Firms Learn to Create Value? The Case of Alliances , 2000 .

[63]  P. Bonacich Power and Centrality: A Family of Measures , 1987, American Journal of Sociology.

[64]  Stewart Macaulay Non-contractual relations in business: a preliminary study , 1963 .

[65]  R. Gulati,et al.  STRATEGIC NETWORKS , 2000 .

[66]  Henk W. Volberda,et al.  The Multifaceted Nature of Exploration and Exploitation: Value of Supply, Demand, and Spatial Search for Innovation , 2007, Organ. Sci..

[67]  Adam B. Jaffe,et al.  Do alliances promote knowledge flows , 2006 .

[68]  Z. Griliches,et al.  Econometric Models for Count Data with an Application to the Patents-R&D Relationship , 1984 .

[69]  Rachelle C. Sampson R&D Alliances and Firm Performance: The Impact of Technological Diversity and Alliance Organization on Innovation , 2007 .

[70]  B. Kogut,et al.  What Firms Do? Coordination, Identity, and Learning , 1996 .

[71]  Daniel A. Levinthal,et al.  Duynamics of Interorganizational Attachments: Auditor-Client Relationships , 1988 .

[72]  Ken G. Smith,et al.  The interplay between exploration and exploitation. , 2006 .

[73]  Simon Rodan,et al.  More than Network Structure: How Knowledge Heterogeneity Influences Managerial Performance and Innovativeness , 2004 .

[74]  D. Mowery,et al.  Technological overlap and interfirm cooperation: implications for the resource-based view of the firm , 1998 .

[75]  A. Portes Social Capital: Its Origins and Applications in Modern Sociology , 1998 .

[76]  Bart Nooteboom,et al.  Exploration and exploitation in innovation systems: The case of pharmaceutical biotechnology , 2006 .

[77]  Joyce E. Berg,et al.  Trust, Reciprocity, and Social History , 1995 .

[78]  O. Sorenson,et al.  Technology as a complex adaptive system: evidence from patent data , 2001 .

[79]  A. Gouldner THE NORM OF RECIPROCITY: A PRELIMINARY STATEMENT * , 1960 .

[80]  Allen M. Weiss,et al.  The relationship between a firm's level of technological innovativeness and its pattern of partnership agreements , 1997 .

[81]  J. Hausman Specification tests in econometrics , 1978 .

[82]  J. Hagedoorn Understanding the rationale of strategic technology partnering: Nterorganizational modes of cooperation and sectoral differences , 1993 .

[83]  W. Powell,et al.  Networks and Economic life , 2003 .

[84]  Daniel A. Levinthal,et al.  Doing versus seeing: acts of exploitation and perceptions of exploration , 2008 .

[85]  Keith Pavitt,et al.  USES AND ABUSES OF PATENT STATISTICS , 1988 .

[86]  Bronwyn H Hall A Note on the Bias in the Herfindahl Based on Count Data , 2000 .

[87]  B. Silverman Technological Resources and the Direction of Corporate Diversification: Toward an Integration of the Resource-Based View and Transaction Cost Economics , 1998 .

[88]  Joseph L. Badaracco,et al.  The knowledge link : how firms compete through strategic alliances / Joseph L. Badaracco, Jr. , 1993 .

[89]  Mark S. Granovetter Economic Action and Social Structure: The Problem of Embeddedness , 1985, American Journal of Sociology.

[90]  Jan W. Rivkin,et al.  Speed and Search: Designing Organizations for Turbulence and Complexity , 2005, Organ. Sci..

[91]  Arvind Parkhe Strategic Alliance Structuring: A Game Theoretic and Transaction Cost Examination of Interfirm Cooperation , 1993 .

[92]  J. Papastavrou,et al.  Accounting for Endogeneity When Assessing Strategy Performance: Does Entry Mode Choice Affect Fdi Survival , 1998 .

[93]  B. Kogut,et al.  Knowledge and the Speed of the Transfer and Imitation of Organizational Capabilities: An Empirical Test , 1995 .

[94]  Daniel A. Levinthal,et al.  ABSORPTIVE CAPACITY: A NEW PERSPECTIVE ON LEARNING AND INNOVATION , 1990 .

[95]  Noah E. Friedkin,et al.  The development of structure in random networks: an analysis of the effects of increasing network density on five measures of structure , 1981 .

[96]  Corey C. Phelps,et al.  Interfirm Collaboration Networks: The Impact of Large-Scale Network Structure on Firm Innovation , 2007, Manag. Sci..

[97]  A. Stirling A general framework for analysing diversity in science, technology and society , 2007, Journal of The Royal Society Interface.

[98]  K. R. Conner,et al.  A Resource-Based Theory of the Firm: Knowledge Versus Opportunism , 1996 .

[99]  B. Kogut,et al.  Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology , 1992 .

[100]  Kimberly S. Hamilton,et al.  The changing composition of innovative activity in the US -- a portrait based on patent analysis , 2001 .

[101]  J. H. Dyer,et al.  Creating and managing a high‐performance knowledge‐sharing network: the Toyota case , 2000 .

[102]  J. Richardson Handbook of Theory and Research for the Sociology of Education , 1986 .

[103]  David L. Deeds,et al.  Honeymoons and Liabilities: The Relationship between Age and Performance in Research and Development Alliances , 2003 .

[104]  R. Gulati Alliances and networks , 1998 .

[105]  B. Uzzi,et al.  Social Structure and Competition in Interfirm Networks: The Paradox of Embeddedness , 1997 .

[106]  J. Barney,et al.  Trustworthiness as a Source of Competitive Advantage , 1994 .

[107]  S. Mezias,et al.  The three faces of corporate renewal: institution, revolution, and evolution , 1993 .

[108]  Daniel A. Levinthal,et al.  The myopia of learning , 1993 .

[109]  Jacob Schmookler,et al.  Invention and Economic Growth , 1967 .

[110]  Geert Duysters,et al.  Strategic repositioning by means of alliance networks: The case of IBM , 2007 .

[111]  D. Teece,et al.  DYNAMIC CAPABILITIES AND STRATEGIC MANAGEMENT , 1997 .

[112]  Morten T. Hansen,et al.  The Search-Transfer Problem: The Role of Weak Ties in Sharing Knowledge across Organization Subunits , 1999 .

[113]  Indre Maurer,et al.  Dynamics of Social Capital and Their Performance Implications: Lessons from Biotechnology Start-ups , 2006 .

[114]  Fernand Amesse,et al.  The telecommunications equipment industry in the 1990s: from alliances to mergers and acquisitions , 2004 .

[115]  M. Tushman,et al.  Resource recombinations in the firm: knowledge structures and the potential for schumpeterian innovation , 1998 .

[116]  R. Gulati Is Slack Good or Bad for Innovation ? , 2007 .

[117]  Pino G. Audia,et al.  Past Success and Creativity over Time: A Study of Inventors in the Hard Disk Drive Industry , 2007, Manag. Sci..

[118]  S. Zeger,et al.  Longitudinal data analysis using generalized linear models , 1986 .

[119]  A. Tiwana Do bridging ties complement strong ties? An empirical examination of alliance ambidexterity , 2008 .

[120]  J. Hagedoorn,et al.  Measuring innovative performance: is there an advantage in using multiple indicators? , 2003 .

[121]  Leslie E. Papke,et al.  Panel data methods for fractional response variables with an application to test pass rates , 2008 .

[122]  B. Kogut,et al.  INTERFIRM COOPERATION AND STARTUP INNOVATION IN THE BIOTECHNOLOGY INDUSTRY. , 1993 .

[123]  Andrew C. Inkpen,et al.  Social Capital, Networks, and Knowledge Transfer , 2005 .

[124]  B. Husted,et al.  Transaction Costs, Norms, and Social Networks , 1994 .

[125]  Kim B. Clark,et al.  Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of , 1990 .

[126]  Wendy K. Smith,et al.  Managing Strategic Contradictions: A Top Management Model for Managing Innovation Streams , 2005 .

[127]  J. Dutton,et al.  The Adoption of Radical and Incremental Innovations: An Empirical Analysis , 1986 .

[128]  Raimar Richers The theory of economic development , 1961 .

[129]  Harbir Singh,et al.  Learning and protection of proprietary assets in strategic alliances: building relational capital , 2000 .

[130]  C. A. Benavides-Velasco,et al.  Innovative competence, exploration and exploitation: The influence of technological diversification , 2008 .

[131]  Kenneth A. Frank,et al.  Linking Action to Social Structure within a System: Social Capital within and between Subgroups1 , 1998, American Journal of Sociology.

[132]  B. Kogut,et al.  Social Capital, Structural Holes and the Formation of an Industry Network , 1997 .

[133]  A. Nerkar,et al.  Beyond local search: boundary‐spanning, exploration, and impact in the optical disk industry , 2001 .

[134]  G. Hamel Competition for competence and interpartner learning within international strategic alliances , 1991 .

[135]  Gavin J. Wright An evolutionary theory of economic change , 1982 .

[136]  Peter Kosso The Network of Knowledge , 2011 .

[137]  B. Kogut Joint ventures: Theoretical and empirical perspectives , 1988 .

[138]  S. Winter,et al.  An evolutionary theory of economic change , 1983 .

[139]  Rachelle C. Sampson Organizational Choice in R&D Alliances: Knowledge Based and Transaction Cost Perspectives , 2004 .

[140]  Henk W. Volberda,et al.  Exploratory Innovation, Exploitative Innovation and Peformance: Effects of Organizational Antecedents and Environmental Moderators , 2006, Manag. Sci..

[141]  P. Bourdieu Forms of Capital , 2002 .

[142]  Manuel Trajtenberg,et al.  Patents, Citations, and Innovations: A Window on the Knowledge Economy , 2002 .

[143]  John Scott Social Network Analysis , 1988 .

[144]  Andrea L. Larson Network Dyads in Entrepreneurial Settings: A Study of the Governance of Exchange Relationships , 1992 .

[145]  Mark S. Granovetter The Strength of Weak Ties , 1973, American Journal of Sociology.

[146]  Marjorie A. Lyles,et al.  Knowledge acquisition from foreign parents in international joint ventures: an empirical examination in the Hungarian context , 1996 .

[147]  P. Adler,et al.  Social Capital: Prospects for a New Concept , 2002 .

[148]  K. Duncker,et al.  On problem-solving , 1945 .

[149]  Arthur B. Markman,et al.  Analogical Reasoning and Conceptual Change: A Case Study of Johannes Kepler , 1997 .

[150]  R. Gulati,et al.  The dynamics of learning alliances: competition, cooperation, and relative scope , 1998 .

[151]  F. Narin,et al.  Patents as indicators of corporate technological strength , 1987 .

[152]  Kenneth W. Koput,et al.  Networks and Knowledge Production: Collaboration and Patenting in Biotechnology , 1999 .

[153]  B. Kogut,et al.  Exploring internal stickiness : Impediments to the transfer of best practice within the firm , 2007 .

[154]  D. MacKenzie,et al.  The use of knowledge about society , 2008 .

[155]  Z. Griliches Patent Statistics as Economic Indicators: a Survey , 1990 .

[156]  M. Shubik,et al.  A Behavioral Theory of the Firm. , 1964 .

[157]  Ralph A. Heidl,et al.  Networks, knowledge, and knowledge networks: A literature review , 2009 .

[158]  S. Winter,et al.  Appropriating the Returns from Industrial Research and Development , 1987 .

[159]  Yadong Luo,et al.  Opportunism in cooperative alliances: Conditions and solutions , 2006 .

[160]  Juan Alcacer,et al.  How Do I Know What You Know? Patent Examiners and the Generation of Patent Citations , 2004 .

[161]  Dovev Lavie The Competitive Advantage of Interconnected Firms: An Extension of the Resource-Based View , 2006 .

[162]  David Lazer,et al.  The Network Structure of Exploration and Exploitation , 2007 .

[163]  B. Uzzi,et al.  The Sources and Consequences of Embeddedness for the Economic Performance of Organizations: The Network Effect , 1996 .

[164]  R. Gulati,et al.  Where Do Interorganizational Networks Come From?1 , 1999, American Journal of Sociology.

[165]  Jesper B. Sørensen,et al.  Aging, Obsolescence, and Organizational Innovation , 2000 .

[166]  R. Katila,et al.  Technological acquisitions and the innovation performance of acquiring firms: a longitudinal study , 2001 .

[167]  Constance E. Helfat,et al.  Evolutionary trajectories in petroleum firm R&D , 1994 .

[168]  G. Dosi Sources, Procedures, and Microeconomic Effects of Innovation , 1988 .

[169]  Gabriel Szulanski,et al.  Template Use and the Effectiveness of Knowledge Transfer , 2003, Manag. Sci..

[170]  G. Huber Organizational Learning: The Contributing Processes and the Literatures , 1991 .

[171]  P. Soh The role of networking alliances in information acquisition and its implications for new product performance , 2003 .

[172]  R. Katila,et al.  SOMETHING OLD, SOMETHING NEW: A LONGITUDINAL STUDY OF SEARCH BEHAVIOR AND NEW PRODUCT INTRODUCTION , 2002 .

[173]  Toby E. Stuart Interorganizational alliances and the performance of firms: A study of growth and innovation rates i , 2000 .

[174]  David L. Deeds,et al.  Exploration and Exploitation Alliances in Biotechnology: A System of New Product Development , 2004 .

[175]  D. Leonard-Barton,et al.  Wellsprings of Knowledge: Building and Sustaining the Sources of Innovation , 1995 .

[176]  W. Raub,et al.  Reputation and Efficiency in Social Interactions: An Example of Network Effects , 1990, American Journal of Sociology.

[177]  A. Greif Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition , 1993 .

[178]  Will Mitchell,et al.  The influence of local search and performance heuristics on new design introduction in a new product market , 1998 .

[179]  G. Ahuja Collaboration Networks, Structural Holes, and Innovation: A Longitudinal Study , 1998 .