Networks for Innovation – But What Networks and What Innovation?

Innovation is a social and interactive process in which collaboration and exchange of knowledge and information play crucial roles. Two conflicting hypotheses have been raised in previous research: Burt's structural hole hypothesis and the density hypothesis. In brief, the former of these hypotheses builds upon arguments for open network structures in the acquisition of innovation; the latter one builds upon arguments for closed network structures for innovation. To shed some light on this state of confusion, this paper tests these two conflicting hypotheses on two separate measures of innovation in a service industry setting. One innovation measure is more incremental in nature and regards the implementation of employees' ideas. The other innovation measure is more radical in nature and regards new services. Findings suggest that social network measures are, indeed, powerful predictors of innovation and, further, that the impact of these are likely to be radically different depending upon the type and measure of innovation. Consequently, this paper recommends caution when studying the impact of social network measures upon innovation, and that more fine-grained measurements in particular are needed rather than focusing upon inter-relationships of an overly general and superficial nature.