Lecture 11: Interfirm Collaboration and Innovation
Agenda
• Review
• Phelps (2010) - The role of the alliance structure and composition on innovation.
• Almeida et al. (2011) – The role of individual scientific collaborations on innovation.
Review
• Informal structure of company influences its innovative output
➢Tradeoff network density and diversity (more a cohesive network, more density > helps increasing
knowledge sharing)(trade-off of having diversity, situating yourself as a connecter for different parts
of organizations)
➢Global versus local mechanisms (local, small cohedsion & global cohesion, everyone is connected)
local is more important than global.
• Combination of human capital and social capital matters for firm productivity and quality of
knowledge creation
➢Productivity and relational stars
➢Micro-foundations research: study internal constituents > so people (star scientists).
Why Do Firms Engage in Alliances and Other Types of Partnerships?
• Learning from partners/knowledge transfer (most important) > gain information from your
partner. Doesn’t have to be formal, can be informal.
• Knowledge complexity/burden of knowledge > you cannot alone complexity of knowledge
• Complementary resource endowments
➢E.g. access to instrumentation and apparatus (expensive machinery, relationship with organization
which does have that machinery)
• Share risks related to R&D and innovation or enjoy benefit of economies of scale
Mainly competitors and universities in the pieces.
Phelps, 2010
The Influence of Alliance Network Structure and Composition on Firm Exploratory Innovation
• Interfirm alliance network perspective on the likelihood to go into unchartered territory
➢Social network perspective to alliance relationships between firms
Composition of relationships impact innovation
• Alliances are formal arrangements with it’s competitors. i.e. airlines alliances, sharing their
burdens.
• Huge prior literature on interfirm network structure, however less so on composition
• 2 hypotheses
• Telecommunications equipment manufacturers
, Dense networks, Coleman:
Build trust
Set of norms how people behave
Facilitates knowledge sharing, crucial for innovation (recombination of different sources)
Disconnected networks (Burt):
Dense networks is not always beneficial
Don’t get exposure to a diverse set of sources
No new information, which is crucial for recombination of ideas. You need to situate yourself
in a brokering type of position.
Interfirm network = formal network of relationships
Round circles are in this case organizations, not people. In Lecture 10 it were people, in this lecture it
is organizations! Here we focus on relationship one organization has with other firms. We do not look
at entire network like in lecture 10. We look here at the focal firm itself.
Why Still No Consensus? (need of dense or diversity?)
• We have overlooked network composition! (introduces new element!)
➢Prior research made inferences based on network structure
Composition: characteristics of other firms that are in the network of alliances of a focal firm.
In this case he focuses on diversity of technologies that other firms in alliances bring. Help
provide focal firm.
• What is the influence of network structure and composition on exploratory innovation?
Related to composition of that network
• Exploratory innovation is ”the creation of technological knowledge that is novel relative to a firm’s
extant knowledge stock”.
New knowledge domains where a firm never innovates in
It’s patents that make use of novel sources of innovations in backward citations which had
not used earlier by the firm
Agenda
• Review
• Phelps (2010) - The role of the alliance structure and composition on innovation.
• Almeida et al. (2011) – The role of individual scientific collaborations on innovation.
Review
• Informal structure of company influences its innovative output
➢Tradeoff network density and diversity (more a cohesive network, more density > helps increasing
knowledge sharing)(trade-off of having diversity, situating yourself as a connecter for different parts
of organizations)
➢Global versus local mechanisms (local, small cohedsion & global cohesion, everyone is connected)
local is more important than global.
• Combination of human capital and social capital matters for firm productivity and quality of
knowledge creation
➢Productivity and relational stars
➢Micro-foundations research: study internal constituents > so people (star scientists).
Why Do Firms Engage in Alliances and Other Types of Partnerships?
• Learning from partners/knowledge transfer (most important) > gain information from your
partner. Doesn’t have to be formal, can be informal.
• Knowledge complexity/burden of knowledge > you cannot alone complexity of knowledge
• Complementary resource endowments
➢E.g. access to instrumentation and apparatus (expensive machinery, relationship with organization
which does have that machinery)
• Share risks related to R&D and innovation or enjoy benefit of economies of scale
Mainly competitors and universities in the pieces.
Phelps, 2010
The Influence of Alliance Network Structure and Composition on Firm Exploratory Innovation
• Interfirm alliance network perspective on the likelihood to go into unchartered territory
➢Social network perspective to alliance relationships between firms
Composition of relationships impact innovation
• Alliances are formal arrangements with it’s competitors. i.e. airlines alliances, sharing their
burdens.
• Huge prior literature on interfirm network structure, however less so on composition
• 2 hypotheses
• Telecommunications equipment manufacturers
, Dense networks, Coleman:
Build trust
Set of norms how people behave
Facilitates knowledge sharing, crucial for innovation (recombination of different sources)
Disconnected networks (Burt):
Dense networks is not always beneficial
Don’t get exposure to a diverse set of sources
No new information, which is crucial for recombination of ideas. You need to situate yourself
in a brokering type of position.
Interfirm network = formal network of relationships
Round circles are in this case organizations, not people. In Lecture 10 it were people, in this lecture it
is organizations! Here we focus on relationship one organization has with other firms. We do not look
at entire network like in lecture 10. We look here at the focal firm itself.
Why Still No Consensus? (need of dense or diversity?)
• We have overlooked network composition! (introduces new element!)
➢Prior research made inferences based on network structure
Composition: characteristics of other firms that are in the network of alliances of a focal firm.
In this case he focuses on diversity of technologies that other firms in alliances bring. Help
provide focal firm.
• What is the influence of network structure and composition on exploratory innovation?
Related to composition of that network
• Exploratory innovation is ”the creation of technological knowledge that is novel relative to a firm’s
extant knowledge stock”.
New knowledge domains where a firm never innovates in
It’s patents that make use of novel sources of innovations in backward citations which had
not used earlier by the firm
