Network embeddedness and the exploration of novel technologies : technological distance, betweenness centrality and density
Faculty of Applied Economics
ISMOT'07: Proceedings of the Fifth International Symposium on Management of Technology, Vols 1 and 2: Managing total innovation and open innovation in the 21st century
5th International Symposium on Management of Technology, JUN 01-03, 2007, Hangzhou, PEOPLES R CHINA
, p. 301-305
This paper analyzes the innovation potential of a firm's alliance network. We focus on the role of technological distance between partners, a firm's network position (centrality) and total network density. We study how these three elements of an alliance network, apart and in combination, affect the 'twin tasks' in exploration, namely novelty creation on the one hand and its efficient absorption on the other hand. We test several hypotheses using technology-based alliance networks in the pharmaceutical, chemical and automotive industry. Our findings lead to several conclusions: (1) successful exploration requires a balance between these two exploration tasks. (2) Different network positions yield different pay-offs in terms of the number of explorative patents. (3)Exploration success depends on the combination of network position, technological distance and network density. These three variables need to be considered jointly in order to understand their complementary effects on both novelty creation and absorptive capacity.