Interfirm Collaboration Networks: The Impact of Large-Scale Network Structure on Firm Innovation

Authors:
Melissa A. Schilling;Corey C. Phelps
Affiliations:
Stern School of Business, New York University, 40 West Fourth Street, New York, New York 10012;Department of Management and Organization, University of Washington, Box 353200, Seattle, Washington 98195
Venue:
Management Science
Year:
2007

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Abstract

The structure of alliance networks influences their potential for knowledge creation. Dense local clustering provides information transmission capacity in the network by fostering communication and cooperation. Nonredundant connections contract the distance between firms and give the network greater reach by tapping a wider range of knowledge resources. We propose that firms embedded in alliance networks that exhibit both high clustering and high reach (short average path lengths to a wide range of firms) will have greater innovative output than firms in networks that do not exhibit these characteristics. We find support for this proposition in a longitudinal study of the patent performance of 1,106 firms in 11 industry-level alliance networks.