Content area
Full text
To assess the effects of a firm's network of relations on innovation, this paper elaborates a theoretical framework that relates three aspects of a firm's ego network-direct ties, indirect ties, and structural holes (disconnections between a firm's partners)-to the firm's subsequent innovation output. It posits that direct and indirect ties both have a positive impact on innovation but that the impact of indirect ties is moderated by the number of a firm's direct ties. Structural holes are proposed to have both positive and negative influences on subsequent innovation. Results from a longitudinal study of firms in the international chemicals industry indicate support for the predictions on direct and indirect ties, but in the interfirm collaboration network, increasing structural holes has a negative effect on innovation. Among the implications for interorganizational network theory is that the optimal structure of interfirm networks depends on the objectives of the network members.
Several recent studies have indicated that the positions of firms in interorganizational networks influence firm behavior and outcomes (e.g., Powell, Koput, and Smith-Doerr, 1996; Walker, Kogut, and Shan, 1997). Because of their facilitative role in various interorganizational contexts, network relationships have even been described as network resources (Gulati, 1999). In spite of the growing consensus that networks matter, however, the specific effects of different elements of network structure on organizational performance remain unclear. In the social networks literature, a debate has arisen over the form of network structures that can appropriately be regarded as beneficial (Walker, Kogut, and Shan, 1997). According to one view, densely embedded networks with many connections linking ego's alters are facilitative for ego, and social structures are seen as advantageous to the extent that networks are "closed" (Coleman, 1988; Walker, Kogut, and Shan, 1997). According to an alternate view, however, social structural advantages derive from the brokerage opportunities created by an open social structure (Burt, 1992). Actors can build relationships with multiple disconnected clusters and use these connections to obtain information and control advantages over others (Burt, 1992). From the perspective of the network theorist, these differences have different, even contradictory, normative implications (Walker, Kogut, and Shan, 1997). From Coleman's (1988) standpoint, the optimal social structure is one generated by building dense, interconnected networks. From Burt's (1992) position, constructing networks consisting of...