Following the dynamic capabilities perspective, we suggest that antecedents to innovation can be found at the individual, firm, and network levels. Thus, we challenge two assumptions common in prior research: (1) that significant variance exists at the focal level of analysis, whereas other levels of analysis are assumed to be homogeneous, and (2) that the focal level of analysis is independent from other levels of analysis. Accordingly, we advance a set of hypotheses to simultaneously assess the direct effects of antecedents at the individual, firm, and network levels on innovation output. We then investigate whether a firm's antecedents to innovation lie across different levels. To accomplish this, we propose two competing interaction hypotheses. We juxtapose the hypothesis that the individual-, firm-, and network-level antecedents to innovation are substitutes versus the proposition that these innovation mechanisms are complements. We test our multilevel theoretical model using an unusually comprehensive and detailed panel data set that documents the innovation attempts of global pharmaceutical companies within biotechnology over a 22-year time period (1980–2001). We find evidence that the antecedents to innovation lie across different levels of analysis and can have compensating or reinforcing effects on firm-level innovative output.
Drawing on the organizational learning literature, we posited that both general, diverse-partner experience and partner-specific experience contribute to alliance performance, but at a declining rate. We tested hypotheses in unique data on the objective performance of projects between large pharmaceutical firms and biotechnology partners. The general alliance experience of the biotechnology partners, but not of the pharmaceutical firms, positively affected joint project performance. This relationship exhibited diminishing marginal returns. Contrary to predictions, partner-specific experience had a negative, marginally significant effect on joint project performance.
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