“…We demonstrated that the benefits of this type of network structure on firm innovation become negative beyond a certain point, as hypothesized. In this sense, our study contributes to both the traditional social capital literature that proposes a direct and positive link between dense and strong-tie networks and innovation (del Corte-Lora et al, 2015; Molina-Morales & Martínez-Fernández, 2010; Obstfeld, 2005; Tsai & Ghoshal, 1998, among others), and the more recent body of literature that has started questioning the directionality of that relationship (Expósito-Langa & Molina-Morales, 2010; Guler & Nerkar, 2012; Molina-Morales et al, 2011; Parra-Requena et al, 2015, among others). Aligned with those recent studies, our results suggest that closed networks provide firms with both advantages (e.g., information exchange, access to valuable assets, low opportunistic behavior, cooperative environment, low agency and transaction costs, and improved adaptability to change) and disadvantages (e.g., redundant information, inertia, myopia, and costs of maintaining connections) in regard to generating innovations.…”