Entry into Insular Domains: A Longitudinal Study of Knowledge Structuration and Innovation in Biotechnology Firms

Abstract

We focus on the firm's decision to enter insular technology domains and its effect on the impact that its subsequent innovation has on the field. Insular domains are technical domains that rely heavily on prior innovations within the same domain for subsequent innovations. We show that the returns to entering insular domains vary with the firm's depth and breadth of knowledge. By analysing data from 128 biotechnology firms over a 20-year period, we find that the relationship between depth of technological capabilities and technology impact is nuanced: depth is necessary but not sufficient for high impact innovation. Firms whose knowledge is spread over disparate domains have negative returns from entering insular domains. The implications of these findings for theories of innovation and the discovery of entrepreneurial opportunities are discussed. Copyright (c) Blackwell Publishing Ltd 2008.

Technology entrepreneurship research opportunities: insights from across Europe

“…1 According to Alvarez and Barney (2005), in a high uncertainty environment, entrepreneurs struggle to identify which resources to assemble and coordinate. In these scenarios, collaboration and knowledge exchange are invaluable for the development of capabilities required to exploit opportunities (George et al 2008). Despite offering potentially invaluable insights for theories of entrepreneurial behavior and venture growth, the development of entrepreneurial coping strategies under high uncertainty has proved challenging to observe empirically.…”

Which Problems to Solve? Online Knowledge Sharing and Attention Allocation in Organizations

“…Broad problems are likely to generate greater cognitive load than narrow problems because they are likely to be inherently more difficult, controlling for expertise matching, since they span multiple domains of expertise and thus require that providers construct and utilize more complex schemas to process them (Dane, 2010). Problems that are novel for the forum likewise are likely to create greater cognitive load than problems that are routine for the forum, either because they are inherently more difficult to address as the knowledge provider does not possess the schemas needed to process them and must build them from scratch; or because even if the provider does possess the necessary schemas, the novelty of the problem for the forum means there is still more work to be done to help others understand the solution than is needed for a routine problem (George et al, 2008;Kotha et al, 2013). Thus, problems with high levels of length, breadth, or novelty impose higher cognitive loads on potential knowledge providers, increasing the costs of allocating attention to such problems.…”

“…This makes it quicker and easier for the provider to make sense of the problem, grasp its intricacies, contingencies, and ramifications, situate it in a broader knowledge landscape, and identify and articulate a solution (Sole & Edmondson, 2002;Thomas, Sussman & Henderson, 2001;Tsai, 2001). In contrast, potential knowledge providers may find it more difficult to solve or even understand a problem when the content of their expertise and the content of the problem are more divergent, due to their lower absorptive capacity and the insularity of their knowledge base (George, Kotha & Zheng, 2008), making it costlier to respond effectively.…”

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“…Though searching widely for technology solutions has positive implications, extensive experimentation without deep understanding of the causal relationships between components may prove counterproductive (George et al, 2008;Lee et al, 2004;Yayavaram and Ahuja, 2008). Entering multiple new technological niches simultaneously necessitates experimentation to understand the technology domains and their underlying science.…”