Networks, Propinquity, and Innovation in Knowledge-intensive Industries

Abstract

Industrial districts and regional clusters depend on the networks that arise from reciprocal linkages among co-located organizations, while physical proximity among firms can alter the nature of information and resource flows through networks. We consider the joint effects of geographic propinquity and network position on organizational innovation using negative binomial count models of patenting activity for U.S.-based life science firms in industrial districts and regional clusters across a 12-year time period, 1988–1999. We find evidence that regional agglomeration and network centrality exert complementary, but contingent, influences on organizational innovation. Results show that in the high-velocity, research-intensive field of biotechnology, geographic and network positions have both independent and contingent effects on organizational innovation. The influence of centrality in local, physically co-located partner networks depends on the extent to which firms are also embedded in a global network comprising physically distant partners. Such global centrality, however, alters how proximity to two important classes of organization-other biotechnology firms and public sector research organizations, such as universities, research institutes, and teaching hospitals—influences innovation. Regional agglomeration shapes the character of information and resource flows through networks, while much of what makes industrial clusters region-like involves the structure of their internal networks. We conclude that network effects persist both independently and interdependently with geographic variables, and regional characteristics influence the degree to which centrality enhances innovation.

International exposure through network relationships: Implications for new venture internationalization

“…For instance, there has been a stream of research questioning the value of co-location or geographically proximate firms for firms' external learning. There has been research reporting no effect of geographic proximity on firm innovation (e.g., Ganesan et al, 2005 andTallman andPhene, 2007); there have also been studies suggesting that, although geographically proximate firms might be a useful group to turn to for knowledge acquisition, such value is not always fundamental and depends on contextual (e.g., Davenport, 2005, Lemarié et al, 2001and McKelvey et al, 2003 and firm (e.g., Folta, 2009 andWhittington et al, 2009) factors. We argue that one critical situational factor is the venture's international exposure from alliance partners.…”

Exploring the Interaction of Space and Networks in the Creation of Knowledge: An Introduction

“…Social network studies also point to a number of structural conditions that are conducive to innovation, such as the number of relationships (e.g., Powell, Koput, & Smith-Doerr, 1996;Zaheer, Gözübüyük, & Milanov, 2010), the quality of those relationships (Granovetter, 1985;Uzzi & Lancaster, 2003), and the location of an actor in the overall structure of a network (Whittington, Owen-Smith, & Powell, 2009). Researchers have found various structural concepts to be positively related with innovation, such as actor centrality (Owen-Smith & Powell, 2004;Whittington et al, 2009), boundary-spanning locations between one's own group and other groups (Krackhardt & Stern, 1988), and intermediate positions between a core and a periphery (Cattani & Ferriani, 2008).…”

“…Researchers have found various structural concepts to be positively related with innovation, such as actor centrality (Owen-Smith & Powell, 2004;Whittington et al, 2009), boundary-spanning locations between one's own group and other groups (Krackhardt & Stern, 1988), and intermediate positions between a core and a periphery (Cattani & Ferriani, 2008). Theories of structural holes (Burt, 1992(Burt, , 2004Obstfeld, 2005) and of structural folds (Vedres & Stark, 2010) have developed rich explanations of how network location affects the access to information and the co-creation of knowledge.…”

“…One explanation of this finding is that proximity allows for knowledge spillovers within the entire network of alliances and beyond the dyadic alliances. In a subsequent analysis of U.S. biotechnology, Whittington et al (2009) demonstrated that the innovativeness of biotech firms benefits from geographical proximity and network centrality in ways that depend on a variety of factors. The effect of the centrality of firms in the interorganizational network was very much a function of proximity: Highly central firms were more likely to be innovative if sited close to other firms than if sited far away from them.…”

14 Organizational and Institutional Genesis

“…Despite divergent origins and founding models, the three established regions display similar patterns of organizational diversity and network configurations that support sustained regional activity (Whittington, Owen-Smith and Powell, 2009). But at the dawn of the new industry, it was not obvious that the Bay Area, Boston, and San Diego were necessarily the most or the only propitious venues for the field to emerge.…”