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In this paper, we examine how the configuration of intraorganizational networks, and in particular, cohesion among members of an organization, influences organizations' innovative output. We argue that the cohesion among R& D scientists could be at a local level or a global level, and that local and global cohesion may have different impacts on firms' innovation performance. We test our hypotheses by examining the structure of the R& D collaboration networks within firms that operated in the pharmaceutical industry between 1981 and 1989, and their innovative outcomes —patents that led to new product launches. We find that local cohesion has a positive impact on the innovative performance of a firm, and global cohesion has a negative impact.

In this paper, knowledge creation is considered as a path-dependent evolutionary process that involves recombining knowledge spread over time. The findings of the paper suggest that a balance in combining current knowledge with the knowledge available across large time spans is an important factor that explains the impact of new knowledge. These ideas are empirically tested using patent data from the pharmaceutical industry. Results from the analysis offer support for the hypotheses developed in the paper.

In this paper, we suggest that the characteristics of individual positions in an intraorganizational network of inventors or intrafirm knowledge network predict the likelihood with which knowledge created by an inventor is used in the firm’s research and development (R&D) activities. Such choices lead to path dependence and subsequent specialization. We provide empirical evidence that a firm’s R&D is concentrated in those areas where it chooses to recombine knowledge, offering support for the path-dependent evolution of capabilities. We test this theory by analyzing the R&D networks in DuPont, a highly regarded Fortune 500 chemical company. Cox Proportional Regression models of intrafirm citations on network characteristics offer strong empirical support for our theory.

Recognition of the firm's tendency toward local search has given rise to concepts celebrating exploration that overcomes this tendency. To move beyond local search requires that exploration span some boundary, be it organizational or technological. While several studies have encouraged boundary-spanning exploration, few have considered both types of boundaries systematically. In doing so, we create a typology of exploration behaviors: local exploration spans neither boundary, external boundary-spanning exploration spans the firm boundary only, internal boundary-spanning exploration spans the technological boundary only, and radical exploration spans both boundaries. Using this typology, we analyze the impact of knowledge generated by these different types of exploration on subsequent technological evolution. In our study of patenting activity in optical disk technology, we find that exploration that does not span organizational boundaries consistently generates lower impact on subsequent technological evolution. In addition, we find that the impact of exploration on subsequent technological evolution within the optical disk domain is highest when the exploration spans organizational boundaries but not technological boundaries. At the same time, we find that the impact of exploration on subsequent technological development beyond the optical disk domain is greatest when exploration spans both organizational and technological boundaries.

Acquisition integration is a pivotal factor in determining whether the objectives of an acquisition are achieved. In this paper, we hypothesize that the productivity of corporate scientists of acquired companies is generally impaired by integration, but that some scientists experience more disruption than others. In particular, acquisition integration will be most disruptive, leading to the most severe productivity drops, for those inventors who have lost the most social status and centrality in the combined entity. Drawing from prior literatures on the knowledge-based view of the firm, and on mergers and acquisitions, we develop hypotheses about a concise set of conditions that will lead to substantial performance drops for acquired technical personnel. We test our hypotheses, using patent application data, on a sample of 3,933 inventors in pharmaceutical firms whose companies were acquired. Results are strongly in line with our theorized expectations.

Real options reasoning (ROR) is a conceptual approach to strategic investment that takes into account the value of preserving the right to make future choices under uncertain conditions. In this study, we explore firms' motivations to invest in a new option. We find, based on an analysis of a large sample of patents by firms active in the pharmaceutical industry, that their investments in R&D are consistent with the logic of ROR. We identify three constructs--scope of opportunity, prior experience, and competitive effects--which have an influence on firms' propensity to invest in new R&D options and which could usefully be incorporated in a strategic theory of investment.

Research Summary: This study explores the role of knowledge interdependencies on the termination of patented inventions. Termination refers to the abandonment of inventive efforts that are no longer deemed promising. We argue that high interdependencies between an inventive effort and the other inventions in the same research program will increase the cognitive burden on managers and decrease the likelihood of termination. Further, in the presence of interdependencies, managers are likely to rely on heuristics for termination decisions. We focus on two such heuristics: interdependencies of an invention with those in other research programs and the level of external competition in the research program. We test our hypotheses with longitudinal data on patent terminations through non-payment of renewal fees in the pharmaceutical industry. Managerial Summary: Effective management of innovation portfolios requires termination of opportunities that are no longer promising. Most current tools on termination assume that opportunities to be evaluated are independent from one another. This assumption may limit their usefulness in increasingly complex research domains, such as pharmaceutical R&D. In this study, we investigate how interdependencies among inventions influence firms' tendency to terminate those inventions. Our results on patent terminations show that a patent that is more interdependent with other patents in the same research program is less likely to be terminated. This suggests that managers may have difficulty in evaluating the inherent value of interdependent opportunities. This result is stronger when the patent is less interdependent with those in other research programs or in a more competitive area.

Research and development (R&D) consortia are specialized strategic alliances that shape the direction and scope of firm innovation activities. Little research exists on the performance consequences of participating in R& D consortia. We study the effect of patent pools, a unique form of R& D consortia, on firm performance in innovation. While prior research on alliances generally implies that patent pools enhance firm innovation, our study finds the opposite. Analyzing data on systemic innovation in the global optical disc industry, we find that patent pool formation substantially and significantly decreases both the quantity and quality of patents subsequently generated by licensors and licensees relative to the patenting activity of nonparticipants. Our empirical findings suggest that patent pools actually inhibit, rather than enhance, systemic innovation by participating firms.

This study builds on the knowledge spillover theory of entrepreneurship to examine the factors that influence the decision of latent entrepreneurs to move from opportunity recognition to opportunity exploitation and emergent entrepreneurship. Using data on independent inventors from 1975 to 2010, we examine how social, geographic, and industry knowledge spillovers influence the likelihood of technological entrepreneurship. We find that social and geographic knowledge spillovers promote independent inventors’ transition to entrepreneurship, while industry knowledge spillovers may result in deterrents that inhibit their hazard of forming a new venture. Plain English Summary Spillovers play a strong role in entrepreneurial processes, but are not always positive influences. While social and geographic spillovers can lead to emergent entrepreneurship, industry ties can hold back latent entrepreneurs. This helps answer the question: where do new firms come from? In this study, we explore the entrepreneurship process of independent inventors to understand what prompts these latent entrepreneurs to transition from creating a new technology to launching a new business. Our focus is on “knowledge spillovers,” the sharing of ideas across regions, social networks, and industry. We find that social and geographic spillovers increase the likelihood of inventors becoming entrepreneurs. Additional findings reveal that industry spillovers may limit entrepreneurship, especially for those with personal financial resources, suggesting that affiliations can be both a source of knowledge and a constraint on entrepreneurial pursuits. This insight reveals the complex interplay of knowledge-sharing in shaping the entrepreneurial process of independent inventors.

We examine the attributes of technological inventions that influence their commercialization. Using a unique dataset of the Massachusetts Institute of Technology (MIT)-licensed patents, we show that the likelihood of invention commercialization, which we measure by the achievement of first sale, is positively associated with two characteristics of licensed technological inventions--scope and pioneering nature--and has an inverted U-shaped relationship with the age of the invention.