Doctoral Dissertation Research: Knowledge Flow and Value Creation: Integrating Structural Embeddedness and Knowledge Embeddedness in Alliance Networks

University Of Pittsburgh, Pittsburgh PA

Investigators

Abstract

Scholars are just beginning to examine the relationship between firms' alliance connections and their innovation outcomes and have reported intriguing yet conflicting results. To further understanding in this area, I investigate how characteristics of firms' alliance partners and the structure of alliance networks jointly affect their capabilities to innovate. Firms are 'structurally embedded' in inter-organizational networks, and these patterns of inter-firm relations inform us about the knowledge exchange through a network, and hence indicate specific organizational informational advantages due to firms' network positions. However, structural approaches ignore firm heterogeneity in knowledge possession. This study introduces the concept of 'knowledge embeddedness' to address the fact that members of a network may possess very different types of expertise. Knowledge embeddedness describes the relationships between a focal firm's knowledge and its partners' knowledge, as well as the distribution of expertise among the members of a network. I seek to integrate these two perspectives in my thesis by proposing that network structure influences the pattern of knowledge flow and exchange, while knowledge relations among firms affect the content of exchange. I examine the relationships between structural embeddedness, knowledge embeddedness, and firms' innovativeness in the pharmaceutical industry. The pharmaceutical industry has undergone fast technology advancement over the decades and product innovation is critical for firms' steady growth. Nevertheless due to the complexity of technology involved, firms often find that they lack necessary knowledge and resources, and hence seek alliance partners to cooperate in product development. I used primary business designation to identify a population of 228 firms in pharmaceutical preparation industry (SIC2834) as listed by COMPUSTAT during the period from 1990 to 2000. The alliance activities of these firms will be gathered from a variety of sources: Recombination Capital, SEC filings, and a list of industrial newspapers and journals (such as Drug Store News, Healthcare Financial Management, Health Industry Today, Pharmaceutical Executive, Pharmaceutical Technology, R & D Focus Drug News). I will collect patent data from USPTO, the official U.S. patent database containing the searchable full-text patent records. This study will contribute to existing research by developing an integrated explanation of how network relations and partner knowledge characteristics jointly affect innovation performance, and by investigating whether certain network positions or partner attributes enhance both the rate of innovation and the value of a firm's innovations. By identifying the unique and joint contributions of structural and knowledge relationships among firms to innovation outcomes, the study will enable managers and policy makers to more efficiently and effectively allocate resources to research and development initiatives. Moreover, the study has broad implications for our understanding of how knowledge and information travel through networks of organizations. This is important for predicting how networks influence such outcomes as the diffusion and adoption of novel organizational forms, management practices, and new technologies, outcomes that have wide-reaching implications for economic growth and social welfare. The results will also be used to develop teaching materials for courses on managing alliance networks and innovation.