Relational Feature of R&D Alliance Portfolios and Firms' Innovation: The Moderating Effect of Geographic Diversity

Abstract

Abstract: Although existing literature has paid more attention to the effect of the average ties' strength on firm's innovation in R&D alliance portfolio, the conclusions are inconsistent. This study attempts to fill this gap by drawing on social network theory to examine how two relational features of R&D alliance portfolio, including average ties' strength and ties' strength dispersion (measured by standard deviation of the strength of ties between the focal firm and its partners), affects firms' innovation, and also explores the moderating effect of R&D partners' geographic diversity. At the same time, this study also divides firms' innovation into critical innovation and incremental innovation in order to explore the relationship between relational features of R&D alliance portfolio and firms' innovation in a more complete way. The empirical study, leveraging Chinese listed biopharmaceutical firms during a twenty-year period (1996-2016), reveals that average ties' strength imposes an insignificant influence on firms' critical innovation, but has an inverted U shaped effect on firms' incremental innovation; ties' strength dispersion positively relates to critical innovation, but negatively relates to firms' incremental innovation; geographic diversity will enhance the effect of average ties' strength and ties' strength dispersion on firms' critical innovation, reduce inverted U shaped effect of average ties' strength on firms' incremental innovation, but insignificantly moderate the relationship between ties' strength dispersion and firms' incremental innovation.

Key words: average ties' strength, ties' strength dispersion, geographic diversity, critical innovation, incremental innovation

Bi Jingyu, Xie En. Relational Feature of R&D Alliance Portfolios and Firms' Innovation: The Moderating Effect of Geographic Diversity[J]. Management Review, 2021, 33(10): 103-114.

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