Collaboration networks and radical innovation: Two faces of tie strength and structural holes

Abstract

This paper studies how tie strength and structural holes collectively affect innovation radicalness at a location within an innovating firm. We identified 16,011 inventors’ locations of the 93 most innovative U.S. pharmaceuticals and biotechnology companies on the EU Industrial R&D Investment Scoreboard. We tracked their patents from 2001 to 2013 and constructed a panel dataset for analysis. Using firm-location fixed effect models, we found that the average tie strength of a location's egocentric network has a negative effect on innovation radicalness, and this negative effect is stronger when the location's egocentric network is cohesive. This suggests that weak ties have informational advantages for radical innovation, which are more pronounced when there is network cohesion to mitigate the relational disadvantages of weak ties. We also found a negative effect of structural holes on innovation radicalness when tie strength is weak but a positive effect when tie strength is strong. This indicates that strong ties are needed for mobilizing the informational advantages associated with structural holes.