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Emergence of Innovation Networks from R&D Cooperation with Endogenous Absorptive Capacity

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  • Ivan Savin
  • Abiodun Egbetokun

Abstract

This paper extends the existing literature on strategic R&D alliances by presenting a model of innovation networks with endogenous absorptive capacity. The networks emerge as a result of bilateral cooperation over time between firms occupying different locations in the knowledge space. Social capital is ignored, and firms ally purely on the basis of knowledge considerations. Partner selection is driven largely by absorptive capacity which is itself influenced by cognitive distance and investment allocation between inventive and absorptive R&D. Cognitive distance between firms changes as a function of the intensity of cooperation and innovation. Within different knowledge regimes, we examine the structure of networks that emerge and how firms perform within such networks. Our model replicates some stylised empirical results on network structure and the contingent effects of network position on innovative performance. We find networks that exhibit small world properties which are generally robust to changes in the knowledge regime. Second, subject to the extent of knowledge spillovers, certain network strategies such as occupying brokerage positions or maximising accessibility to potential partners pay off. Third and most importantly, absorptive capacity plays an important role in network evolution: firms with different network strategies indeed differ in the build-up of absorptive capacity.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 13-022.

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Length: 39 p.
Date of creation: 22 May 2013
Date of revision:
Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/143871

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Keywords: absorptive capacity; agent-based modeling; cognitive distance; dynamics; innovation; knowledge spillovers; networks;

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  1. Wuyts, Stefan & Colombo, Massimo G. & Dutta, Shantanu & Nooteboom, Bart, 2005. "Empirical tests of optimal cognitive distance," Journal of Economic Behavior & Organization, Elsevier, vol. 58(2), pages 277-302, October.
  2. Robin Cowan & Nicolas Jonard & Jean-Benoit Zimmermann, 2007. "Bilateral Collaboration and the Emergence of Innovation Networks," Management Science, INFORMS, vol. 53(7), pages 1051-1067, July.
  3. Nooteboom, B. & Vanhaverbeke, W.P.M. & Duijsters, G.M. & Gilsing, V.A. & Oord, A., 2006. "Optimal Cognitive Distance and Absorptive Capacity," Discussion Paper 2006-33, Tilburg University, Center for Economic Research.
  4. Nooteboom, B. & Gilsing, V.A. & Vanhaverbeke, W.P.M. & Duijsters, G.M. & Oord, A., 2006. "Network Embeddedness and the Exploration of Novel Technologies: Technological Distance, Betweenness Centrality and Density," Discussion Paper 2006-32, Tilburg University, Center for Economic Research.
  5. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
  6. Joel A. C. Baum & Robin Cowan & Nicolas Jonard, 2010. "Network-Independent Partner Selection and the Evolution of Innovation Networks," Management Science, INFORMS, vol. 56(11), pages 2094-2110, November.
  7. Cristiano Antonelli & Jackie Krafft & Francesco Quatraro, 2010. "Recombinant Knowledge and Growth: The Case of ICTs," Post-Print hal-00448649, HAL.
  8. Winker, Peter & Gilli, Manfred, 2004. "Applications of optimization heuristics to estimation and modelling problems," Computational Statistics & Data Analysis, Elsevier, vol. 47(2), pages 211-223, September.
  9. Blueschke, D. & Blueschke-Nikolaeva, V. & Savin, I., 2013. "New insights into optimal control of nonlinear dynamic econometric models: Application of a heuristic approach," Journal of Economic Dynamics and Control, Elsevier, vol. 37(4), pages 821-837.
  10. Abiodun Egbetokun & Ivan Savin, 2014. "Absorptive capacity and innovation: when is it better to cooperate?," Journal of Evolutionary Economics, Springer, vol. 24(2), pages 399-420, April.
  11. Joel A. C. Baum & Andrew V. Shipilov & Tim J. Rowley, 2003. "Where do small worlds come from?," Industrial and Corporate Change, Oxford University Press, vol. 12(4), pages 697-725, August.
  12. Uwe Cantner & Andreas Meder, 2007. "Technological proximity and the choice of cooperation partner," Journal of Economic Interaction and Coordination, Springer, vol. 2(1), pages 45-65, June.
  13. Gilli, M. & Winker, P., 2003. "A global optimization heuristic for estimating agent based models," Computational Statistics & Data Analysis, Elsevier, vol. 42(3), pages 299-312, March.
  14. Fabrizio, Kira R., 2009. "Absorptive capacity and the search for innovation," Research Policy, Elsevier, vol. 38(2), pages 255-267, March.
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