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The strength of long ties and the weakness of strong ties: Knowledge diffusion through supply chain networks

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  • Todo, Yasuyuki
  • Matous, Petr
  • Inoue, Hiroyasu

Abstract

Using a large firm-level panel dataset for Japan, this paper examines the effects of the structure of supply chain networks on productivity and innovation capability through knowledge diffusion. We find that ties with distant suppliers improve productivity (as measured by sales per worker) more than ties with neighboring suppliers, which is likely because distant firms’ intermediates embody more diversified knowledge than those from neighboring firms. Ties with neighboring clients improve productivity more than ties with distant clients, which is likely because neighboring clients more effectively diffuse disembodied knowledge than distant clients. By contrast, ties with distant suppliers and clients improve innovative capability (as measured by the number of registered patents), whereas ties with neighboring suppliers or clients do not affect innovative capability. In addition, the density of a firm's ego network (as measured by how densely its supply chain partners transact with one another) has a negative effect on productivity and innovative capability, implying knowledge redundancy in dense networks. These results suggest that access to diversified ties is important for improving productivity and innovation capability through knowledge diffusion.

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  • Todo, Yasuyuki & Matous, Petr & Inoue, Hiroyasu, 2016. "The strength of long ties and the weakness of strong ties: Knowledge diffusion through supply chain networks," Research Policy, Elsevier, vol. 45(9), pages 1890-1906.
  • Handle: RePEc:eee:respol:v:45:y:2016:i:9:p:1890-1906
    DOI: 10.1016/j.respol.2016.06.008
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    1. Christina Poetzsch, 2017. "Technology transfer on a two-way street: R&D spillovers through intermediate input usage and supply," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(4), pages 735-751, November.
    2. Ren Ze & Zhan Kun & Francis Boadu & Liu Yu, 2018. "The Effects of Boundary-Spanning Search, Network Ties, and Absorptive Capacity for Innovation: A Moderated Mediation Examination," Sustainability, MDPI, Open Access Journal, vol. 10(11), pages 1-18, October.
    3. HOSHINO Tadao & SHIMAMOTO Daichi & TODO Yasuyuki, 2017. "Accounting for Heterogeneity in Network Formation Behavior: An application to Vietnamese SMEs," Discussion papers 17023, Research Institute of Economy, Trade and Industry (RIETI).
    4. Isaksson, Olov H.D. & Simeth, Markus & Seifert, Ralf W., 2016. "Knowledge spillovers in the supply chain: Evidence from the high tech sectors," Research Policy, Elsevier, vol. 45(3), pages 699-706.
    5. Suminori Tokunaga & Maria Ikegawa, 2019. "Global supply chain, vertical and horizontal agglomerations, and location of final and intermediate goods production sites for Japanese MNFs in East Asia: evidence from the Japanese Electronics and Au," Asia-Pacific Journal of Regional Science, Springer, vol. 3(3), pages 911-953, October.
    6. Shigeno, Hidenori & Tsuji, Masatsugu & Matsuzaki, Taisuke & Shinohara, Sobee, 2017. "ICT Use, Connectivity, and Innovation Capability in Japanese SMEs," 28th European Regional ITS Conference, Passau 2017 169498, International Telecommunications Society (ITS).
    7. IINO Takashi & INOUE Hiroyasu & SAITO Yukiko & TODO Yasuyuki, 2018. "How Does the Global Network of Research Collaboration Affect the Quality of Innovation?," Discussion papers 18070, Research Institute of Economy, Trade and Industry (RIETI).
    8. Martin Andersson & Trudy-Ann Stone, 2017. "Global sourcing and technical efficiency – a firm-level study on the ICT industry in Sweden," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 18(5), pages 877-896, September.
    9. INUI Tomohiko & KODAMA Naomi, 2016. "The Effects of Japanese Customer Firms' Overseas Outsourcing on Supplier Firms' Performance," Discussion papers 16106, Research Institute of Economy, Trade and Industry (RIETI).
    10. LU Yi & OGURA Yoshiaki & TODO Yasuyuki & ZHU Lianming, 2017. "Supply Chain Disruptions and Trade Credit," Discussion papers 17054, Research Institute of Economy, Trade and Industry (RIETI).
    11. Agnieszka Zakrzewska-Bielawska, 2018. "The Relationship between Managers’ Network Awareness and the Relational Strategic Orientation of their Firms: Findings from Interviews with Polish Managers," Sustainability, MDPI, Open Access Journal, vol. 10(8), pages 1-20, August.
    12. Wan, Bingyue & Tian, Lixin & Zhu, Naiping & Gu, Liqin & Zhang, Guangyong, 2018. "A new endogenous growth model for green low-carbon behavior and its comprehensive effects," Applied Energy, Elsevier, vol. 230(C), pages 1332-1346.
    13. SHIMAMOTO Daichi & TODO Yasuyuki, 2015. "Economic and Political Networks and Firm Openness: Evidence from Indonesia," Discussion papers 15084, Research Institute of Economy, Trade and Industry (RIETI).
    14. Mbugua, M. & Nzuma, J. & Muange, E. & Njuguna, M. & Jaeckering, L., 2018. "Social Networks and Household Dietary Diversity, Evidence from Smallholder Farmers in Kenya," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277341, International Association of Agricultural Economists.
    15. Rene Belderbos & Kyoji Fukao & Kenta Ikeuchi & Young Gak Kim & Hyeog Ug Kwon, 2015. "Buyers, suppliers, and R&D spillovers," Working Papers of Department of Management, Strategy and Innovation, Leuven 502593, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
    16. Bi, Xiang & Mullally, Conner, 2017. "Does Peer Adoption Increase the Diffusion of Pollution Prevention Practices?," SocArXiv 95xbj, Center for Open Science.

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