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Bilateral Collaboration and the Emergence of Innovation Networks

  • Robin Cowan

    ()

    (UNU-MERIT, University of Maastricht, P.O. Box 616, 6200 MD Maastricht, The Netherlands)

  • Nicolas Jonard

    ()

    (CNRS, CREA, Ecole Polytechnique, 1 Rue Descartes, 75005 Paris, France)

  • Jean-Benoit Zimmermann

    ()

    (CNRS, GREQAM, EHESS, 2 Rue de la Charité, 13002 Marseille, France)

In this paper, we model the formation of innovation networks as they emerge from bilateral decisions. In contrast to much of the literature, here firms only consider knowledge production, and not network issues, when deciding on partners. Thus, we focus attention on the effects of the knowledge and information regime on network formation. The effectiveness of a bilateral collaboration is determined by cognitive, relational, and structural embeddedness. Innovation results from the recombination of knowledge held by the partners to the collaboration, and its success is determined in part by the extent to which firms' knowledge complement each other. Previous collaborations (relational embeddedness) increase the probability of a successful collaboration, as does information gained from common third parties (structural embeddedness). Repeated alliance formation creates a network. Two features are central to the innovation process: how firms pool their knowledge resources, and how firms derive information about potential partners. When innovation is decomposable into separate subtasks, networks tend to be dense; when structural embeddedness is important, networks become cliquish. For some regions in this parameter space, small worlds emerge.

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File URL: http://dx.doi.org/10.1287/mnsc.1060.0618
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Article provided by INFORMS in its journal Management Science.

Volume (Year): 53 (2007)
Issue (Month): 7 (July)
Pages: 1051-1067

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Handle: RePEc:inm:ormnsc:v:53:y:2007:i:7:p:1051-1067
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  1. Goyal, S. & Joshi, S., 2000. "Networks of Collaboration in Oligopoly," Econometric Institute Research Papers EI 9952-/A, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
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  6. Watts, Alison, 2001. "A Dynamic Model of Network Formation," Games and Economic Behavior, Elsevier, vol. 34(2), pages 331-341, February.
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  9. Teece, David J., 1986. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," Research Policy, Elsevier, vol. 15(6), pages 285-305, December.
  10. Gabrielle Demange & Wooders Myrna, 2005. "Group Formation in Economics: Networks, Clubs and Coalitions," Post-Print halshs-00576778, HAL.
  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. Cowan Robin & Jonard Nicolas, 1999. "Network Structure and the Diffusion of Knowledge," Research Memorandum 026, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
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