Structural social capital evolution and knowledge transfer: Evidence from an Irish pharmaceutical network

Businesses are becoming increasingly involved in collaboration networks to access external knowledge and sustain innovation. In this context, knowledge and knowledge transfer are considered an important source of innovation and competitive advantage. Social capital theory offers a theoretical approach to explain how individuals, groups, and organizations manage relationships and access knowledge resources. The structural dimension of social capital has stimulated debate regarding optimal network configuration to achieve innovation. The extant literature suggests network structures evolve from a bridging configuration to a bonding configuration without examining the details of how the evolution occurs within the network and its stage-by-stage impact on knowledge transfer. This study explores this relationship by analyzing the evolution of a successful Irish pharmaceutical network involving organizations from industry and academia. This research setting encompasses a rare network configuration in an industry known for its lack of collaboration among competing firms. Findings show that structural holes provide access to a set of complementary and heterogeneous knowledge. However, for such knowledge to be exploited, the network configuration has to evolve from a sparse network (small in size and characterized by weak ties across multiple organizational networks), to a large and cohesive network configuration characterized by high levels of commitment, trust, fine-grained information exchange, and joint problem solving. Mechanisms crucial to this evolution include consistently-scheduled meetings, training to communicate tacit knowledge, wide diffusion of knowledge through an on online portal, and relationship specific investments designed to safeguard intellectual property. Surprisingly, industry members appear to transition to a cohesive network faster than do academic members.