Collaboration Networks, Structural Holes, and Innovation: A Longitudinal Study

To assess the effects of a firm's network of relations on innovation, this paper elaborates a theoretical framework that relates three aspects of a firm's ego network—direct ties, indirect ties, and structural holes (disconnections between a firm's partners)—to the firm's subsequent innovation output. It posits that direct and indirect ties both have a positive impact on innovation but that the impact of indirect ties is moderated by the number of a firm's direct ties. Structural holes are proposed to have both positive and negative influences on subsequent innovation. Results from a longitudinal study of firms in the international chemicals industry indicate support for the predictions on direct and indirect ties, but in the interfirm collaboration network, increasing structural holes has a negative effect on innovation. Among the implications for interorganizational network theory is that the optimal structure of interfirm networks depends on the objectives of the network members.