Exploration versus exploitation: the influence of network density on firm's strategic choice between two types of innovation

Extant research has shown equivocal evidences of brokerage on firm innovation. We try to unpack the mixed findings by studying how network density among a firm's alliance partners influences exploratory innovation. Based on the idea that it is optimum for a firm to focus on one type of innovation when searching for resources from the alliance network, we posit that a low level, as well as a high level of network density, offer a suitable environment for exploratory innovation, but a medium level of network density is more conductive to exploitative innovation. A longitudinal investigation of 277 biopharmaceutical firms indicates a U-shaped relationship between network density and exploratory innovation. This relationship is positively moderated by absorptive capacity. The study integrates related theories and provides a comprehensive framework of how the connect tightness among a firm's partners impacts its exploration and exploitation behaviour.

Automated summary

This study examines the impact of network density among a firm's alliance partners on exploratory innovation and finds a U-shaped relationship. It also shows that this relationship is positively moderated by absorptive capacity, providing a comprehensive framework for understanding how the connect tightness among a firm's partners affects its exploration and exploitation behavior.