Network structure and innovation: The leveraging of a dual network as a distinctive relational capability

Antonio Capaldo
2007 Strategic Management Journal  
This paper employs comparative longitudinal case study research to investigate why and how strong dyadic interfirm ties and two alternative network architectures (a 'strong ties network' and a 'dual network') impact the innovative capability of the lead firm in an alliance network. I answer these intrinsically cross-level research questions by examining how three design-intensive furnishings manufacturers managed their networks of joint-design alliances with consulting industrial design firms
more » ... er more than 30 years. Initially, in order to explore the sample lead firms' alliance behavior, I advance an operationalization of interorganizational tie strength. Next, I unveil the strengths of strong ties and the weaknesses of a strong ties network. Finally, I show that the ability to integrate a large periphery of heterogeneous weak ties and a core of strong ties is a distinctive lead firm's relational capability, one that provides fertile ground for leading firms in knowledge-intensive alliance networks to gain competitive advantages whose sustainability is primarily based on the dynamic innovative capability resulting from leveraging a dual network architecture. relational capabilities. The primary objective of this study is to shed light on a single relational capability, namely the lead firm's capability to sustain its innovativeness by creating and managing the overall architecture of its network over time. This demands a deeper analysis of the relationships between network structure and firm-level innovation. Despite some research on the relationships between network structure and effectiveness in health services (Provan and Milward, 1995) , and between network structure and various organizational outcomes in SME networks (Human and Provan, 1997) , little is known about whether, why, and how different network architectures exert asymmetric impacts on the innovative capability of the network's leading actor. Several contributions (Uzzi,
doi:10.1002/smj.621 fatcat:j3hamspl7ffjvk7zh32wma624y