Good for One, Bad for Most? Intrafirm Networks and Innovation at the Inventor and Firm Level

Abstract

A well-established finding in network research is that central inventors within a firm’s internal network are more likely to produce impactful innovations. Complementing such predominant actor-level viewpoint, we examine under what conditions the pursuit of network advantage by central actors contributes to, or detracts from, the innovative performance of the firm as a whole. We argue that the extent to which the benefits of centrally connected individuals spill over to the firm depends on the distribution of network centrality within the network and on the type of knowledge exchanges. We test our predictions by examining the internal networks of 141 semiconductor firms, and the position of individual inventors therein, between 1986 and 2003. Bringing new insights on the trade-off between individual and collective outcomes within organizations, we find that the same network structures enhancing the innovativeness of central inventors often reduce the firm-level ability to come out with impactful innovations.