R&D Modes and Firm Performance: The Moderating Role of Network Structure

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ABSTRACTFirms frequently face two R&D decisions: whether to leverage internal or external resources along the organizational dimension and whether to conduct exploration or exploitation along the technological dimension. The resulting four R&D modes are internal exploration, internal exploitation, external exploration, and external exploitation. Over the past 15 years, as changes in market demand have accelerated and R&D has become more difficult, firms are no longer relying heavily on internal exploitation and are increasingly choosing the other three R&D modes. The majority of extant studies have drawn on ambidexterity theory to examine whether and how the balance of R&D modes contributes to firm performance. However, few studies have directly compared the mechanisms by which the four R&D modes affect firms' short‐ and long‐term performance. Moreover, as firms are increasingly engaging in external R&D collaboration, it is also worth exploring how the characteristics of firms' external network structure moderate these relationships. This work examines the distinctive performance impacts of the four R&D modes by constructing a panel dataset that combines the patent and financial data of 587 Chinese high‐tech firms between 2008 and 2017. Moreover, based on an index (network structure exploitation) that depicts the extent to which firms rely on previous collaborative partners in their current network, this work proposes that a familiar network structure plays different moderating roles in the relationships between the two external R&D modes and financial performance. The findings can help guide high‐tech firms in optimizing R&D resource allocation and establishing efficient collaboration networks.