The influences of characteristics of three intrafirm networks on firm exploitative and exploratory innovation

Abstract

Existing literature suggests that firm innovation is embedded in the social network of R&D cooperation between employees and the knowledge network of co-application between knowledge elements. We additionally investigate a two-mode network composed of linkage between employees and knowledge elements, namely the employee-knowledge network. Using the patent information of 39 Chinese high-tech firms from the pharmaceutical, automobile, electronics, and telecommunication industries, we construct three intrafirm networks, namely employee cooperative network, knowledge network, and employee-knowledge network, extract network characteristics, including tie quantity, tie heterogeneity, and tie proportion of preexisting agents with new agents, and examine their influences on firm innovation. The findings suggest that ties of employee cooperative network and employee-knowledge network positively impact firm exploitative innovation rather than exploratory innovation, while ties of knowledge network positively impact both types of firm innovation. Tie heterogeneity of all three networks positively impacts on firm exploitative as well as exploratory innovation. Tie proportion of preexisting agents with new agents of knowledge network and employee-knowledge network positively impact firm exploratory innovation rather than the exploitative one, while tie proportion of preexisting agents with new agents of employee cooperative network positively impacts both types of firm innovation.