What kinds of innovation benefits do firms get from R&D alliance networks?

What is it about?

In high-technology industries, firms innovate through R&D alliances by obtaining bits of knowledge from different partners and recombining that knowledge -- a process labeled as "brokerage." As these R&D alliances become more global, firms find that their R&D networks increasingly span domestic and international borders. We find that firms achieve radical innovation but low innovation productivity by brokering across foreign partners, and high innovation productivity but low innovation novelty by brokering across domestic partners. This shows that there's a tradeoff between novelty and productivity depending on the location of alliance partners.

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Why is it important?

Innovation is increasingly becoming essential for many firms in many industries. In high-technology settings, where knowledge is complex and widely distributed, firms must rely on R&D partnerships to innovate. But are all partnerships created equal as sources of innovation? We find that they are not, depending on the configuration of nationalities which the firm "brokers" as it combines knowledge from pairs of partners. The results help managers understand what portions of their networks help them enhance innovation productivity (the domestic partnerships) and what portions help them enhance innovation radicalness (the international ones).