The Impact of Firm Interdependency and IT Structure on Relational Rents in Innovation Collaboration Networks Paul M. Di Gangi Florida State University College of Business Ashley A. Bush Florida State University College of Business

Paul M. Di Gangi

Florida State University

College of Business

Ashley A. Bush

Florida State University

College of Business

Agenda Motivation of Study & Research Questions Theoretical Foundation & Model Hypotheses Research Methodology, Measures, & Analysis Expected Contributions, Limitations, & Future Directions

Motivation of Study & Research Questions

Theoretical Foundation & Model

Hypotheses

Research Methodology, Measures, & Analysis

Expected Contributions, Limitations, & Future Directions

Motivation of Study Open Business Models (Chesborough, 2003) Recognizes Sources of Value External to Organization Suggests the Use of Directed Strategy for Increasing Organizational Profitability Open Innovation Processes (Owen-Smith & Powell, 2004) Recognizes Sources of Innovations External to the Organization Suggests the Use of Innovation Collaboration Networks

Open Business Models (Chesborough, 2003)

Recognizes Sources of Value External to Organization

Suggests the Use of Directed Strategy for Increasing Organizational Profitability

Open Innovation Processes (Owen-Smith & Powell, 2004)

Recognizes Sources of Innovations External to the Organization

Suggests the Use of Innovation Collaboration Networks

Motivation of Study (Cont’d) Innovation Collaboration Networks Networks Designed for Research and Development Activities (Ahuja, 2000) Relational Rents “ a supernormal profit jointly generated in an exchange relationship that cannot be generated by either firm in isolation and can only be created through the joint idiosyncratic contributions of the specific alliance partners.” (Dyer & Singh, 1998)

Innovation Collaboration Networks

Networks Designed for Research and Development Activities (Ahuja, 2000)

Relational Rents

“ a supernormal profit jointly generated in an exchange relationship that cannot be generated by either firm in isolation and can only be created through the joint idiosyncratic contributions of the specific alliance partners.” (Dyer & Singh, 1998)

Research Questions What factors lead to the maximum likelihood of generating relational rents for innovation collaboration networks? How does the alignment between firm interdependency and the social structure of an innovation collaboration network affect the networks ability to generate relational rents?

What factors lead to the maximum likelihood of generating relational rents for innovation collaboration networks?

How does the alignment between firm interdependency and the social structure of an innovation collaboration network affect the networks ability to generate relational rents?

Theoretical Foundation Relational View of the Firm Extension from Resource-Based View (Barney, 1991) Sources of Relational Rents (Dyer & Singh, 1998) Interfirm Relationship-Specific Assets Interfirm Knowledge-Sharing Routines Complementary Resource Endowments Effective Governance Structures

Relational View of the Firm

Extension from Resource-Based View (Barney, 1991)

Sources of Relational Rents (Dyer & Singh, 1998)

Interfirm Relationship-Specific Assets

Interfirm Knowledge-Sharing Routines

Complementary Resource Endowments

Effective Governance Structures

Research Model

H1: Firm Interdependency Pooled Interdependence Limited Complementary Resource Endowments Sequential Interdependence Moderate Complementary Resource Endowments Reciprocal Interdependence Strong Complementary Resource Endowments

Pooled Interdependence

Limited Complementary Resource Endowments

Sequential Interdependence

Moderate Complementary Resource Endowments

Reciprocal Interdependence

Strong Complementary Resource Endowments

H2: IT Structure Structural Holes Diverse Non-redundant Knowledge Assets Limited Inter-organizational Interaction Hybrid Ties Mixture of Non-redundant and Redundant Knowledge Assets Moderate Inter-organizational Interaction Strong Ties Redundant Knowledge Assets Strong Inter-organizational Interaction

Structural Holes

Diverse Non-redundant Knowledge Assets

Limited Inter-organizational Interaction

Hybrid Ties

Mixture of Non-redundant and Redundant Knowledge Assets

Moderate Inter-organizational Interaction

Strong Ties

Redundant Knowledge Assets

Strong Inter-organizational Interaction

H3: Alignment of Network Properties Aligned Networks Pooled-Structural Hole Network Reciprocal-Strong Tie Network Misaligned Networks Pooled-Strong Tie Network Reciprocal-Structural Hole Network

Aligned Networks

Pooled-Structural Hole Network

Reciprocal-Strong Tie Network

Misaligned Networks

Pooled-Strong Tie Network

Reciprocal-Structural Hole Network

H3: Alignment of Network Properties Aligned Networks Pooled-Structural Hole Network Reciprocal-Strong Tie Network Misaligned Networks Pooled-Strong Tie Network Reciprocal-Structural Hole Network

Aligned Networks

Pooled-Structural Hole Network

Reciprocal-Strong Tie Network

Misaligned Networks

Pooled-Strong Tie Network

Reciprocal-Structural Hole Network

Research Methodology Sample Selection Pharmaceutical / Biotechnology Organizations (Ahuja, 2000) Securities Data Company (SDC) Database Alliance Partners Partner Activities Alliance Types Industry Setting Data Collection Mixed-method Approach Open-ended Questionnaires Alliance Partnership Manager Network Analysis IT Manager / Vice-President IT Operations Objective Measure Joint Patents US Patent Office

Sample Selection

Pharmaceutical / Biotechnology Organizations (Ahuja, 2000)

Securities Data Company (SDC) Database

Alliance Partners

Partner Activities

Alliance Types

Industry Setting

Data Collection

Mixed-method Approach

Open-ended Questionnaires

Alliance Partnership Manager

Network Analysis

IT Manager / Vice-President IT Operations

Objective Measure

Joint Patents

US Patent Office

Research Measures Relational Rents Joint Patents Proxy for Intellectual Property (Ahuja, 2000; Chesborough, 2003; Schilling et al., 2007) Firm Interdependency Strategic Rationales (Gulati & Singh, 1998) Open-ended Questionnaire IT Structure Proportion of network that has access to all other ties within the network (Burt, 1992) Indicator of network density

Relational Rents

Joint Patents

Proxy for Intellectual Property (Ahuja, 2000; Chesborough, 2003; Schilling et al., 2007)

Firm Interdependency

Strategic Rationales (Gulati & Singh, 1998)

Open-ended Questionnaire

IT Structure

Proportion of network that has access to all other ties within the network (Burt, 1992)

Indicator of network density

Research Design & Analysis Survey / Questionnaire Alliance Manager IT Manager / Vice-President of IT Operations Control Variables Innovation Type Network Size Prior Alliance Relationship Statistical Analysis Hierarchical Regression Models Model 1: Control Variables Model 2: Firm Interdependency Model 3: IT Structure Model 4: Alignment of Structural Properties

Survey / Questionnaire

Alliance Manager

IT Manager / Vice-President of IT Operations

Control Variables

Innovation Type

Network Size

Prior Alliance Relationship

Statistical Analysis

Hierarchical Regression Models

Model 1: Control Variables

Model 2: Firm Interdependency

Model 3: IT Structure

Model 4: Alignment of Structural Properties

Expected Contributions Practitioner Organizations can choose which innovation networks to participate in based on individual structural properties Raises awareness of the alignment issue between structural properties Theoretical Examines innovation networks at the inter-organizational level Suggests relationship between degree of interdependency and relational rent generation Suggests alignment between strategic orientation (Firm Interdependency) and IT Structure

Practitioner

Organizations can choose which innovation networks to participate in based on individual structural properties

Raises awareness of the alignment issue between structural properties

Theoretical

Examines innovation networks at the inter-organizational level

Suggests relationship between degree of interdependency and relational rent generation

Suggests alignment between strategic orientation (Firm Interdependency) and IT Structure

Limitations Assumes organizations possess similar interdependency requirements when participating within an innovation collaboration network Assumptions on firm interdependency Limited scope of alignment issue empirically examined (Does not examine hybrid forms of social structure and firm interdependency)

Assumes organizations possess similar interdependency requirements when participating within an innovation collaboration network

Assumptions on firm interdependency

Limited scope of alignment issue empirically examined (Does not examine hybrid forms of social structure and firm interdependency)

Future Directions Further examination of the misalignment issue for innovation collaboration networks and moderating factors Empirically validate assumptions on firm interdependencies and introduce complex interdependency issues in innovation collaboration networks Further research firm interdependency relationship on performance outcomes Examine interactions within the proposed structural dimensions followed by the interaction between the structural dimensions on relational rent generation

Further examination of the misalignment issue for innovation collaboration networks and moderating factors

Empirically validate assumptions on firm interdependencies and introduce complex interdependency issues in innovation collaboration networks

Further research firm interdependency relationship on performance outcomes

Examine interactions within the proposed structural dimensions followed by the interaction between the structural dimensions on relational rent generation

Questions