Intra-firm Network Structure, Environmental Uncertainty, Technological Diversity, and Firm Innovation: Evidence from the Software and ICT Industries

Description

The structure of an intra-firm network influences the potential for firm innovation.Recent studies have demonstrated that the effects of structural holes on innovation areinconclusive. Burt’s (1992) theory suggested that a network rich in structural holesallows its members to receive diverse information, increasing firm innovation. However,Coleman’s (1988) theory suggested that the richness in structural holes limits members’access to information, which, in turn, decreases firm innovation. Drawing on these twotheories, we predict an inverted-U-shaped relationship between structural holes andfirm innovation. We further propose that this non-linear effect is moderated by twocontextual factors (environmental uncertainty and technological diversity). To test thesehypotheses, we collect patent data in the software and ICT industries from 1991 to 2012from the United States Patent and Trademark Office (USPTO) and extract firmattribute data from the Compustat database. Our findings reveal significant theoreticaland practical implications.