Does familiarity foster innovation? Repeated R&D alliances and breakthrough innovations

Does familiarity with alliance partners lead to breakthrough innovations? Drawing on an integrated framework of social capital and organizational learning perspectives, this study proposes a balanced perspective on the impact of a firm’s repeated R&D collaborations on breakthrough innovations. Specifically, we contend that a firm’s repeated R&D alliances in its alliance portfolio exhibits an inverted U-shaped relationship with its breakthrough innovations due to the competing effects of social capital versus ossified learning in repeated interactions. This curvilinear relationship is further moderated by factors that can tilt the balance between the structural benefits and information costs such as knowledge complementarity, partner firms’ network brokerage, and technological dynamism. Analyses of firms in U.S. biopharmaceutical industry from 1983 to 2002 largely support our hypotheses.