Corey Phelps

Interfirm Collaboration Networks: The Impact of Large-Scale Network Structure on Firm Innovation

The structure of alliance networks influences their potential for knowledge creation. Dense local clustering provides information transmission capacity in the network by fostering communication and cooperation. Nonredundant connections contract the distance between firms and give the network greater reach by tapping a wider range of knowledge resources. We propose that firms embedded in alliance networks that exhibit both high clustering and high reach (short average path lengths to a wide range of firms) will have greater innovative output than firms in networks that do not exhibit these characteristics. We find support for this proposition in a longitudinal study of the patent performance of 1,106 firms in 11 industry-level alliance networks.

Knowledge, Networks, and Knowledge Networks: A Review and Research Agenda

A large and growing body of empirical research shows that social relationships and the networks these relationships constitute are influential in explaining the processes of knowledge creation, diffusion, absorption, and use. The authors refer to such networks as “knowledge networks.” They advance an understanding of knowledge networks at multiple levels by conducting a systematic review and analysis of empirical research published on this topic in leading management, psychology, sociology, and economics journals. The authors develop a comprehensive framework that organizes the knowledge networks literature, which they use to review extant empirical research within and across multiple disciplines and levels of analysis. They identify points of coherence and conflict in theoretical arguments and empirical results within and across levels and identify emerging themes and promising areas for future research.

Knowledge, Networks, and Knowledge Networks

A large and growing body of empirical research shows that social relationships and the networks these relationships constitute are influential in explaining the processes of knowledge creation, diffusion, absorption, and use. The authors refer to such networks as “knowledge networks.” They advance an understanding of knowledge networks at multiple levels by conducting a systematic review and analysis of empirical research published on this topic in leading management, psychology, sociology, and economics journals. The authors develop a comprehensive framework that organizes the knowledge networks literature, which they use to review extant empirical research within and across multiple disciplines and levels of analysis. They identify points of coherence and conflict in theoretical arguments and empirical results within and across levels and identify emerging themes and promising areas for future research.

Interfirm Collaboration Networks: The Impact of Small World Connectivity on Firm Innovation

The structure of alliance networks strongly influences their potential for knowledge creation. Dense local clustering provides transmission capacity in the network by fostering communication and cooperation while non-redundant connections contract the distance between firms and give the network greater reach by tapping a wider range of knowledge resources. However, since firms are constrained in forming alliances, there appears to be a trade-off between creating transmission capacity versus reach. We argue that small world connectivity (i.e., simultaneity of high clustering and short average path lengths in a sparse, decentralized network) helps resolve this tradeoff by enabling transmission capacity and reach to be achieved simultaneously. We propose that firms embedded in alliance networks that exhibit high clustering and short average path lengths to a wide range of firms will experience greater knowledge creation than firms in networks that do not exhibit these characteristics. We find support for this proposition in a longitudinal study of the patent performance of 1106 firms in 11 industry-level alliance networks.

Divisive Faultlines and the Unplanned Dissolutions of Multipartner Alliances

Received wisdom suggests that multipartner alliances are relatively unstable because of their complexity and the increased potential for free riding. Nonetheless, multipartner alliances do benefit from built-in stabilizing third-party ties that mitigate opportunism and conflict between partner pairs. Previous empirical research on multipartner alliance stability has been inconclusive. We shed some light on these inconsistencies by recognizing that within multipartner alliances, schisms can occur not only between a pair of partners but also between subgroups of partners that are divided by faultlines. We suggest that divisive faultlines can form between subgroups of partners within a multipartner alliance as a function of their prior experience with one another. When a subgroup of alliance partners has relatively strong ties to each other and weak ties to other partners, destabilizing factions can develop that hamper reciprocity among the partners. Using a longitudinal analysis of 59 multipartner alliances, we found that, in general, faultlines as modeled by the dispersion of tie strength within multipartner alliances increase the hazard of unplanned dissolutions. We also found that multipartner alliances comprising a mix of centrally and peripherally positioned partners within the industry network were less apt to suffer the effects of divisive faultlines. We suggest that this is due to the greater opportunity costs of dissolution and the presence of relatively high-status partners who can act as peacekeepers and coordinators of their lower-status partners.

Small World Networks and Knowledge Creation: Implications for Multiple Levels of Analysis

We integrate research on creativity and innovation at the individual, group and interfirm-network levels to develop a level-agnostic definition of a knowledge network. We identify properties of these networks that appear to be common across levels, and show how these properties influence knowledge diffusion and search. We then apply graph theoretic findings on small worlds to this knowledge network approach to show how the structure of a knowledge network will impact its rate of new knowledge creation: small world properties enable a knowledge network to simultaneously achieve high bandwidth and great reach, accelerating the rate of knowledge creation.

Creating Exploratory Innovations by Learning from Entrepreneurial Ventures

Corporate venture capital (CVC), direct minority equity investments made by established companies in privately held start-ups, has become an important strategic tool for many large companies. In particular, firms often pursue CVC investing as a way to learn about novel technologies. Although CVC investments are inherently exploratory and have been found to enhance investing firm’s innovation, research has yet to establish whether CVC investing leads to the development of exploratory innovations (i.e., innovations that embody knowledge that differs from knowledge used by the firm in prior innovation efforts). In this paper, we explore the conditions under which CVC investments lead to the creation of exploratory knowledge by corporate investors. Building on insights from the recombinatory search and interorganizational learning literatures, we argue that three characteristics of an investing firm’s portfolio of start-ups will enhance its creation of exploratory knowledge. Using longitudinal data on a panel of 40 telecommunications equipment manufacturers, we find that investing firms produce more exploratory knowledge when their portfolios include start-ups that are moderately diverse, mature, and possess codified technological knowledge.

An Option to Partner: A Dyadic Analysis of CVC Relationships

This paper takes a real options view of corporate venture capital (CVC), which are direct minority equity investments made by established companies in privately held entrepreneurial ventures. CVC investments have been characterized as creating growth options for corporate investors. We argue corporate investors often exercise these growth options by forming strategic alliances with their portfolio firms. We identify and empirically test a set of factors that lead established firms to exercise the growth options embedded in CVC investments by forming strategic alliances with the entrepreneurial ventures in which they invested. We explore how uncertainty surrounding a CVC investment influences the likelihood of future alliance formation.

Sell the Solution: Recommendation Report and Delivery

Walking the audience through PowerPoint slides is both the most frequent and the least efficient way to deliver recommendations. The challenge is to steer a productive conversation with problem owners in which visual aids do not become visual impediments. Telling relevant stories and using striking examples can help. Handing out a neat and concise recommendation report is mandatory. The report must start with an executive summary and follow the storyline. If it takes the form of a slide deck, it must feature only one message per page. You can present supporting evidence with charts that you must keep relevant and simple. The chapter discusses various types of charts and templates, as well as guidelines to check and improve your presentations.

The 4S Method in Action

This chapter applies the 4S method from end to end to a disguised, real-life case. It starts with a brief description of the Kangaroo Company and the issue at hand, which is basically to look into the attractiveness of “Kangaroo” (the leader in the men’s underwear market in “Syldavia”) as an acquisition target. It then discusses the problem statement and the problem-structuring effort. Finally, it presents a storyline and the first section of a slide deck that conveys the main conclusions and the final recommendation. The content draws from analyses that were actually conducted to look into the real situation. A facsimile of the first 12 pages of the report is appended.