Gautam Ahuja

Collaboration Networks, Structural Holes, and Innovation: A Longitudinal Study

To assess the effects of a firms network of relations on innovation, this paper elaborates a theoretical framework that relates three aspects of a firms ego network—direct ties, indirect ties, and structural holes (disconnections between a firms partners)—to the firms subsequent innovation output. It posits that direct and indirect ties both have a positive impact on innovation but that the impact of indirect ties is moderated by the number of a firms direct ties. Structural holes are proposed to have both positive and negative influences on subsequent innovation. Results from a longitudinal study of firms in the international chemicals industry indicate support for the predictions on direct and indirect ties, but in the interfirm collaboration network, increasing structural holes has a negative effect on innovation. Among the implications for interorganizational network theory is that the optimal structure of interfirm networks depends on the objectives of the network members.

Does it Pay to be Green? An Empirical Examination of the Relationship Between Emission Reduction and Firm Performance

Evidence can be marshalled to support either the view that pollution abatement is a cost burden on firms and is detrimental to competitiveness, or that reducing emissions increases efficiency and saves money, giving firms a cost advantage. In an effort to resolve this seeming paradox, the relationship between emissions reduction and firm performance is examined empirically for a sample of S&P 500 firms using data drawn from the Investor Responsibility Research Centers Corporate Environmental Profile and Compustat. The results indicate that efforts to prevent pollution and reduce emissions drop to the ‘bottom line’ within one to two years of initiation and that those firms with the highest emission levels stand the most to gain.

The duality of collaboration: inducements and opportunities in the formation of interfirm linkages

I argue that the linkage-formation propensity of firms is explained by simultaneously examining both inducement and opportunity factors. Drawing upon resource-based and social network theory literatures I identify three forms of accumulated capital—technical, commercial, and social—that can affect a firm’s inducements and opportunities to form linkages. Firms possessing these capital stocks enjoy advantages in linkages formation. However, firms lacking these accumulated resources can still form linkages if they generate a radical technological breakthrough. Thus, I identify paths to linkage formation for leading as well as peripheral firms. I test these arguments with longitudinal data on technical collaborative linkages in the global chemicals industry. Copyright

Introduction to the Special Issue: The Genesis and Dynamics of Organizational Networks

An extensive body of knowledge exists on network outcomes and on how network structures may contribute to the creation of outcomes at different levels of analysis, but less attention has been paid to understanding how and why organizational networks emerge, evolve, and change. Improved understanding of network dynamics is important for several reasons, perhaps the most critical being that the understanding of network outcomes is only partial without an appreciation of the genesis of the network structures that resulted in such outcomes. To provide a context for the papers in this special issue, and with the broader goal of furthering network dynamics research, we present a framework that begins by discussing the meaning and role of network dynamics and goes on to identify the drivers and key dimensions of network change as well as the role of time in this process. We conclude with theoretical and methodological issues that researchers need to address in this domain.

1 Moving Beyond Schumpeter: Management Research on the Determinants of Technological Innovation

AbstractSchumpeter’s conjecture that large monopolistic firms were the key source of innovation in modern industrial economies has been the underpinning for much work on the topic of innovation. In this review paper we consciously move beyond the Schumpeterian tradition of focusing on firm size and market structure as the primary determinants of innovation to identify a broader set of innovation determinants that have been investigated by the management literature. We make a distinction between innovative efforts and innovative output and for each of these outcomes we group the determinants of innovation into four broad headings—industry structure, firm characteristics, intra‐organizational attributes, and institutional influences. We examine four aspects of the industrial structure and how they influence innovation: the horizontal market structure which reflects the influence of competition and collaboration, as well as the role of buyers, suppliers and complementors. Under the rubric of firm characteris...

Decomposability in Knowledge Structures and Its Impact on the Usefulness of Inventions and Knowledge-base Malleability

We use patent data from the worldwide semiconductor industry from 1984 to 1994 to study the effect of the structure of organizational knowledge bases, or the patterns of coupling between their elements of technical knowledge, on the usefulness of inventions and knowledge-base malleability. We argue that organizational variations in coupling patterns between knowledge elements can be reflected in a spectrum of knowledge-base structures—varying from fully decomposable (the knowledge base is composed of distinct clusters of knowledge elements coupled together with no significant ties between clusters) through nearly decomposable (knowledge clusters are discernable but are connected through cross-cluster couplings) to non-decomposable (no knowledge clusters emerge, as the couplings are pervasively distributed)—and that organizations may differ in the way they use their knowledge because of variations in their knowledge-base structure, rather than because of differences in the knowledge elements themselves. Results show that a nearly decomposable knowledge base increases the usefulness of the inventions generated from it, as measured by patent citations, and also the knowledge bases malleability or capacity for change.

PERSPECTIVE---Explaining Influence Rents: The Case for an Institutions-Based View of Strategy

Research in strategy has identified and tried to explain four types of rents: monopolistic rents, efficiency rents, quasi rents, and Schumpeterian rents. Building on previous work on political and institutional strategies, we add a fifth type of rent: influence rents. Influence rents are the extra profits earned by a firm because the rules of the game (laws, regulations, and informal rules) are designed or changed to suit it. To aid the analysis of the relationship between institutional context and firm performance and to provide a structure to guide research, we develop a framework with five key components: (a) an identification of the five fundamental problems of a market economy, (b) a typology that describes the five different types of institutions that emerge to solve these problems, (c) the market-ordering mechanisms used by institutions to solve these problems, (d) the common causes of weak institutional performance, and (e) generic strategies used by firms to exploit these weaknesses of an institutional context to enhance firm performance. We highlight potential applications of the framework as well as an illustrative research agenda that can advance the development of theory to explain the emergence and persistence of influence rents.

An Assessment of the Performance of Indian State-Owned Enterprises

We examine the determinants of performance of 68 Indian state-owned enterprises in the manufacturing sector for a five-year period: 1987 to 1991. Relative performance is determined using data envelopment analysis, with variations in performance patterns subsequently explained using regression analysis. We note that the performance of firms in the Indian state-owned sector is characterized by both, low performance, as well as significant and systematic variations in the performance parameters. Size is positively associated and age negatively associated with efficiency. Further, economic liberalization and reforms aimed at improving the performance of state-owned firms induces efficiency gains over time. This heterogeneity within the state-owned sector has policy implications, which we discuss. In countries which have privatized large numbers of their state-owned firms, it is often the larger establishments which have been sold to the public. The state-owned firms in the manufacturing sector that can be candidates for privatization are the smaller and older manufacturing firms. These firms may also be easier to dispose of to private investors. This finding reinforces our central thesis that firm-level analysis within the state-owned sector is useful and important for generating pragmatic policy guidelines.

Explaining Influence Rents: The Case for an Institutions-Based View of Strategy

Research in strategy has identified and tried to explain four types of rents: monopolistic rents, efficiency rents, quasi-rents, and Schumpeterian rents. Building on previous work on political and institutional strategies, we add a fifth type of rent, influence rents. Influence rents are the extra profits earned by a firm because the rules of the game (laws, regulations, and informal rules) are designed or changed to suit it. To aid the analysis of the relationship between institutional context and firm performance and to provide a structure to guide research, we develop a framework with five key components: a) an identification of the five fundamental problems of a market economy, b) a typology that describes the five different types of institutions that emerge to solve these problems, c) the market-ordering mechanisms used by institutions to solve these problems, d) the common causes of weak institutional performance, and e) generic strategies used by firms to exploit these weaknesses of an institutional context to enhance firm performance. We highlight potential applications of the framework as well as an illustrative research agenda that can advance the development of theory to explain the emergence and persistence of influence rents.

Paradigm-Changing vs. Paradigm-Deepening Innovation: How Firm Scope Influences Firm Technological Response to Shocks

We examine the direction of firms’ research efforts as they respond to the shock of a sharp increase in the price of a key input. In terms of direction, firms can respond to this shock with paradigm-changing investments that develop technologies to use substitute inputs or with paradigm-deepening investments that develop technologies to improve the utilization efficiency of the existing input. We develop a framework that suggests that firms’ emphasis on paradigm-changing versus paradigm-deepening investments depends on the degree of input-relatedness across their businesses. We test our hypotheses by examining the responses of large manufacturing firms in the United States to the oil shock of the early 1980s. Our framework predicts and our results show that the more related a firm’s businesses are, the larger its investments into paradigm-changing technologies are and the smaller its investments into paradigm-deepening technologies in response to the oil shock are. We identify the implications of these findings for technological evolution and diversification literatures.