Lee Fleming

Technology as a complex adaptive system: evidence from patent data

This paper develops a theory of invention by drawing on complex adaptive systems theory. We see invention as a process of recombinant search over technology landscapes. This framing suggests that inventors might face a ‘complexity catastrophe’ when they attempt to combine highly interdependent technologies. Our empirical analysis of patent citation rates supports this expectation. Our results also suggest, however, that the process of invention differs in important ways from biological evolution. We discuss the implications of these findings for research on technological evolution, industrial change, and technology strategy.

Collaborative Brokerage, Generative Creativity, and Creative Success:

Analyzing data on utility patents from 1975 to 2002 in the careers of 35,400 collaborative inventors, this study examines the influence of brokered versus cohesive collaborative social structures on an individuals creativity. We test the hypothesis that brokerage—direct ties to collaborators who themselves do not have direct ties to each other—leads to greater collaborative creativity. We then test interaction hypotheses on the marginal benefits of cohesion, when collaborators have independent ties between themselves that do not include the individual. We identify the moderators of brokerage and argue for contingent benefits, based on the interaction of structure with the attributes, career experiences, and extended networks of individuals and their collaborators. Using a social definition of creative success, we also trace the development of creative ideas from their generation through future use by others. We test the hypothesis that brokered ideas are less likely to be used in future creative efforts. The results illustrate how collaborative brokerage can aid in the generation of an idea but then hamper its diffusion and use by others.

Small Worlds and Regional Innovation

Small-world networks have attracted much theoretical attention and are widely thought to enhance creativity. Yet empirical studies of their evolution and evidence of their benefits remain scarce. We develop and exploit a novel database on patent coauthorship to investigate the effects of collaboration networks on innovation. Our analysis reveals the existence of regional small-world structures and the emergence and disappearance of giant components in patent collaboration networks. Using statistical models, we test and fail to find evidence that small-world structure (cohesive clusters connected by occasional nonlocal ties) enhances innovative productivity within geographic regions. We do find that both shorter path lengths and larger connected components correlate with increased innovation. We discuss the implications of our findings for future social network research and theory as well as regional innovation policies.

Mobility, Skills, and the Michigan Non-Compete Experiment

Whereas a number of studies have considered the implications of employee mobility, comparatively little research has considered institutional factors governing the ability of employees to move from one firm to another. This paper explores a legal constraint on mobility---employee non-compete agreements---by exploiting Michigans apparently inadvertent 1985 reversal of its non-compete enforcement policy as a natural experiment. Using a differences-in-differences approach, and controlling for changes in the auto industry central to Michigans economy, we find that the enforcement of non-competes indeed attenuates mobility. Moreover, non-compete enforcement decreases mobility more sharply for inventors with firm-specific skills and for those who specialize in narrow technical fields. The results speak to the literature on employee mobility while offering a credibly exogenous source of variation that can extend previous research on the implications of such mobility.

Managing Creativity in Small Worlds

Greater job mobility among engineers and scientists has caused the extended social networks of inventors to become increasingly connected. As a result, invention increasingly occurs within small worlds (or social networks) that straddle firm boundaries. Small worlds provide both strategic opportunity and potential threat; while they can increase creativity within a firm, they also aid in the diffusion of creative knowledge to other firms through personnel and knowledge transfer. Firms that operate within small worlds such as in Silicon Valley long agolearned to manage invention in an environment of rampant knowledge spillovers across firm boundaries. Now, however, all firms need to learn how to manage innovation in a small world environment. This article offers them advice about how to do this. (Publisher’s Abstract)

Scanning the Commons? Evidence on the Benefits to Startups Participating in Open Standards Development

This paper contributes large-sample evidence to an emerging discussion on open innovation and firm strategy. We ask why a startup should participate in an open standards community. We propose four ways that participation might increase a startups chances of a liquidity event: gaining endorsement of the startups technology standard, openly developing the startups technology within the community (but not necessarily gaining endorsement), simply attending physical meetings of the community, and having startup members elected to leadership positions. Examination of venture-funded startups in the networking/data communications industry sectors reveals that those startups that participate in an open standards community (the Internet Engineering Task Force (IETF)) have a greater likelihood of an initial public offering or acquisition. The strongest effects are due to attendance, and conditional on high levels of attendance, holding leadership positions within the IETF. Surprisingly, standards endorsement is insignificant when controlling for simple physical attendance. These results are robust to instrumental variable methods and alternative coding of variables. In two-stage models we also find that prominent venture capitalists might help their portfolio companies by steering them to effective technology strategies, in this case active participation in the IETF, and not simply by lending status.

REGIONAL DISADVANTAGE? NON-COMPETE AGREEMENTS AND BRAIN DRAIN

We construct inventor career histories using the U.S. patent record from 1975 to 2005 and demonstrate a brain drain among patenting inventors from states that enforce employee non-compete agreements to those that do not. Non-compete enforcement appears to drive away inventors with greater human and social capital. We address causality-related concerns with a difference-in-differences study design based on an inadvertent reversal of Michigans non-compete enforcement policy.

Managing innovation in small worlds

This publication contains reprint articles for which IEEE does not hold copyright. Full text is not available on IEEE Xplore for these articles.

Financing by and for the Masses: AN INTRODUCTION TO THE SPECIAL ISSUE ON CROWDFUNDING

This introduction to the special issue on crowdfunding begins by providing some information about the history and nature of the phenomenon. It then summarizes some of the key advantages and disadvantages of crowd-funding for entrepreneurs and for investors, introducing the various articles in the issue that explore these topics in greater depth. It concludes with some speculations regarding the possible future of the industry and its effects on entrepreneurship, innovation, and inequality.

Expand innovation finance via crowdfunding

Crowdfunding attracts venture capital to new regions Crowdfunding (CF) platforms, such as Kickstarter (KS), offer a means of funding innovation, connecting inventors and entrepreneurs with a multitude of supporters, who each provide a small fraction of the amount required to fund the project. Although considerable funding for innovation has historically come from venture capitalists (VCs), the entrepreneurs funded by VCs often mirror the investors in terms of their educational, social, and professional characteristics and end up concentrated in a small number of regions (1–4). Policy-makers have thus hailed CF platforms, hoping that they will expand access to entrepreneurial finance, including among women and minority innovators, and that the innovations funded will create jobs and spur economic growth (5). But if particular regions, or certain sorts of individuals, routinely produce better ideas (6), and VC concentrates on them, then CF might simply compete with professional investors to fund the same ideas. We find, however, that CF has been funding innovators in a large number of places that have typically been excluded from VC, and has also been expanding the geographic reach of VC itself.