The Multiple Dimensions of The Interfirm Network: The Critical Sources of Product Innovation

This dissertation examines the impacts of interfirm variables on both invention and commercialization activities, following Greves (2003) suggestion that innovation research will be enriched if more studies integrate invention and commercialization activities to understand the entire innovation development process. Utilizing two established theoretical perspectivesorganizational learning and institutional theorysix sets of hypotheses are developed containing the following interfirm variables: 1) direct and indirect ties, 2) strength of direct ties, 3) structural holes, 4) prominence of direct partners, 5) exploration and exploitation partners, and 6) horizontal and vertical networks. The dissertation also predicts that these interfirm variables would contribute to either invention or commercialization activities.Examining 262 publicly traded biopharmaceutical firms from 1986 to 2003, the study demonstrates that the interfirm variables significantly influence the invention and commercialization outcomes. While some interfirm variables positively influence the number of patents of a focal firm, they could have a negative impact upon the number of marketed drug applications and revenue. A managerial implication from the findings is that a focal firm may want to clarify its objectives before engaging in any interfirm collaboration by examining the multiple dimensions of its interfirm network and to identify its posture toward alliances. Due to the complexity and length of invention and commercialization activities, future research is warranted to investigate further the impacts of these interfirm predictors on important, but relatively ignored, product innovation outcomes (i.e., the number of new projects and licensing, marketing, and sales fees).