Weaving webs of innovation

Purpose – This research aims to utilize a social network analysis approach to examine the effect of organizational position within a network of strategic partnerships on innovation as measured by perceptions of industry analysts. Specifically, the purpose of the paper is to examine how network characteristics such as degree centrality (being centrally located in a network), between centrality (being positioned as an intermediary), and closeness centrality (having a short average distance to all other firms in the network) affect the innovation ranking of the focal firm. Design/methodology/approach – Data for 563 firms are generated from three distinct data sources (SDC Platinum: Alliances and Joint Ventures, COMPUSTAT, and Fortune's America's Most Admired Companies) and analyzed via social network analysis and linear regression. Findings – The network characteristics of degree centrality and between centrality positively relate to industry perceptions or innovativeness whereas closeness centrality had no significant effect. Additionally, there were no discernable differences in innovativeness when comparing manufacturing firms to service organizations. Research limitations/implications – Insignificant findings related to closeness centrality and the good/service differential may be attributable to the data sources, in that, the information is limited to firms within the respective sources. This data limitation may limit the potential of examining the effect of all network characteristics. Additionally, some included companies participate in multiple industries (i.e., have multiple SIC codes), which may serve as the blurring of any differences between good and service firms. Practical implications – The results highlight the importance of considering strategic partnerships that establish configurations of partnership webs when pursuing innovation activities. Specifically, the findings suggest that firms should seek numerous strategic partnerships (high degree centrality) and attempt to broker information or control the extent to which partners collaborate (high between centrality). These results provide insights for firms seeking to establish new supply‐chain relationships in order to enhance their level of innovation. Originality/value – This research provides a unique empirical examination of the impact of network positional characteristics on the innovativeness of a focal firm.