Ego Networks and Firm Innovativeness

In this chapter we seek to analyze how firm innovativeness is related to individual cooperation events and the structure and dynamics of firms’ ego networks. On the one hand, we analyze to what extent individual cooperation events have a direct effect on firm innovativeness. On the other hand, each cooperation event changes the structural configuration of a firm’s portfolio of cooperative relationships. Evolutionary network change processes at the micro-level – i.e. tie-formation as well as tie-termination – shape the structural configuration of firm-specific ego networks which are assumed to have an indirect effect on innovation output. Consequently, the aim of this second empirical section is to disentangle these two cooperation-related innovation effects. To shed some light on the questions raised, we apply the longitudinal panel dataset described above (cf. Sect. 6.1.2). Network measures are calculated on the basis of 570 knowledge-related publicly funded R&D cooperation projects. Firm innovativeness is measured by patent grants with a 1 and 2 year time lag. Several robustness checks are performed on the basis of patent application counts. The following empirical analysis is organized as follows. We start in Sect. 10.1 with a short introduction. In Sect. 10.2 we provide a theoretical foundation, present our conceptual framework and derive a set of testable hypotheses. A description of the data sources together with a brief presentation of the variables used follow in Sect. 10.3. In Sect. 10.4 we discuss some methodological issues, specify the econometric estimation approach and present our empirical results. Finally the paper closes with a brief discussion of our main findings.