Network characteristics and organizational innovation capability: A study of the inter‐organizational collaboration network of new drug development in Shanghai, China

• Author: Lu Xu,Jie Yan,Jie Xiong
• DOI: http://doi.org/10.1002/jsc.2301
• Published date: 01 November 2019
• Date: 01 November 2019

RESEARCH ARTICLE

Network characteristics and organizational innovation

capability: A study of the inter-organizational collaboration

network of new drug development in Shanghai, China

Lu Xu

1

| Jie Yan

2

| Jie Xiong

1

1

Rennes School of Business, Rennes Cedex,

France

2

Grenoble Ecole de Management, Grenoble,

France

Correspondence

Jie Xiong, Rennes School of Business, 2 rue

Robert d'Arbrissel CS 76522, 35065 Rennes

Cedex, France.

Email: jie.xiong@rennes-sb.com

Funding information

The National Natural Science Foundation of

China, Grant/Award Number: #71772142; The

Humanities and Social Science Project of the

Ministry of Education, P. R. China, Grant/

Award Number: 18YJC630053

Abstract

The size of organizational network, organizations' betweenness centrality and struc-

tural hole exert positive effects on organizational innovation capability. The interme-

diary effect of structural hole on organizational innovation capability is not

significant. These outcomes enrich the understanding of the promoting effect of the

inter-organizational network on organizational innovation performance in general.

The findings contribute to business practitioners in high-tech clusters on their capa-

bility development.

1|INTRODUCTION

In recent decades, firms increasingly utilize external resources in new

product development (Chesbrough, 2003). Firms cooperate by means

of specialized work division and resource complementarity to increase

competitive advantage. Inter-organizational collaboration is able to

create an innovation environment, increase knowledge flow, acceler-

ate transition of knowledge of different attributes, raise collision, and

integration frequency of knowledge from different sources

(Sternberg, 1996), strengthen organization innovation capability, and

magnify the effect of technological innovation and eventually increase

the overall innovation level of all the participants in the network.

Some also studies revealed that inter-organizational network is helpful

to combine inter-individual relations, “microscopic”network and

“macroscopic”structure of large-scale social system (Zhou, 2008).

Social network represents the interactive relationship among the

actors in a social system with their connecting ties. Inter-

organizational collaboration network integrates the complementary

resources distributed among the participating firms and benefits all

members. However, how the network influences the innovative per-

formance of high-tech firms in emerging countries is less explained.

Therefore, this paper aims to exam the relationship between the

structural characteristics of social network among organizations and

organizational innovation capability. We take data from the pharma-

ceutical industry in the Shanghai, China. Organizations including phar-

maceutical firms, research institutes, universities, hospitals, and so on

work together for new drug development projects. Our research inter-

ests lay in how network characteristics affect organizational innova-

tion capability for the level of network structure.

2|THEORETICAL DEVELOPMENTS

2.1 |Size of organizational network and

organizational innovation capability

Size of the organizational network could be calculated at two levels.

First, at the network level, it refers to the total number of nodes in

the network. Second, at the node level, a node's size of organizational

network refers to the number of nodes it directly connects. In this

study, we are interested in the size of an organization's network.

Wellman & Berkowitz (1988) points out the size of organizational net-

work of an organization positively influences its capability of resource

acquisition. The more extensive the organizational network of an

organization in the collaborative innovation network, the more het-

erogeneous and diversified knowledge it will access (Debresson &

Amesse, 2004). Better absorption of heterogeneous resources helps

JEL classification codes: L65, M10, O30.

DOI: 10.1002/jsc.2301

Strategic Change. 2019;28:499–506. wileyonlinelibrary.com/journal/jsc © 2019 John Wiley & Sons, Ltd. 499