Managing technological diversity: The role of intra-unit network structure in innovation

Abstract

Why do firms R&D units differ in their abilities to exploit technological diversity? We argue that the differences can arise from the heterogeneity in their internal social network structures. We examine how knowledge distribution shaped by the two global properties of internal network structure – clustering and connectivity, each measured by clustering coefficient and average path length – differently moderate the inverted U-shaped relationship between technological diversity and innovation. An investigation of a 20-year panel of 27 pharmaceutical R&D units reveals the curvilinear relationship between technological diversity and innovation and the negative moderating role of intra-unit network structure on this relationship. By questioning the assumption of a strong correspondence between network structure and knowledge diversity, this study contributes to knowledge diversity and innovation literature and further provides implications to managers in designing informal structure of their R&D units.