Networks of collaborative alliances: the second order interfirm technological distance and innovation performance

Studies have typically focused on the relationship between technological distance between partners in alliances, and innovation performance, from a direct tie or dyadic perspective. This paper explores the ego network set up in order to disclose how the second order technological distance, which is the distance between the partner and the partner’s partner, affects the innovation performance of the focal firm. To accomplish it, the network of alliances is built using biotechnological joint patents. The main result of this research is the finding of a positive quadratic relationship between the innovative performance of firms and second-order technological distance. This result has two implications. The first one is that the innovative performance of each firm embedded in a network cannot be optimized simultaneously. The second one, is that firm’s decision makers should consider the second-order neighborhood of the focal firm to establish optimal alliance in terms of innovation and enhance firm’s competitive advantage. Overall, this research set a new perspective to understand and improve the role of individual firms in collaborative networks, and help to complement the dominant view emphasizing the role of indirect ties in order to innovate.