R&D Alliance and Innovation: The Interaction of Network Structure and the Quality of the Relationship

Abstract

Much research has taken a structural perspective to examine how the R&D alliance network affects innovation. However, little is known about how the quality of the relationship affects firms’ innovation. In this study, I examine the interaction of network structure and the quality of the relationship and explore the impact on innovation. Using a combination of propensity score weighting and difference-in-difference estimation strategies to address endogeneity, I find that the quality of the relationship moderates the inverted U-shaped relationship between network structure and innovation performance. In addition, I present evidence consistent with possible underlying mechanisms: both network structure and the quality of the relationship affect firms’ access to novel information and firms’ recombination capacity to influence innovation performance.