Dual network configurations and invention renewals within the pharmaceutical industry

Abstract

PurposeAlthough research on how the downstream calculations of a patent’s profit potential influence invention renewal decisions is extensive, the impact of the upstream knowledge creation stages is overlooked. The purpose of this study is to address this theoretical vacuum by examining the intra-organizational configuration of knowledge networks and collaboration networks.Design/methodology/approachThe data consist of 491 global pharmaceutical firms that patent in the USA. Drawing on patent records, the authors simultaneously construct intra-organizational knowledge networks and collaboration networks and identify network cohesion features (i.e. local and global). The authors employ panel fixed-effects models to test the hypotheses.FindingsThe results show that local knowledge cohesion and local social cohesion decrease invention renewals, while global knowledge cohesion and global social cohesion increase renewals. Moreover, the marginal effects of local and global social cohesion are stronger than those of local and global knowledge cohesion, respectively.Research limitations/implicationsThe hypotheses are tested using the pharmaceutical industry as a research setting, which limits the generalizability of our findings. In addition, potential formal and informal contingencies are not considered.Practical implicationsDespite its limitations, this study provides valuable implications. First, managers are cautioned against the adverse effects of local cohesion structures on invention renewal. Second, firms can dynamically adjust their local and global network configuration strategies to harmonize the generation of valuable inventions and the retention of good ideas.Originality/valueComplementary to previous research that focused on inventions’ performance feedback, this study delves into upstream knowledge creation stages to understand invention renewals.