Organizational change and the dynamics of innovation: Formal R&D structure and intrafirm inventor networks

Abstract

Prior research has argued and shown that firms with more centralized R&D produce broader innovations, but the organizational mechanisms underlying this relationship are underexplored. This gap limits our understanding of whether and how formal R&D structure can be used as a lever to influence research outcomes. To address this question, we study the relationship between formal R&D structure, internal inventor networks, and innovative behavior and outcomes. We find that centralization of R&D budget authority increases the connectedness of internal inventor networks, which in turn increases the breadth of both innovation impact and technological search. Surprisingly, decentralization does not have the opposite effect. Our results suggest that changes in formal structure influence innovation outcomes through changes in inventor networks, with a lag reflecting organizational inertia.

Whither geographic proximity? Bypassing local R&D units in foreign university collaboration

“…In contrast, the literature on the organization of R&D has emphasized the advantages of centralizing the R&D function in a single location. Centralization allows firms to benefit from economies of scale in specialized and indivisible human and physical resources (Poppo, 2003 ), and to reap economies of scope in large R&D laboratories where R&D activities span a diverse set of complementary technology fields (Argyres & Silverman, 2004 ; Argyres et al, 2020 ; Arora et al, 2011 ; Henderson & Cockburn, 1996 ; Leten et al, 2007 ). Furthermore, it has been argued that central R&D units conduct research that is more fundamental and scientific in orientation (Arora et al, 2011 ), and that the collocation of central R&D and corporate IP units offers advantages in terms of stronger control of knowledge (leakages) and more effective appropriation strategies (Collis et al, 2007 ; Di Minin & Bianchi, 2011 ).…”

“…This ties in with the notion that R&D activities are typically characterized by strong scale economies, due to the presence of indivisible resources, such as laboratory equipment and specialized human capital (Kuemmerle, 1998 ). Empirical evidence on the organization of R&D has suggested that firms can benefit from conducting R&D in fewer locations, allowing for greater centralization (Argyres & Silverman, 2004 ; Argyres et al, 2020 ; Belderbos et al, 2013 ; Chacar & Lieberman, 2003 ). Centralization of R&D efforts enables firms to spread the high cost of specialized equipment and human capital and to reach the critical mass that is needed to efficiently utilize these resources (Poppo, 2003 ).…”

“…It is primarily in central R&D laboratories with a broad knowledge base that knowledge developed and accumulated in one research domain can be efficiently transferred to and recombined with other domains (Argyres & Silverman, 2004 ; Argyres et al, 2020 ). Centralization provides firms with the flexibility to more easily and efficiently respond to the specific needs arising in a given collaboration by leveraging the central unit’s diverse cumulative pool of knowledge, technological know-how and infrastructure (Argyres & Silverman, 2004 ).…”

“…R&D managers of central laboratories are also incentivized to create such firm-wide synergies and to cater to the innovation needs of the firm as a whole (Coombs & Richards, 1993 ; Lerner & Wulf, 2007 ). Recent evidence suggests that with centralization of R&D authority, internal R&D collaboration is enhanced (Argyres et al, 2020 ).…”

Networks as Drivers of National Innovative System Development in the Conditions of Globalization

“…A number of modern researchers have devoted their scientific works to innovation policy [4][5][6][7]. In this vein, the analysis of the meaning and impact of network theory and the network approach refers to the key issues of modern innovation policy [8][9][10][11][12][13].…”