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well to understand the study I think some background is useful right so companies especially high tech companies
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are facing two important trends one is the technology development is increasingly more complex so they have
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to partner with other companies more and more right to do R&D alliances and things like that the other one is that
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technology and ideas and markets are more globalized than ever so firms are not just having to do partnerships but
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international partnerships so you see companies involved in these global R&D
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networks now this can be very good but it also creates a bit of a dilemma for companies because on the one hand if you
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think about it if you have partners from all over the world and you're exposed to
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new ideas and new ways of doing things new business systems that can help you be very innovative on the other hand
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though you also have to manage a much more complex network so you have to deal with cultural differences legal
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differences institutional differences you name it right and so think you know of a pharmaceutical company and it has
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partners in the United States and Germany and Japan China India that sounds like a promising network in terms
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of innovation but it's also complex to manage so against that backdrop we really asked a very simple question we
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we thought well there there must be kind of an optimal mix of domestic and foreign partners in your network and how
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that affects your innovation okay so if you think of the most basic unit of a network which is a simple triad of firms
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where I'm the firm and I have two partners there's essentially three basic
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configurations everyone can be foreign everyone from a different country that's
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an all foreign triad or you can think of everyone being from the same country that's all domestic or a mix of foreign
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and domestic so our question was simply out of these three which one is best for innovation
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and to do that we had some data from the life sciences or biotechnology industry
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involving companies from 57 different countries and we studied the types and amount of patents that they produced
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from those partnerships so the key takeaway is it really depends on what kind of innovation you are
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trying to produce so when it comes to innovations that we call radical these are innovations that are path-breaking
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and they really break from the status quo in terms of the knowledge of the industry those innovations were most
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strongly associated with the all foreign partnerships with the all foreign networks not with the all domestic and
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not with the ones that have a mix of foreign and domestic in contrast if you're going to produce what we call an
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impactful innovation so this is an innovation that's more incremental it's
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still economically valuable but kind of preserves the status quo in terms of knowledge those were associated with
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having all domestic network partners in the R&D alliances not with all foreign
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or with the mix of foreign and domestic and the other interesting thing is that these general patterns hold even if we
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account for the ways in which countries are different so think of cultural differences or institutional differences
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or or anything like that so in a nutshell I think what it tells you is that if you're a manager that's
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in charge of global R&D and especially global R&D partnerships you have to be
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aware of the entire network and the mix of foreign and domestic partners and how
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that's affecting the types of innovations you produce and and the efficiency with which you can produce
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innovation and I say that because when I talk to managers often I see that firms
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are very good at what I call the dyadic level they're very good at when they're
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gonna form a partnership screening that partner making sure that they trust that
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partner that that partner brings something new but managers typically don't look beyond the Dyanne to consider
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the entire network and how the configuration especially the global configuration may may affect how
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innovative they are and what they're getting out of those partnerships the other interesting and practical thing is
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that it seems like you really have to commit so you either have to commit to sort of the all foreign or all domestic
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and this kind of mix the foreign and domestic partners isn't producing much for firms and of course that depends on
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what you expect to get out if you're going for the home run radical innovations it's really you you get that
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out of the the foreign partnerships and if you're going for more the incremental
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profitable type of innovations then those are going to come more from your domestic partnerships
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well I think a general statement is that the science of networks has advanced a lot in the last 20 years mathematically
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and in a lot of other ways what's interesting is that there's a gap between what we know about networks
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purely and how networks and globalization relate to one another but the paradox of course is that we see
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that firms are involved more and more in global networks so I like to close that
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gap a little bit so for example the study I just described tells us about the consequences are the outcomes of
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what you might get from international versus domestic networks a natural follow-up is to see if firms are doing
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something in in their network formation behaviors right do they account for differences across countries do they
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account for the global pattern of partnerships in the way they structure their relationships particularly when it
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comes to seeking for innovation and new ideas and knowledge the other thing that
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I think is important is just to understand not just if you're getting different things out of your networks
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but what are the underlying processes right why is it that it's hard to manage
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foreign partnerships and what can managers do to make that process more efficiency to overcome all those
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frictions in terms of culture and institutions and just the basic differences across countries to make
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these foreign partnerships that seem to be so valuable function more efficiently
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you