00:00:04
well to understand the study I think
00:00:06
some background is useful right so
00:00:08
companies especially high tech companies
00:00:10
are facing two important trends one is
00:00:13
the technology development is
00:00:14
increasingly more complex so they have
00:00:16
to partner with other companies more and
00:00:19
more right to do R&D alliances and
00:00:21
things like that the other one is that
00:00:23
technology and ideas and markets are
00:00:25
more globalized than ever so firms are
00:00:28
not just having to do partnerships but
00:00:30
international partnerships so you see
00:00:32
companies involved in these global R&D
00:00:34
networks now this can be very good but
00:00:37
it also creates a bit of a dilemma for
00:00:39
companies because on the one hand if you
00:00:40
think about it if you have partners from
00:00:43
all over the world and you're exposed to
00:00:45
new ideas and new ways of doing things
00:00:47
new business systems that can help you
00:00:49
be very innovative on the other hand
00:00:51
though you also have to manage a much
00:00:53
more complex network so you have to deal
00:00:55
with cultural differences legal
00:00:57
differences institutional differences
00:00:59
you name it right and so think you know
00:01:02
of a pharmaceutical company and it has
00:01:04
partners in the United States and
00:01:05
Germany and Japan China India that
00:01:07
sounds like a promising network in terms
00:01:09
of innovation but it's also complex to
00:01:12
manage so against that backdrop we
00:01:14
really asked a very simple question we
00:01:16
we thought well there there must be kind
00:01:19
of an optimal mix of domestic and
00:01:22
foreign partners in your network and how
00:01:24
that affects your innovation okay so if
00:01:26
you think of the most basic unit of a
00:01:28
network which is a simple triad of firms
00:01:31
where I'm the firm and I have two
00:01:32
partners there's essentially three basic
00:01:35
configurations everyone can be foreign
00:01:37
everyone from a different country that's
00:01:40
an all foreign triad or you can think of
00:01:42
everyone being from the same country
00:01:44
that's all domestic or a mix of foreign
00:01:46
and domestic
00:01:46
so our question was simply out of these
00:01:48
three which one is best for innovation
00:01:50
and to do that we had some data from the
00:01:53
life sciences or biotechnology industry
00:01:56
involving companies from 57 different
00:01:58
countries and we studied the types and
00:02:01
amount of patents that they produced
00:02:03
from those partnerships
00:02:08
so the key takeaway is it really depends
00:02:11
on what kind of innovation you are
00:02:13
trying to produce so when it comes to
00:02:16
innovations that we call radical these
00:02:17
are innovations that are path-breaking
00:02:19
and they really break from the status
00:02:21
quo in terms of the knowledge of the
00:02:23
industry those innovations were most
00:02:25
strongly associated with the all foreign
00:02:27
partnerships with the all foreign
00:02:29
networks not with the all domestic and
00:02:31
not with the ones that have a mix of
00:02:32
foreign and domestic in contrast if
00:02:34
you're going to produce what we call an
00:02:36
impactful innovation so this is an
00:02:38
innovation that's more incremental it's
00:02:40
still economically valuable but kind of
00:02:42
preserves the status quo in terms of
00:02:44
knowledge those were associated with
00:02:45
having all domestic network partners in
00:02:48
the R&D alliances not with all foreign
00:02:51
or with the mix of foreign and domestic
00:02:53
and the other interesting thing is that
00:02:55
these general patterns hold even if we
00:02:57
account for the ways in which countries
00:02:59
are different so think of cultural
00:03:01
differences or institutional differences
00:03:03
or or anything like that
00:03:08
so in a nutshell I think what it tells
00:03:11
you is that if you're a manager that's
00:03:13
in charge of global R&D and especially
00:03:16
global R&D partnerships you have to be
00:03:18
aware of the entire network and the mix
00:03:21
of foreign and domestic partners and how
00:03:23
that's affecting the types of
00:03:25
innovations you produce and and the
00:03:27
efficiency with which you can produce
00:03:29
innovation and I say that because when I
00:03:31
talk to managers often I see that firms
00:03:34
are very good at what I call the dyadic
00:03:36
level they're very good at when they're
00:03:38
gonna form a partnership screening that
00:03:40
partner making sure that they trust that
00:03:41
partner that that partner brings
00:03:43
something new but managers typically
00:03:44
don't look beyond the Dyanne to consider
00:03:46
the entire network and how the
00:03:48
configuration especially the global
00:03:50
configuration may may affect how
00:03:52
innovative they are and what they're
00:03:53
getting out of those partnerships the
00:03:55
other interesting and practical thing is
00:03:57
that it seems like you really have to
00:03:59
commit so you either have to commit to
00:04:01
sort of the all foreign or all domestic
00:04:03
and this kind of mix the foreign and
00:04:05
domestic partners isn't producing much
00:04:07
for firms and of course that depends on
00:04:09
what you expect to get out if you're
00:04:10
going for the home run radical
00:04:12
innovations it's really you you get that
00:04:15
out of the the foreign partnerships and
00:04:18
if you're going for more the incremental
00:04:20
profitable type of innovations then
00:04:22
those are going to come more from your
00:04:24
domestic partnerships
00:04:29
well I think a general statement is that
00:04:32
the science of networks has advanced a
00:04:34
lot in the last 20 years mathematically
00:04:36
and in a lot of other ways what's
00:04:39
interesting is that there's a gap
00:04:40
between what we know about networks
00:04:42
purely and how networks and
00:04:44
globalization relate to one another
00:04:46
but the paradox of course is that we see
00:04:48
that firms are involved more and more in
00:04:50
global networks so I like to close that
00:04:53
gap a little bit so for example the
00:04:55
study I just described tells us about
00:04:57
the consequences are the outcomes of
00:04:59
what you might get from international
00:05:01
versus domestic networks a natural
00:05:03
follow-up is to see if firms are doing
00:05:07
something in in their network formation
00:05:09
behaviors right do they account for
00:05:11
differences across countries do they
00:05:12
account for the global pattern of
00:05:14
partnerships in the way they structure
00:05:15
their relationships particularly when it
00:05:18
comes to seeking for innovation and new
00:05:19
ideas and knowledge the other thing that
00:05:22
I think is important is just to
00:05:24
understand not just if you're getting
00:05:27
different things out of your networks
00:05:28
but what are the underlying processes
00:05:30
right why is it that it's hard to manage
00:05:32
foreign partnerships and what can
00:05:34
managers do to make that process more
00:05:36
efficiency to overcome all those
00:05:37
frictions in terms of culture and
00:05:40
institutions and just the basic
00:05:41
differences across countries to make
00:05:43
these foreign partnerships that seem to
00:05:46
be so valuable function more efficiently
00:05:55
you
