Exploration and exploitation in technology-based alliance networks

Although the literature converges regarding the reasons why and how networks of technology alliances are formed, there is still lack of agreement on what constitutes an optimal network structure, once it has been formed. The aim of this paper is to fill this void and to determine what constitutes an optimal network structure for exploration and exploitation within the context of technological innovation. We differentiate among a firm's direct ties, indirect ties and degree of redundancy and analyze their role in the pharmaceutical, chemical and automotive industry. Regarding the role of direct ties, in combination with indirect ties, we find two alternative alliance network structures that are effective for both exploitation and exploration. We also find that redundancy in the alliance network has a positive effect on exploitation. However, there is no relation between redundancy and exploration, which seems to point to a new insight regarding the role of network redundancy in case of exploration of new technological fields. A final point is that our findings remain largely invariant across the three industries, enhancing the generalizability of our results.