Attenuating the negative effects of network change on innovation: a whole network level analysis of taiwanese business groups

Abstract

This paper investigates when and how changes in interorganizational networks affect innovation at a whole-network level. We consider three forms of network change as suggested by prior research on networks: membership change, change in network structure, and tie restructuring. We examine the independent and interactive effects between membership change and other types of network changes on group innovation. Our longitudinal analyses of the intra-group network changes in Taiwanese business groups show that membership change in the intra-group networks has a negative effect on group-level innovation. However, the negative effect is attenuatedwhen the centralization of intra-group networks decreases and when ties involving hub firms are reconfigured. The findings provide implications for both inter-firm network governance and innovation management, especially in the context of business groups.