Clustering and Connectedness: How Inventor Network Configurations within Incumbent Firms Influence Their Assimilation and Absorption of New Venture Technologies

Abstract

We explore how an incumbent firm’s internal inventor network configuration influences its ability to assimilate and absorb new venture technologies. We find that incumbents that have internal inventor network configurations in which inventors are heavily clustered into cohesive subgroups of interconnected inventors are more likely to build on new venture technologies. We suggest that such networks engender specific social capital in terms of information conduits, trust, and common vernaculars that is ideal for inventors to translate and share with their cluster members the technological insights that they have derived from outside sources. Moreover, any insularity that may result from having cohesive clusters is mitigated by internal competition between clusters. In contrast, having a highly connected inventor network engenders social capital that impedes incumbents’ absorbing new venture technologies. Broadly distributed access to internal technology, combined with a strong social identity that results from high levels of connectedness, can lead to insularity and a “not invented here” ethos. We also find that highly connected internal inventor networks diminish any advantage that incumbent firms gain from having corporate venture capital investments in new ventures in terms of absorbing their technologies.