Degrees of Separation Affect Innovation and Creativity
Melissa A. Schilling, Corey C. Phelps
Management Science, July 2007
Available
online (abstract)
Researchers at the University of Washington and New York University have discovered that companies that network and form strategic alliances are more creative and develop more patented inventions than those that don't.
Corey Phelps, an assistant professor of management and organization at the UW Business School, and Melissa Schilling, an associate professor at NYU, analyzed the innovative performance of 1,106 companies in 11 different industries over a six-year period. They examined the pattern or structure of strategic alliance relationships among companies in each industry. They found that how firms are connected to one another influences the number of patented inventions they obtained. Those that secured more patents were classified by Phelps and Schilling as being more creative.
The researchers argue that companies reap greater benefits when they are part of a network that exhibits a high degree of clustering and only a few degrees of separation, both of which are characteristic of a small-world network.
They found that clustering enables information to travel quickly and accurately because it creates redundant paths between companies and increases the level of cooperation among them. Clusters within networks are important structures for making information exchange meaningful and useful. In fact, the authors add, lustering can make firms more willing and able to exchange information.
A network in which companies are directly or indirectly connected to many others by only a few degrees of separation has high reach. Reach increases the amount and diversity of information available by increasing the number of companies that provide information and by decreasing the length of the path the information has to travel. Based upon their analysis, the authors conclude that companies involved in large-scale alliance networks that exhibit high levels of clustering and reach are more innovative.
The study, which was partially supported by the National Science Foundation, appears in the July issue of Management Science.