Interfirm networks and search-transfer problem: the role of geographic proximity
| Date | 06 March 2020 |
| DOI | https://doi.org/10.1108/IMDS-07-2019-0384 |
| Pages | 923-940 |
| Published date | 06 March 2020 |
| Author | Dong Wu,Xiaobo Wu,Haojun Zhou,Mingu Kang |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
Interfirm networks and
search-transfer problem: the role
of geographic proximity
Dong Wu, Xiaobo Wu, Haojun Zhou and Mingu Kang
School of Management, Zhejiang University, Hangzhou, China
Abstract
Purpose –This paper represents an empirical study of how geographic proximity influences the search
advantage and the transfer problem of interfirm networks.
Design/methodology/approach –By using the data collected from 226 Chinese manufacturing firms, this
study examines the proposed hypotheses.
Findings –The authors’findings suggest that (1) geographic proximity is an important antecedent for
promoting knowledge transfer, whereas it lowers the degree of knowledge novelty; and (2) geographic
proximity also moderates the effects of interfirm networks on knowledge novelty and knowledge transfer.
Originality/value –This study contributes the literature of interfirm network and provides practical
implications by addressing the ways in which manufacturing firms can promote knowledge transfer and
acquire novel knowledge.
Keywords Interfirm networks, Search benefit, Transfer barriers, Geographic proximity, Knowledge/
innovation diffusion
Paper type Research paper
1. Introduction
In the studies related to interfirm network, consensus is far from being reached on such
theoretical disputes over weak ties and strong ties, structural holes and closed network,
network diversity and network similarity. For instance, there is dispute over the effects of
weak ties and strong ties. Granovetter (1973) emphasizes the role of weak ties by analyzing
the strength of weak ties and holds that weak ties provide access to information. Weak ties
are likely to be a form of bridging; therefore, they can be source of novel information through
interacting with distant individuals and groups. However, Nelson (1989) attaches more
importance to the strength of strong ties and wins the support of many scholars (Bian, 1997;
McFadyen et al., 2009). Strong ties facilitate the development of trust and reciprocity
(Coleman, 1988;Uzzi, 1997) and reduce conflict (Nelson, 1989) so as to promote the
establishment of a mechanism for jointly addressing the problems (McEvily and Marcus,
2005;Uzzi, 1997). In regard to the structural holes and closed network, Burt (1992) holds that a
sparse network rich in structural holes is an ideal network structure, while Coleman (1988)
argues that a closely connected closed network is more beneficial. In addition, there is also
dispute over the benefits of network diversity and network similarity. Some scholars think
that network diversity contributes to information diversity (Higgins and Kram, 2001) and
boosts interfirm learning (Parkhe, 1991) and firm innovation (Phelps, 2010;Powell et al., 1996).
However, other scholars believe network similarity promotes knowledge transfer among
cooperators and speeds up mutual learning among firms, thus enhancing firm performance
(Darr and Kurtzberg, 2000).
These disputes have arisen mainly due to different perspectives of researchers. Weak ties,
structural holes and network diversity stress the network’s search benefit, that is, providing
Interfirm
networks and
knowledge
transfer
923
This work was supported by the National Natural Science Foundation of China (Grant Nos 71502163,
71832013 and 71821002).
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0263-5577.htm
Received 16 July 2019
Revised 25 November 2019
Accepted 30 January 2020
Industrial Management & Data
Systems
Vol. 120 No. 5, 2020
pp. 923-940
© Emerald Publishing Limited
0263-5577
DOI 10.1108/IMDS-07-2019-0384
access to novel knowledge; while strong lies, closed network and network similarity stress the
network’s transfer benefit, that is, promoting the effective transfer of knowledge. Both the
searches for external novel knowledge and interfirm knowledge transfer play a vital role in
firms’innovation processes (Fleming, 2001;Grant, 1996;Lin, 2012;Mar
ıa Ruiz-Jim
enez, 2013).
Also, since external novel knowledge can promote firm innovation after it is being transferred
to the organization (Hansen, 1999), both knowledge search and transfer work together
promote firms’innovation performance. However, when explaining how interfirm network
affects innovation, previous literature tends to analyze it from either search perspective or
transfer perspective, respectively (Hansen, 1999;Hansen et al., 2005). Weak ties, structural
holes and network diversity do have the search benefit so as to promote firm innovation,
while they are confronted with knowledge transfer barriers, which hinder firm innovation.
Therefore, in order to improve innovation performance, it very important for manufacturing
firms to not only strengthen the positive impacts of weak ties, structural holes and network
diversity on novel knowledge search but also reduce the negative impacts of weak ties,
structural holesand network diversity on knowledge transfer.Consideringthis importantissue,
this study specifically explores the impacts of network space on novel knowledge search
and knowledge transferby incorporating geographic proximityinto thisinfluence relationships.
Although it is well documented that geographic locations play a critical role in competition
among firms (Porter, 1998), however, our understanding of how geographic and network
spaces together influence firm innovation is very limited. Thus, it is necessary to further
investigate the interactive effect of geographic space and network space on firm innovation
in order to guide firms in better making the spatial arrangements of interfirm network.
In response to this research need, this study aims to answer the following research questions:
RQ1. What are the effects of geographic proximity on transferring knowledge and
acquiring novel knowledge from the network partners?
RQ2. How does geographic proximity moderate the effects of interfirm networks (i.e.
weak ties, structural holes and network diversity) on transferring knowledge and
acquiring novel knowledge from the network partners?
By considering the role of geographic proximity in knowledge search-transfer problem of
interfirm networks, this study provides an important insight into the effective use of interfirm
network to promote knowledge transfer and access novel knowledge. The remainder of this
paper is organized as follows. In Section 2, issues related to interfirm networks, knowledge
search-transfer problem and geographic proximity are discussed. Proposed hypotheses are
also developed. In Section 3, an empirical methodology is described for the measurement
variables. In Section 4, the results of the empirical study from 226 Chinese manufacturing
firms are presented and analyzed. In Section 5, conclusions to be drawn from this research are
presented. The theoretical and practical implications are discussed, and the limitation and
future approach are also given.
2. Literature review and hypotheses development
Based on previous literature, there is search benefit in weak ties, structural holes and network
diversity, but the transfer problem also exists. The sparse heterogeneous network formed by
weak ties, structural holes and network diversity helps to access novel knowledge, which has
innovation potential (Fleming, 2001;March, 1991;Tiwana, 2008;Wulf, 2017). A great deal of
research on social networks has also verified the important role of these three factors in
helping firms to access diverse knowledge and thus promoting innovation. However, sparse
heterogeneous network might encounter serious problems during knowledge transfer. If
knowledge fails to be transferred to the interior of the firm, it is of no help to innovation no
matter how novel it is. On the other hand, dense homogeneous network formed by strong ties,
IMDS
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