Academic journal article Journal of Small Business Management

Strong Ties as Sources of New Knowledge: How Small Firms Innovate through Bridging Capabilities

Academic journal article Journal of Small Business Management

Strong Ties as Sources of New Knowledge: How Small Firms Innovate through Bridging Capabilities

Article excerpt

While extant literature assumes an inverted U-shaped relationship between tie-strength and new knowledge acquisition, our study suggests a positive, curvilinear relationship. Our multiple case study shows that firms use specific relational capabilities--which we define "bridging capabilities"--to acquire new knowledge. These bridging capabilities mitigate the risk of overembeddedness in strong ties through increasing multiplexity, that is, through establishing and leveraging multiple relations within a single tie. Our findings suggest that small firms should invest more in the exploration of strong ties instead of increasing their weak tie network. Doing so helps them to reduce alliance complexity, thereby increasing alliance management efficiency and alliance ambidexterity.

Introduction

New knowledge acquisition is a key factor that determines a firm's innovation performance (Cohen and Levinthal 1990; Yli-Renko, Autio, and Sapienza 2001). To acquire new knowledge, small firms rely more and more on their networks (Baum, Calabrese, and Silverman 2000; Groen, Wakkee, and De Weerd-Nederhof 2008; Street and Cameron 2007). To continuously capture value from these networks, firms are advised to establish heterogeneous alliance portfolios consisting of both strong and weak ties (Ahuja 2000; Capaldo 2007; Hansen 1999; Obstfekl 2005; Reagans and MclMly 2003; Tiwana 2008). For small firms, the management of a broad and heterogeneous alliance portfolio can be problematic, though, because of limitations in resource availability and man-agement attention (Duysters and Lokshin 201 1: Lang, Calantone, and Gudmunclson 1997). Despite these problems, small firms are still able to innovate, often through alliances with strong-tie partners, like customers and suppliers (Street and Cameron 2007; Yli-Renko, Autio, and Sapienza 2001). Therefore, the question arises how these small firms use their strong ties to innovate.

Extant literature on networks and alliances assumes an inverted U-shaped relationship between tie strength and new knowledge acquisition (McFadyen and Cannella 2004; Uzzi 1996). After a certain point, stronger ties suffer from "overembeddedness," resulting in diminishing availability of new knowledge as the partner firms become too similar (Hagedoorn and Frankort 2008; Uzzi 1996). In contrast, some studies found that firms that applied relational capabilities were able to acquire new knowledge from strong ties over a long period of time (korenzoni and Lipparini 1999). In our study, we aim to integrate both perspectives by answering two research questions: Do specific relational capabilities mitigate the negative effect of over-embeddedness? And if so. what are these capabilities?

The results of our multiple case study on four small technology firms show that these firms have established long-lasting relationships and that they acquire new knowledge from these strong ties through the application of six "bridging capabilities." These capabilities build and leverage multiple relations within a strong-tie relationship, thereby proactively expanding the scope of knowledge acquisition through an increasing level of multiplexity. Based on our findings, we propose that the extent to which strong ties can be sustainable sources of new-knowledge depends on the application of bridging capabilities by the focal firm in combination with the innovativeness of the partner firm.

This study contributes to network and alliance literature in three ways. First, we extend literature on alliance capabilities by explaining the underlying processes and mechanisms that affect new knowledge acquisition. We provide a taxonomy of bridging capabilities and explain their effect through multiplexity. Second, we challenge the assumption in network literature of an inverted T-shaped relation-ship between tie strength and new knowledge acquisition. Our findings indicate a positive curvilinear relationship, which results from the application of bridging capabilities on innovative strong-tie partners. …

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