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Empirical Tests of Optimal Cognitive Distance


Stefan Wuyts


Catholic University of Leuven (KUL); Erasmus Research Institute of Management (ERIM)

Massimo G. Colombo


Politecnico di Milano

Shantanu Dutta


University of Southern California - Marshall School of Business

Bart Nooteboom


Tilburg University - Center and Faculty of Economics and Business Administration

January 19, 2004

ERIM Report Series Reference No. ERS-2004-007-ORG

Abstract:     
This article provides empirical tests of the hypothesis of ‘optimal cognitive distance’, proposed by Nooteboom (1999, 2000), in two distinct empirical settings. Variety of cognition, needed for learning, has two dimensions: the number of agents with different cognition, and differences in cognition between them (cognitive distance). The hypothesis is that in interfirm relationships optimal learning entails a trade-off between the advantage of increased cognitive distance for a higher novelty value of a partner’s knowledge, and the disadvantage of less mutual understanding. If the value of learning is the mathematical product of novelty value and understandability, it has an inverse-U shaped relation with cognitive distance, with an optimum level that yields maximal value of learning. With auxiliary hypotheses, the hypothesis is tested on interfirm agreements between pharmaceutical companies and biotech companies, as well as on interfirm agreements in ICT industries.

Number of Pages in PDF File: 38

Keywords: innovation, organizational learning, ICT, biotechnology, alliances

JEL Classification: L2, M, M10, L1

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Date posted: March 9, 2004  

Suggested Citation

Wuyts, Stefan and Colombo, Massimo G. and Dutta, Shantanu and Nooteboom, Bart, Empirical Tests of Optimal Cognitive Distance (January 19, 2004). ERIM Report Series Reference No. ERS-2004-007-ORG. Available at SSRN: http://ssrn.com/abstract=496713

Contact Information

Stefan Wuyts
Catholic University of Leuven (KUL) ( email )
Oude Markt 13
Leuven, Vlaams-Brabant
Belgium
+32 16 325007 (Phone)
+32 16 324713 (Fax)
Erasmus Research Institute of Management (ERIM)
P.O. Box 1738
3000 DR Rotterdam
Netherlands
Massimo G. Colombo
Politecnico di Milano ( email )
Piazza Leonardo da Vinci, 32
20113 Milan
Italy
Shantanu Dutta
University of Southern California - Marshall School of Business ( email )
Hoffman Hall 701
Los Angeles, CA 90089-1427
United States
213-740-5038 (Phone)
213-740-7828 (Fax)
Bart Nooteboom (Contact Author)
Tilburg University - Center and Faculty of Economics and Business Administration ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
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