A Structural Perspective on Organizational Innovation

Abstract

Sociologists contend that industries can be importantly characterized as sets of interlocking producer positions. This paper argues that this distinctively relational conception of a market represents a powerful framework for depicting and analyzing the process of technical change. The paper presents a method for using patent citation data to describe the positions of high-technology firms in a market-wide 'technological network'. It focuses on one property of a producer's position in this technological network - 'crowding' - which represents the extent to which the firm specializes in areas of technology that are densely populated with other organizations. Four propositions are developed linking technological crowding to two firm-level measures of innovation: (i) the annual level of R&D expenditures, and (ii) the continuous time rate of patenting. The findings demonstrate that the positions innovators occupy in the technological structure of the market strongly affects their level of investment in R&D and rate of innovation.

JEL Classification: M10