The Impact of Global and Local Cohesion on Innovation in the Pharmaceutical Industry

Abstract

In this paper, we examine how the configuration of intra-organizational networks, and in particular, cohesion among members of an organization, influences organizations’ innovative output. We argue that the cohesion among R&D scientists could be at a local level or a global level, and that local and global cohesion may have different impacts on firms’ innovation performance. We test our hypotheses by examining the structure of the R&D collaboration networks within firms that operated in the pharmaceutical industry between 1981 and 1989, and their innovative outcomes – patents that led to new product launches. We find that local cohesion has a positive impact on the innovative performance of a firm, and global cohesion has a negative impact.