Empirical Tests of Optimal Cognitive Distance
38 Pages
Posted: 9 Mar 2004
Catholic University of Leuven (KUL); Erasmus Research Institute of Management (ERIM)
Politecnico di Milano
University of Southern California - Marshall School of Business
Tilburg University - Center and Faculty of Economics and Business Administration
Date Written: January 19, 2004
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.
Keywords: innovation, organizational learning, ICT, biotechnology, alliances
JEL Classification: L2, M, M10, L1
Suggested Citation:
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: https://ssrn.com/abstract=496713
