Structural Constraints, Strategic Interactions and Innovative Processes: Measuring Network Effects in New Product Development Projects

Abstract

In this paper I approach the analysis of innovation activities as relational processes first deriving the econometric specification of an endogenous model of network effect on individual outcome, and then using data on innovation projects to empirically test the impact on actors' performance of relational activities in new product development. A complete relational set of inter-unit relationships in 173 new product development projects among 24 R&D units of a profit oriented R&D organization is analyzed using mixed regressive-autoregressive models. Results show the importance of a network effects on unit's performance, after controlling for unit's attributional characteristics. The magnitude and directionality of these effects are sensitive to project characteristics, but not to the directionality of the ties. Implications for theory and research in innovation management are discussed by elaborating on the importance of the content of the ties to assess the impact of relational activities, and to examine client (i.e. ties sent) and server (i.e. ties received) relational options as complementary aspects of interaction strategies.

Keywords: Auto-correlation models, innovation, networks, product development, strategic interaction

JEL Classification: C52, O31, O32