The Effect of Network Closure and Structural Hole in Technological Knowledge Exchange on Radical Innovation

기술지식 교류 네트워크의 네트워크 폐쇄와 구조적 공백이 급진적 혁신에 미치는 영향

  • Ahn, Jae-Gwang (Department of Business Administration, Kumoh National Institute of Technology) ;
  • Kim, Jin-Han (Department of Business Administration, Kumoh National Institute of Technology)
  • 안재광 (금오공과대학교 경영학과) ;
  • 김진한 (금오공과대학교 경영학과)
  • Received : 2018.04.03
  • Accepted : 2018.04.20
  • Published : 2018.04.28


This study empirically test the roles of network closure and structural hole on radical innovation in technological knowledge exchange network in Gumi cluster. In doing so, we build 2,550 firm network, transforming association*firm(2-mode) to firm*firm(1-mode) network data. In addition, in order to investigate firms' attributes, we conduct survey for 101 firms in Gumi cluster using random sampling, and finally collect 86 firm samples. For analysis, we use ridge regression since network density and efficiency, indices of network closure and structural hole respectively, has a high level of multicollinearity. The findings show that structural hole has a significant and positive impact on radical innovation, but network closure has a significant and negative impact on radical innovation. This study contributes to present an empirical evidence of debate on network closure and structural hole based on past conceptual discussions and literature review and further goes a long way towards strategy formulation to establish social capital in accomplishing radical innovation. Further research is required that pays closer attention to features of technological knowledge, innovation types and interaction between network closure and structural hole, directing efforts to structural characteristics of various networks.


Cluster network;Social network analysis;Social capital;Network closure;Structural hole;Radical innovation


Supported by : Kumoh National Institute of Technology


  1. Coleman. J.S. (1990). Foundations of Social Theory. Cambridge, MA: Harvard University Press.
  2. Burt. R.S. (1992). Structural Holes: The Social Structure of Competition, Cambridge, MA: Harvard University Press.
  3. Kim, Y., Choi, T.Y., Yan, T. & Dooley, K. (2011). Structural investigation of supply networks: A social network analysis approach. Journal of Operations Management, 29(3), 194-211.
  4. Broekel, T., Balland, P.A., Burger, M. & van Oort, F. (2014). Modeling knowledge networks in economic geography: a discussion of four methods. The annals of regional science, 53(2), 423-452.
  5. Jenssen, J.I. & Nybakk, E. (2013). Inter-organizational networks and innovation in small, knowledge-intensive firms: A literature review. International Journal of innovation management, 17(2), 1350008.
  6. Eggers, F., Kraus, S. & Covin, J.G. (2014). Traveling into unexplored territory: radical innovativeness and the role of networking, customers, and technologically turbulent environments. Industrial Marketing Management, 43(8), 1385-1393.
  7. Porter, M.E. (1998). Clusters and the new economics of competition (Vol. 76, No. 6, pp. 77-90). Boston: Harvard Business Review.
  8. Tallman, S., Jenkins, M., Henry, N. & Pinch, S. (2004). Knowledge, clusters, and competitive advantage. Academy of management review, 29(2), 258-271.
  9. Gnyawali, D.R. & Srivastava, M.K. (2013). Complementary effects of clusters and networks on firm innovation: A conceptual model. Journal of Engineering and Technology Management, 30(1), 1-20.
  10. Zaheer, A. & George, V.P. (2004). Reach out or reach within? Performance implications of alliances and location in biotechnology. Managerial and decision economics, 25(6-7), 437-452.
  11. McCann, B.T. & Folta, T.B. (2011). Performance differentials within geographic clusters. Journal of Business Venturing, 26(1), 104-123.
  12. Uzzi, B. (1996). The sources and consequences of embeddedness for the economic performance of organizations: The network effect. American sociological review, 61(4), 674-698.
  13. Powell. W.W. (1990). Neither market nor hierarchy: network forms of organization, Research in Organizational Behavior, 12, 295-336.
  14. De Carolis, D. M. & Saparito, P. (2006). Social capital, cognition, and entrepreneurial opportunities: A theoretical framework. Entrepreneurship theory and practice, 30(1), 41-56.
  15. Coleman, J.S. (1988). Social Capital in the Development of Human Capital: The Ambiguous Position of Private Schools.
  16. Lin. N. (2001). Social Capital: A Theory of Social Structure and Action. Cambridge.
  17. Collier. P. (1998). Social Capital and Poverty, Center for Institutional Reform and the Informal Sector(IRIS). University of Maryland. Working Paper, 4.
  18. Bellamy, M.A. & Basole, R.C. (2013). Network analysis of supply chain systems: A systematic review and future research. Systems Engineering, 16(2), 235-249.
  19. Echols, A. & Tsai, W. (2005). Niche and performance: The moderating role of network embeddedness. Strategic Management Journal, 26(3), 219-238.
  20. Gulati, R. (1998). Alliances and networks. Strategic management journal, 19(4), 293-317.<293::AID-SMJ982>3.0.CO;2-M
  21. Granovetter, M. (2005). The impact of social structure on economic outcomes. Journal of economic perspectives, 19(1), 33-50.
  22. Inkpen, A.C. & Tsang, E.W. (2005). Social capital, networks, and knowledge transfer. Academy of management review, 30(1), 146-165.
  23. Nahapiet J. & Ghoshal. S. (1998). Social Capital, Intellectual Capital, and the Organizational Advantage. The Academy of Management Review, 23(2), 242-266.
  24. Yawson. R.M. (2009). The Ecological System of Innovation: A New Architectural Framework for a Functional Evidence-Based Platform for Science and Innovation Policy. The Future of Innovation. Proceedings of XX ISPIM 2009 Conference.
  25. Gulati, R. (1999). Network location and learning: The influence of network resources and firm capabilities on alliance formation. Strategic management journal, 20(5), 397-420.<397::AID-SMJ35>3.0.CO;2-K
  26. Dewar, R.D. & Dutton, J.E. (1986). The adoption of radical and incremental innovations: An empirical analysis. Management science, 32(11), 1422-1433.
  27. Garcia, R., & Calantone, R. (2002). A critical look at technological innovation typology and innovativeness terminology: a literature review. Journal of product innovation management, 19(2), 110-132.
  28. Capaldo, A. (2007). Network structure and innovation: The leveraging of a dual network as a distinctive relational capability. Strategic management journal, 28(6), 585-608.
  29. Nieto, M. J. & Santamaria, L. (2007). The importance of diverse collaborative networks for the novelty of product innovation. Technovation, 27(6-7), 367-377.
  30. Koka, B.R. & Prescott, J.E. (2002). Strategic alliances as social capital: A multidimensional view. Strategic management journal, 23(9), 795-816.
  31. Granovetter. M. (1973). The strength of weak ties, The American Journal of Sociology, 78(6), 1360-1380.
  32. Gilsing, V., Nooteboom, B., Vanhaverbeke, W., Duysters, G. & van den Oord, A. (2008). Network embeddedness and the exploration of novel technologies: Technological distance, betweenness centrality and density. Research policy, 37(10), 1717-1731.
  33. Xiao, Z., & Tsui, A.S. (2007). When brokers may not work: The cultural contingency of social capital in Chinese high-tech firms. Administrative Science Quarterly, 52(1), 1-31.
  34. Gargiulo, M. & Benassi, M. (2000). Trapped in your own net? Network cohesion, structural holes, and the adaptation of social capital. Organization science, 11(2), 183-196.
  35. Parkhe, A. (1993). Strategic alliance structuring: A game theoretic and transaction cost examination of interfirm cooperation. Academy of management journal, 36(4), 794-829.
  36. Zaheer, A., & Venkatraman, N. (1995). Relational governance as an interorganizational strategy: An empirical test of the role of trust in economic exchange. Strategic management journal, 16(5), 373-392.
  37. Pathak, S.D., Day, J. M., Nair, A., Sawaya, W.J. & Kristal, M.M. (2007). Complexity and adaptivity in supply networks: Building supply network theory using a complex adaptive systems perspective. Decision sciences, 38(4), 547-580.
  38. Knoke D. & Yang. S. (2008). Social Network Analysls. Thousand Oaks, California : SAGE Publications Inc.
  39. Christensen, C.M. (1997). The Innovators Dilemma: When New Technologies Cause Great Firms to Fail. Harvard Business School Press, Boston, MA.
  40. Tsai, W. & Ghoshal, S. (1998). Social capital and value creation: The role of intrafirm networks. Academy of management Journal, 41(4), 464-476.
  41. Souitaris, V. (2002). Technological trajectories as moderators of firm-level determinants of innovation. Research policy, 31(6), 877-898.
  42. Chen, J., Zhu, Z., & Yuan X.H. (2004). Measuring intellectual capital: a new model and empirical study. Journal of Intellectual capital, 5(1), 195-212.
  43. Wang, C.L. & Ahmed, P.K. (2004). The development and validation of the organisational innovativeness construct using confirmatory factor analysis. European journal of innovation management, 7(4), 303-313.
  44. Subramaniam, M. & Youndt, M.A. (2005). The influence of intellectual capital on the types of innovative capabilities. Academy of Management journal, 48(3), 450-463.
  45. Leifer, R.C., McDermott, M., O'Connor, G.C., Peters, L.S., Rice, M. & Veryzer, R.W. (2000). Radical Innovation. Harvard Business School Press.
  46. Churchill. G.A. (1991). Marketing Research: Methodological Foundations. Fort Worth. TX: Dryden Press.
  47. Nunnally. J.C. (1978). Psychometric Theory, 2nd Edition, Mcgraw-Hill Book Company, New York.
  48. Cule, E. & De Iorio, M. (2012). A Semi-Automatic Method to Guide the Choice of Ridge Parameter in Ridge Regression. Submitted to the Annals of Applied Statistics, 1-32.
  49. Chen, M. J., Su, K. H. & Tsai, W. (2007). Competitive tension: The awareness-motivation- capability perspective. Academy of Management Journal, 50(1), 101-118.
  50. Arikan, A.T. (2009). Interfirm knowledge exchanges and the knowledge creation capability of clusters. Academy of Management Review, 34(4), 658-676.
  51. Chatterjee, S., Hadi, A.S. & Price. B. (2000). Regression analysis by example, 3rd ed. John Wiley & Sons.
  52. Burt, R.S. (2004). Structural holes and good ideas. American journal of sociology, 110(2), 349-399.
  53. Rodan, S. & Galunic, C. (2004). More than network structure: How knowledge heterogeneity influences managerial performance and innovativeness. Strategic management journal, 25(6), 541-562.
  54. Moran, P. (2005). Structural vs. relational embeddedness: Social capital and managerial performance. Strategic management journal, 26(12), 1129-1151.
  55. Hargadon, A., & Sutton, R.I. (1997). Technology brokering and innovation in a product development firm. Administrative Science Quarterly, 42(4), 716-749.
  56. Florida, R., Cushing, R. & Gates, G. (2002). When social capital stifles innovation. Harvard Business Review, 80(8), 20-24.
  57. Ahuja, G. (2000). Collaboration networks, structural holes, and innovation: A longitudinal study. Administrative science quarterly, 45(3), 425-455.
  58. Nooteboom, B. (2000). Institutions and forms of co-ordination in innovation systems. Organization studies, 21(5), 915-939.
  59. Obstfeld, D. (2005). Social networks, the tertius iungens orientation, and involvement in innovation. Administrative science quarterly, 50(1), 100-130.
  60. Ettlie, J.E., Bridges, W.P., & O'keefe, R.D. (1984). Organization strategy and structural differences for radical versus incremental innovation. Management science, 30(6), 682-695.
  61. Yang. H.M. (2017). A study on the patent valuation for SMEs' patent management. Journal of Industrial Convergence, 15(2), 17-26.