How a firm's position in a whole network affects innovation performance

Abstract

A whole network consists of the relationships that exist among members of a population. However, prior studies treated the whole network as a metaphor, and consequently, existing empirical research is limited. As such, this paper investigates the effects of a whole network on firm innovation performance among firms engaged in the Korean semiconductor industry using three variables, namely main component, eigenvector centrality, and closeness centrality. The effects are then analysed using two-step generalised method of moments estimates. The results show a firm is included among the main component in a whole network, and the more centralised it is in terms of connectivity and distance, the more advantageous it is for firm innovation. The significance of this paper is two-fold; First, unlike previous studies that use variables reflecting collective characteristics, this study uses variables reflecting the characteristics of individual firms in a whole network. Second, it is a rare empirical study of a whole network.

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