Network rivalry, Competition and Innovation

Abstract

© 2020 The Authors Strategy, structure and rivalry across an industry has an impact upon innovation outcomes at the industry level. However, when patterns of rivalry are altered through the presence of strategic networks (sets of firms that cooperate closely on the basis of their web of strategic alliances) it is not clear what impact this has upon product market (price) competition and in factor markets (patents). Using data from the motor vehicle industry, we find only limited support for the notion that competitive responses vary with changes in network-level rivalry most likely due to co-opetition and a lack of stability across the networks. The results suggest that firms are likely to engage in co-opetition, thus changes in innovation outcomes can only be observed at the network level. When the presence of strong strategic networks leads to lower levels of rivalry on the basis of at least some cooperative behavior within the network (and competitive actions being focused on firms in other networks) we see a reduction in innovation at the network level. However, as the strategic networks changed consistently over time, the change in patenting behavior was limited.