R&d Organizational Structure and Innovation: the Interplay Between Intrafirm and Interfirm Inventor Networks
Nicholas S. Argyres (Washington University)
Luis A. Rios (University of Pennsylvania)
Brian S. Silverman (University of Toronto)

Abstract : Recent research has explored the effect of shifts in formal R&D structure on the evolution of inventor networks within the firm, which consequently affects the nature of innovation generated by the firm. Yet prior research demonstrates that the formal organization of R&D affects both internal production of innovation and external sourcing of innovation. In this study, we advance the literature by exploring the interaction between changes in within-firm inventor networks and changes in across-firm inventor networks after a shift in formal R&D structure, and by exploring the effect of this interaction on innovation.

New Models and New Practices in the Private Funding of Academic Research
Janet Bercovitz (University of Colorado Boulder)
Maryann Feldman (University of North Carolina)
Alex Graddy-Reed (University of Southern California)

Abstract : Private foundation funding of academic research has grown substantially over the past decade reaching $4.3B in 2010. The majority of foundation funding is allocated to research in the life sciences. Given a focus on the immediate needs of a specific patient population and the concomitant emphasis on translational advances, an emerging subset of foundation funders are acting as institutional entrepreneurs and promoting the adoption of a different model for sponsored research, that of venture philanthropy. The venture philanthropy model emphasizes the active management of the commercialization process, with the goal of accelerating scientific progress to material outcomes. This study investigates how these relatively new players are influencing the substance, practice and structure of academic research by examining contractual terms in sponsored research agreements. We explore two specific questions: (1) How do the terms in research agreements vary across funder types? And (2) what are the performance implications of the adoption of these contractual innovations?

The Problem You Know: an Empirical Examination of Firms' Recombination Strategies
J.P. Eggers (New York University)
Aseem Kaul (University of Minnesota)

Abstract : In this study, we empirically examine the approaches firms take when recombining knowledge to develop new technologies. Conceiving of recombination as the matching of problems to solutions, we develop a typology of four recombination strategies based on whether the firm is familiar with the problem and / or the solution. We then examine the prevalence of these four strategies, both in general and when pursuing potentially radical inventions. Citation-level analyses for the population of patents granted to for-profit firms by the US patent office between 1981 and 2004 show that while firms are most likely to recombine knowledge across domains with which they are already familiar, a surprisingly high proportion of recombinations occur across domains that are both new to the firm. More interestingly, when recombining existing and new knowledge, firms are substantially more likely to seek unfamiliar solutions to familiar problems than to apply familiar solutions to unfamiliar problems, with this pattern being more pronounced when pursuing potentially radical technologies. Supplementary analyses suggest that this ‘preference for problems’ is not driven by access to complementary assets or the superior effectiveness of such a strategy, but seems to reflect a cognitive focus on problems when evaluating technological opportunities.

Public Governance, Corporate Governance, and Firm Innovation: an Examination of State-owned Enterprises
Nan Jia (University of Southern California)
Kenneth G. Huang (National University of Singapore)
Cyndi M. Zhang (Singapore Management University)

Abstract : Innovation activities create substantial firm value, but they are difficult to manage owing to agency risks which are commonly thought to result in shirking hence underinvestment in innovation. However, agency risks can also create inefficient allocation of resources among innovation activities, on which the literature provided limited understanding. We examine an important type of agency risk-that agents pursue quantity of innovation at the expense of novelty, and how it is influenced by corporate and public governance. We theorize that improved corporate governance tools, including better alignment of agents' private incentives and stronger monitoring, and high-quality public governance reduce such agency risk in state-owned enterprises (SOEs). Furthermore, high-quality public governance enhances the functioning of corporate governance tools in further reducing this agency risk in innovation. We test our theory in the context of Chinese SOEs that responded to state's pro-innovation policies relying disproportionately on quantifiable outcomes (e.g., patent counts) for assessing innovation performance. Our difference-in-differences estimates provide overall support for the hypotheses. These findings provide new insights on how agency risk affects innovation by distinguishing the consequences on quantity and novelty of innovation and on how conventional corporate governance tools shaping innovation is dependent on public governance of institutional environment.