How Does A Firm’s Previous Social Network Position Affect Innovation? Evidence from Chinese Listed Companies

Abstract

The impact of social network position on innovation has been widely confirmed in past studies. However, research on the time-lag structure of the impact is still insufficient. Within the time window 2010 to 2017, this study constructs a two-mode social network between Chinese listed companies and other participants. To analyze the lag structure of the effect of social network position on innovation, this study uses a panel negative binomial regression model transformed by the Almon polynomial. The results show that a firm does need an advantageous past social network position for innovation. Previous local and global centrality in a social network has a different influence on innovation. For the local centrality indices, degree centrality has a positive impact in the short-term, but has a negative impact in the long-term; the impact of betweenness centrality is not significant in the short-term and is negative in the long run. For the global centrality indices, closeness centrality has a positive influence that decreases with the increase of the time-lag. At the same time, using the method of necessary condition analysis (NCA), this study calculates the bottleneck for a given innovation level. Finally, based on these research conclusions, the theoretical implications and management practice implications are summarized.