Organizational Change and the Dynamics of Innovation: Formal R&D Structure and Intrafirm Inventor Networks (with Nicholas Argyres, Olin School of Business, Washington University & Luis A. Rios, Wharton School of Business, University of Pennsylvania)
Prior research has argued and shown that firms with centralized R&D organization structures produce broader-impact innovations relative to more decentralized firms. The organizational mechanisms underlying this relationship, however, are underexplored. A better understanding of these mechanisms is needed in order understand whether and how formal R&D structure can be used as a lever to influence research outcomes in the firm. To address these questions, we study the relationship between formal R&D structure, internal inventor networks, and innovative behavior and outcomes. We find that centralization of R&D budget authority increases the connectedness of internal inventor networks, which in turn increases the breadth of impact of innovations and the breadth of technological search. Our results suggest that changes in structure impact innovation outcomes through changes in inventor networks, with a lag reflecting organizational inertia.
JEL Classification: D23 D83 L22
Keywords: Organizational Structure, Innovation, Social Networks, R&D