Network Structure and Inventive Performance

The goal of this paper is to analyze how different structural configurations of networks stimulate invention activities, i.e., whether they increase the quantity or the quality of patented inventions. We present theoretical arguments implying that the strength of ties is more important for inventive quality, and the size of a network is more important for inventive quantity. We base our analysis on original survey data obtained from 1,204 inventors listed on European patent applications of companies active in clean technology, nanotechnology, and mechanical engineering. The survey data were matched with register information covering 15,168 patent applications filed at the European Patent Office. We find that the size of the network and the strength of the ties are positively related to invention quantity and quality. After instrumenting the endogenous network variables, we find that not considering endogeneity leads to an overestimation of the effect of the network size and an underestimation of the effect of the strength of the network ties. Additionally, after instrumenting the endogenous variables, we find that whereas the size of a network is equally important for invention quantity and quality, the strength of network ties is considerably more important (times 1.6) for quality than for quantity