Where Your Partner Is Matters:Alliance Centrality, Geographical Distance, and Knowledge Creation

Whereas firms’ centrality in alliance networks has been found to be associated with their development of knowledge and innovation, how network centrality at the dyad level – given that strategic alliance is essentially a dyadic phenomenon between firms – influences knowledge creation has not been systematically examined. We draw on network complexity to study the curvilinear impacts of alliance centrality on knowledge creation at the dyad level, by looking into breakthrough knowledge and all new knowledge of two alliance partners. We further bring geographic complexity into account and investigate its distinct moderating role in these curvilinear impacts in terms of different types of knowledge. By using dyadic data from 386 pharmaceutical alliances over a 15-year period, we find empirical evidence corroborating our arguments, where alliance centrality has inverted U-shaped relationships with breakthrough knowledge and all new knowledge at the dyad level, and geographic distance only makes the inverted U-shaped relationship between alliance centrality and breakthrough knowledge flattening. Novel implications for the complexity theory in the collaborative innovation context are discussed