Unveiling the influence of global innovation networks on corporate

The role of global innovation networks in driving technological progress

As economic globalization and the internationalization of business cooperation continue to expand, factor resources are being redistributed worldwide. In this context, closed innovation is no longer a suitable development strategy for enterprises or countries. Seeking external resources to reduce R&D risks has become the first choice for companies facing asymmetric market information and an unstable innovation environment. Through open collaborative innovation modes, enterprises can seize strategic high points in science and technology development and even dominate the industrial development landscape.

The semiconductor industry is a prime example of this dynamic, characterized by rapid innovation and technological advancements that shape the future of various products, from chips and crystals to hardware and integrated circuits. As a high-technology threshold industry, the semiconductor sector faces increasingly fierce international competition, higher technological complexity, and faster technology upgrading. The networking and globalization of enterprises in this industry are becoming more apparent, as companies are unable to complete complex technological research solely through their own resources and funding, leading to an increased reliance on external innovation resources and information.

This paper delves into the distinct role of global innovation networks (GINs) within the semiconductor sector, highlighting how they mitigate risks and costs amidst market information asymmetry. By investigating the impact of such networks on corporate innovation performance, this article provides sector-specific insights that contribute to the broader understanding of GINs and their influence on technological advancement.

The evolution of global innovation networks and their impact on semiconductor firms

The concept of “Global Innovation Network” (GIN) was first proposed by Ernst1, who argued that GINs are a network form that integrates decentralized engineering applications, product development, and R&D activities across organizational and regional boundaries. Kollmann2 further pointed out that GINs emerge when enterprises shift from closed innovation to open innovation in the context of economic globalization.

Expanding on the concept of open innovation, Malecki6 discusses the symbiotic relationship between local entrepreneurial ecosystems and GINs, emphasizing the integration of global and local networks in fostering comprehensive innovation capabilities. Vanhaverbeke7 believes that open innovation means that the product development process within the enterprise is not limited to the participation of internal personnel, and that valuable technologies or products that can be developed outside the enterprise can also be used for their own use.

GINs can help address the deficiencies of internal innovation systems. The flow of knowledge, information, and resources within GINs can accelerate learning and the acquisition of new knowledge and resources, prevent the risk of internal research and development failure, reduce high costs associated with R&D, and ultimately improve the innovation capability and performance of enterprises9,10. In a similar vein, Cano-Kollmann et al.11 delve into the organizational and individual layers of GINs, demonstrating how these networks serve as platforms for decentralized innovation activities across borders.

However, the impact of GINs on innovation performance is not straightforward. Zhang17 found that when the density of cooperation networks within an organization increases to a certain extent, the spread of explicit knowledge and tacit knowledge will be inhibited, and the information homogenization will be serious, hindering the proposal of innovative ideas, and thus not conducive to the generation of progressive inventions and breakthrough innovations in enterprises. Yao and Gong18 also suggest that the structure of corporate knowledge networks can negatively affect the performance of exploratory innovation.

These insights highlight the need for a nuanced understanding of how specific network structures and positions within GINs can either enable or constrain the innovation capabilities of semiconductor firms. By delving into the distinct mechanisms through which GIN embedding influences innovation performance, this article aims to provide a more comprehensive perspective on the strategic role of global innovation networks in the semiconductor industry.

The mechanisms of GIN embedding and its impact on semiconductor firm innovation

This study investigates the influence of global innovation networks (GINs) on the innovation output of semiconductor firms. Utilizing negative binomial regression and network analysis, we assess how network positions, specifically degree, betweenness, and closeness centrality, as well as structural holes, affect firms’ innovation performance.

Degree centrality and innovation performance

Degree centrality indicates the direct connections a company holds, influencing its resource accessibility. Recent network theory suggests that a firm’s strategic network position significantly boosts its innovative capabilities by enhancing the diversity of information flow and resources26,27. Firms with high degree centrality are privy to unique information, cutting-edge technologies, and potential collaborative ventures, all essential ingredients for innovation. Additionally, the expedited flow of information among centrally located nodes markedly reduces the duration from ideation to market launch, a critical aspect for maintaining a competitive edge in dynamic industries like the semiconductor sector28,29.

Hypothesis 1 (H1): The degree centrality within the GIN significantly and positively impacts the innovation performance of semiconductor enterprises, with the firm’s absorptive capacity and the quality of its network ties serving as moderating factors.

Betweenness centrality and innovation performance

Betweenness centrality quantifies a node’s role as an intermediary within a network, bridging the gap between disparate nodes. This crucial position empowers a firm to facilitate extensive connections, communications, and the transfer of knowledge across the network, thereby amplifying its influence. Nodes with high betweenness centrality are pivotal in the dissemination of information, knowledge, and resources, accumulating a wealth of insights from various sectors of the network.

Hypothesis 2 (H2): Betweenness centrality within the GIN significantly and positively impacts the innovation performance of semiconductor enterprises.

Closeness centrality and innovation performance

Closeness centrality is pivotal in understanding a node’s efficiency in a network, measuring the average shortest path from a given node to all other nodes. This indicator is critical, as nodes with higher closeness centrality are not only in closer proximity to others but also possess enhanced relational ties and wield greater influence within the network. Such proximity facilitates swift and cost-effective access to diverse technological domains, thereby accelerating the flow of knowledge, social capital, and managerial insights.

Hypothesis 3 (H3): Closeness centrality within the GIN significantly and positively influences the innovation performance of semiconductor enterprises, enhancing their competitiveness and rate of innovation within the network.

Structural holes and innovation performance

The concept of ‘structural hole’ signifies gaps between non-redundant contacts, allowing companies to bridge diverse groups and foster innovation by combining distinct knowledge sets. Nodes in the position of a “structural hole” have many advantages, including access to more resources, invisible knowledge, and scarce resources, as well as the power to selectively retain and disseminate knowledge, information, and technology.

However, the high-tech density of the semiconductor industry means that companies have a high monopoly on knowledge, and cooperation and exchanges between companies are less frequent. Acquiring heterogeneous resources, information, and knowledge from other enterprises requires a significant investment of time and resources, which can initially hinder enterprise innovation after obtaining these resources. As companies gain more learning experience, they can absorb, use, and acquire heterogeneous resources, information, and knowledge more efficiently, enhancing their R&D capabilities and realizing technological innovation.

Hypothesis 4 (H4): The impact of structural changes in the network on the innovation performance of semiconductor companies shows a positive “U” shape.

Empirical analysis and findings

The empirical analysis in this study is based on the patent data of the top 20 global semiconductor companies, which account for 81% of the market share. Using negative binomial regression and network analysis, the results reveal several key insights:

1. Degree centrality has a significant positive impact on the innovation performance of semiconductor firms, supporting H1. Companies with high degree centrality can access a diverse range of resources, information, and collaborative opportunities, enhancing their innovation capabilities.

2. Betweenness centrality also shows a significant positive effect on innovation performance, validating H2. Semiconductor firms positioned as central intermediaries can facilitate the flow of knowledge, resources, and information across the GIN, bolstering their technological innovation.

3. Closeness centrality demonstrates a significant positive influence on innovation performance, confirming H3. Firms with higher closeness centrality can efficiently access and integrate diverse technological domains, accelerating their innovation pace within the semiconductor industry.

4. The relationship between structural holes and innovation performance exhibits a positive “U-shaped” pattern, supporting H4. This suggests that while initial increases in structural holes may hinder innovation due to information overload, beyond an optimal threshold, the ability to bridge diverse knowledge sets can significantly enhance a firm’s technological innovation.

These findings underscore the nuanced impact of specific network positions and structures within GINs on the innovation performance of semiconductor companies. The study highlights the strategic importance of network management and position optimization for firms seeking to harness the full potential of global innovation networks in driving technological progress.

Implications and recommendations for semiconductor firms

The empirical findings of this study offer several practical implications and recommendations for semiconductor companies seeking to leverage global innovation networks to enhance their technological innovation:

1. Cultivate an optimal network position: Semiconductor firms should strategically position themselves within the GIN to maximize the benefits of degree centrality, betweenness centrality, and closeness centrality. Maintaining a central network position can provide access to diverse resources, accelerate knowledge flow, and strengthen the firm’s influence within the industry.

2. Manage structural holes effectively: Companies should strike a balance in the utilization of structural holes within the GIN. While initial increases in structural holes can cause information overload, effectively bridging diverse knowledge sets beyond an optimal threshold can significantly boost innovation performance.

3. Enhance organizational learning and knowledge absorption: Semiconductor firms must develop robust mechanisms for vetting, selecting, and efficiently assimilating the resources, information, and knowledge obtained through their GIN relationships. Strengthening organizational learning and knowledge absorption capabilities is crucial for translating network-derived assets into tangible innovation outcomes.

4. Invest in patent management and intellectual property rights: Establishing a comprehensive patent management framework and reinforcing intellectual property rights protection are essential for safeguarding the integrity and maximizing the value of network-derived innovations.

5. Foster a collaborative ecosystem: Encouraging effective communication, reciprocal learning, and knowledge-sharing among GIN entities can amplify the flow and utility of knowledge and information, further enhancing the innovation performance of semiconductor firms.

By implementing these strategies, semiconductor companies can navigate the complex landscape of global innovation networks more effectively, unlocking the full potential of these collaborative platforms to drive technological progress and maintain a competitive edge in the industry.

Conclusion

This study’s comprehensive examination of the impact of global innovation networks (GINs) on the innovation performance of semiconductor firms provides valuable insights for both academics and industry practitioners. The findings underscore the strategic significance of network position and structure in shaping a firm’s technological innovation capabilities within the semiconductor sector.

The positive influence of degree centrality, betweenness centrality, and closeness centrality on innovation output highlights the importance of cultivating a central network position that facilitates access to diverse resources, accelerates knowledge flow, and strengthens the firm’s industry influence. Furthermore, the identification of a positive “U-shaped” relationship between structural holes and innovation performance emphasizes the need for semiconductor companies to strike a balance in leveraging these informational gaps to bridge distinct knowledge sets and foster technological breakthroughs.

By integrating these sector-specific insights into their strategic decision-making, semiconductor firms can harness the full potential of global innovation networks to drive sustainable technological progress and maintain a competitive edge in the dynamic, high-tech industry. As the semiconductor sector continues to evolve, the strategic management of GIN positioning and structure will remain a critical determinant of a firm’s innovation performance and long-term success.