27 Oct

Advocacy groups help solving grand challenge problems

Grand challenges are among the most complex problems for modern societies. Many governments and foundations provide substantial resources to encourage the search for solutions. Due to the significance of these problems, organizations often form partnerships in what we call search consortia to engage in joint search and compete for funding. Prior research on joint search highlights the role of specialized organizations, mainly regarding technological domains, to identify a superior solution. However, stakeholder theory leads us to believe that the success of any solution depends on the acceptance and support of important stakeholders. In a new study, which will be published in the Academy of Management Journal, Anders Ørding Olsen, Wolfgang Sofka and I suggest that search consortia are more likely to receive funding when they include representatives of stakeholder concerns, so-called advocacy groups. We extend theory on coordinated exploration in joint search by integrating mechanisms from stakeholder theory and argue that advocacy groups improve the generation of potential solutions and provide legitimacy. We test our theory with a unique dataset of 35,249 consortia that proposed solutions to 2,349 grand challenge problems as part of a large European funding program. Our results show that advocacy groups benefit search consortia, particularly when consortia exhibit a high dispersion of technological knowledge and when they are inexperienced.

27 Oct

Search strategies can be complementary – but only under certain conditions

Extant research has characterized a firm’s search for external knowledge in its innovation activities as either relational or transactional in nature. The former implies that a firm chooses and develops collaborative relationships with knowledge sources like universities, customers or suppliers, while the latter suggests transactions governed by markets for technology. Together with Wolfgang Sofka of Copenhagen Business School, we argue that prior literature has ignored that both search strategies are interrelated and complementary: adopting one strategy has a higher marginal return on innovation performance if the other one is present. Moreover, we suggest the benefits from complementarity to be higher when a firm is more distant to the technological frontier in the industry and when markets for technology in that industry are shallow. We test our hypotheses on a sample of 3,921 German firms from 2001 to 2009 and find support for our hypotheses. The results of our study have been published in Research Policy.