Fits and Misfits: Technological Matching and R&D Networks

This paper presents an economic model of R&D network formation through the creation of strategic alliances. Firms are randomly endowed with knowledge elements. They base their alliance decisions purely on the technological fit of potential partners, ignoring social capital considerations and indirect benefits on the network. This is sufficient to generate equilibrium networks with the small world properties of observed alliance networks, namely short pairwise distances and local clustering. The equilibrium networks are more clustered than "comparable" random graphs, while they have similar characteristic path length. Two extreme regimes of competition are examined, to show that while the competition has a quantitative effect on the equilibrium networks (density is lower with competition), the small world features of the equilibrium networks are preserved.network formation, small worlds, R&D networks, strategic alliances, business clusters

Networks as Emergent Structures from Bilateral Collaboration

In this paper we model the formation of innovation networks as they emerge from bilateral actions. The effectiveness of a bilateral collaboration is determined by cognitive, relational and structural embeddedness. Innovation results from the recombination of knowledge held by the partners to the collaboration, and the extent to which agents’ knowledge complement each others is an issue of cognitive embeddedness. Previous collaborations (relational embeddedness) increase the probability of a successful collaboration; as does information gained from common third parties (structural embeddedness). As a result of repeated alliance formation, a network emerges whose properties are studied, together with those of the process of knowledge creation. Two features are central to the innovation process: how agents pool their knowledge resources; and how agents derive information about potential partners. We focus on the interplay between these two dimensions, and find that they both matter. The networks that emerge are not random, but in certain parts of the parameter space have properties of small worlds. (JEL Classification: L14, Z13, O3 Keywords: Networks, Innovation, Network Formation, Knowledge)industrial organization ;

Data-driven modeling of collaboration networks: A cross-domain analysis

We analyze large-scale data sets about collaborations from two different domains: economics, specifically 22.000 R&D alliances between 14.500 firms, and science, specifically 300.000 co-authorship relations between 95.000 scientists. Considering the different domains of the data sets, we address two questions: (a) to what extent do the collaboration networks reconstructed from the data share common structural features, and (b) can their structure be reproduced by the same agent-based model. In our data-driven modeling approach we use aggregated network data to calibrate the probabilities at which agents establish collaborations with either newcomers or established agents. The model is then validated by its ability to reproduce network features not used for calibration, including distributions of degrees, path lengths, local clustering coefficients and sizes of disconnected components. Emphasis is put on comparing domains, but also sub-domains (economic sectors, scientific specializations). Interpreting the link probabilities as strategies for link formation, we find that in R&D collaborations newcomers prefer links with established agents, while in co-authorship relations newcomers prefer links with other newcomers. Our results shed new light on the long-standing question about the role of endogenous and exogenous factors (i.e., different information available to the initiator of a collaboration) in network formation.Comment: 25 pages, 13 figures, 4 table

Robustness of airline alliance route networks

The aim of this study is to analyze the robustness of the three major airline alliances’ (i.e., Star Alliance, oneworld and SkyTeam) route networks. Firstly, the normalization of a multi-scale measure of vulnerability is proposed in order to perform the analysis in networks with different sizes, i.e., number of nodes. An alternative node selection criterion is also proposed in order to study robustness and vulnerability of such complex networks, based on network efficiency. And lastly, a new procedure – the inverted adaptive strategy – is presented to sort the nodes in order to anticipate network breakdown. Finally, the robustness of the three alliance networks are analyzed with (1) a normalized multi-scale measure of vulnerability, (2) an adaptive strategy based on four different criteria and (3) an inverted adaptive strategy based on the efficiency criterion. The results show that Star Alliance has the most resilient route network, followed by SkyTeam and then oneworld. It was also shown that the inverted adaptive strategy based on the efficiency criterion – inverted efficiency – shows a great success in quickly breaking networks similar to that found with betweenness criterion but with even better results.Peer ReviewedPostprint (author’s final draft

Quantifying knowledge exchange in R&D networks: A data-driven model

We propose a model that reflects two important processes in R&D activities of firms, the formation of R&D alliances and the exchange of knowledge as a result of these collaborations. In a data-driven approach, we analyze two large-scale data sets extracting unique information about 7500 R&D alliances and 5200 patent portfolios of firms. This data is used to calibrate the model parameters for network formation and knowledge exchange. We obtain probabilities for incumbent and newcomer firms to link to other incumbents or newcomers which are able to reproduce the topology of the empirical R&D network. The position of firms in a knowledge space is obtained from their patents using two different classification schemes, IPC in 8 dimensions and ISI-OST-INPI in 35 dimensions. Our dynamics of knowledge exchange assumes that collaborating firms approach each other in knowledge space at a rate $\mu$ for an alliance duration $\tau$. Both parameters are obtained in two different ways, by comparing knowledge distances from simulations and empirics and by analyzing the collaboration efficiency $\mathcal{\hat{C}}_{n}$. This is a new measure, that takes also in account the effort of firms to maintain concurrent alliances, and is evaluated via extensive computer simulations. We find that R&D alliances have a duration of around two years and that the subsequent knowledge exchange occurs at a very low rate. Hence, a firm's position in the knowledge space is rather a determinant than a consequence of its R&D alliances. From our data-driven approach we also find model configurations that can be both realistic and optimized with respect to the collaboration efficiency $\mathcal{\hat{C}}_{n}$. Effective policies, as suggested by our model, would incentivize shorter R&D alliances and higher knowledge exchange rates.Comment: 35 pages, 10 figure