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The relationship between social network and firm innovation and its determinants
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In recent years, the importance of innovation for firms is on the rise. To develop innovation, firms usually cooperate with each other, in the form of strategic alliances, joint investments, or mutual shareholding, which produces social networks among firms. Social networks provide firms with resources and knowledge they need, and thus are of great help. Therefore, it is an important issue to explore the impact of social networks on innovation. Using date from electronics industry, this study analyzes the relationship between social network and firm innovation and its determinants. The results show that the relationship between network diversity and firm innovation is inverted U-shaped and so does the relationship between network density and firm innovation. However, this study does not find a significant relation between network size and firm innovation. Besides, for firms with lower absorptive capacity and market power, the marginal benefit of social network is larger.
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