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Management Science Vol. 59 No. 5 2013

The Evolving Impact of Combinatorial Opportunities and Exhaustion on Innovation by Business Groups as Market Development Increases: The Case of Taiwan

Ishtiaq Mahmood1; Chi-Nien Chung2; Will Mitchell3

1 NUS Business School, National University of Singapore, Singapore 119245; and IMD, CH-1001 Lausanne, Switzerland · 2 NUS Business School, National University of Singapore, Singapore 119245 · 3 Fuqua School of Business, Duke University, Durham, North Carolina 27708; and Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada

Abstract

Business groups are key sources of innovation in emerging market economies, but we understand little about why innovativeness differs across groups and over time. Variation in the density of intragroup buyer–supplier ties, which are common structural linkages among group affiliates, can help explain both cross-sectional and temporal heterogeneity of group innovativeness. We argue that greater buyer–supplier density within a group initially creates combinatorial opportunities that contribute to group innovativeness but ultimately generates combinatorial exhaustion that constrains innovation. Combinatorial exhaustion will set in at lower levels of density as the market environment becomes more developed because the opportunity costs of local search increase. The research introduces a dynamic argument to studies of business-group innovation.

DOI
10.1287/mnsc.1120.1605
Volume
59
Issue
5
Pages
1142-1161
Language
en
Sources
openalex bibtex:phds-export.bib crossref

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