The dynamics of the inventor network in German biotechnology: geographic proximity versus triadic closure
This paper discusses the increasing prevalence of triadic closure in regard to German biotechnology inventor networks. Specifically, it compares triadic closure and geographic distance and each’s role in the development of networks. Its purpose is to look more closely at the role of geographic proximity in networks, as this is a specific idea that has not gotten a lot of attention in the expanding interest and research in network formation.
The idea of geographic proximity argues that firms that are physically close to one another are more likely to form ties, trumping any information on the reliability of the other firm. In terms of German biotechnology development, in its early years, most of the knowledge that was circulating was largely known by all. It was a new, emerging field, and most people were just concerned with laying a foundation of general information. At this point, no one was really making any significant discoveries, and therefore the need for privacy within firms’ results and conclusions from their research was not very high. It was more an issue of convenience at the start: biotechnology firms used resources around them that were the most readily available, which usually meant firms that were physically close to them.
In later years, as the field of biotechnology became more and more revolutionary, scientists began to make more specialized discoveries, rather than the basic knowledge that was circulating at the field’s beginnings. Additionally, biotechnology research and development became much more technology driven, which results in difficulties controlling where the information goes and who can obtain access to it. Namely, there’s a greater chance of competitors getting a hold of any successful progress that may have been made. With an increase in value of new research together with the fact that it’s now at a higher risk of being intercepted, obviously there is a new problem. If a certain firm makes a groundbreaking development, if another firm “steals” it and gets a patent on it, the true discoverer won’t receive credit (and thus financial benefits) for it. This results in research firms’ desire to connect only with other firms with which they know they can trust. How does a firm know if it can trust another? This is where the concept of triadic closure comes in. Suppose a firm A has a tie to a firm B and also a tie to firm C. When firm B is looking to expand its network and collaborate with another firm, it is very likely that it will form a tie with firm C, since it knows from firm A that firm C is trustworthy (assuming firm A would break off its tie with firm C if it were not trustworthy). A tie between firms B and C would complete the triangle, demonstrating the concept of triadic closure in networks. Overall, the force of triadic closure is now much stronger than that of geographic proximity, due to the inevitable changes of research and development in the field of biotechnology.
It is clear how this relates to topics we have discussed in class. We talked a lot about triadic closure and how it affects the development of networks. The idea of geographic distance is interesting, though. This paper was largely written because of the lack of research done on the effect of geographic distance on networks, and sure enough, we never looked too deeply into this idea in class, either. As it turns out, though, according to this paper at least, triadic closure is much more relevant and important.
http://joeg.oxfordjournals.org/content/14/3/589.full