The most prolific innovators are the people positioned at the center of informal knowledge-sharing networks who also belong to central organizational units.
The context
We know that individuals have networks of social relationships where they share information and knowledge, and that these networks shape their behaviors and the quality of their work performance. In light of this, what organizations need to do is to create optimal conditions so that employees can do their best possible work.
But still unclear is the question of which positions in formal and informal networks in organizations are best suited for maximizing new knowledge generation and triggering innovation dynamics? Is a core position better or a peripherical one? And which one ensures that the innovation in question circulates throughout the entire organization?
The research
To answer these questions, in a recent study we developed a theoretical framework that empirically describes the effects of specific positions in formal and informal networks on knowledge generation and innovation production. We chose for our analysis the Research and Development Division (R&D) of a large multinational in the semi-conductor industry. We collected a sizeable sample from 276 interviewees who work in R&D, divided into 16 laboratories and assigned to 21 different areas of technological expertise.
To measure the relationships for sharing knowledge inside the R&D Division, we used a typical technique for sociometric studies: we asked interviewees to list all the colleagues they worked with on a regular basis and how often they went to them to exchange work-related information. Then we compiled all the answers in a single informal knowledge-sharing network. Instead, in identifying the formal network by using a qualitative/quantitative approach, two laboratories stood out clearly: the ones that had been established first. These two laboratories had more resources (around 22% of the division’s total workforce), broader technological competences (13 areas out of 21 total), and were proximate to Production and Administration.
In our study we introduced several control variables both at a network level and an individual level; the aim here was to exclude the potential advantage of higher formal hierarchical positions or greater access to a variety of knowledge sources. As a dependent variable, instead, we utilized “incremental innovation productivity,” by which we mean the number of technological improvements to existing products proposed by each individual in the sample (regardless of the number of products actually improved upon). We considered two hypotheses. The first is that interviewees at the core of informal networks, who are also part of more prominent (core) R&D laboratories, show more innovation productivity with respect to individuals who at the center of only one of the two networks. In other words, the ideal situation emerges when individuals hold core positions in both informal and formal networks. Our second hypothesis posits that the incremental innovation productivity of inventors at the core of informal and formal networks declines when their knowledge-sharing ties extend too much toward the periphery of informal networks, because they “spread themselves too thin” and reduce their focus. Instead, concentrating relationships in a central, densely interconnected network represents the most favorable scenario for incremental innovation because it enables people to consolidation relevant knowledge.
After analyzing all the data we collected, our work empirically demonstrates that when an individual holds a core position in an informal network and also works in a core organizational unit, we see more pronounced effects on innovation productivity as compared to those with a core position in only one of the two dimensions, confirming our first hypothesis. Moreover, the productivity of individuals who occupy a core position is negatively impacted by the propensity to share knowledge and establish ties with the periphery of the informal network, corroborating our second hypothesis.
Conclusions and implications
- The results of our work highlight how the most prolific inventors are people who have a core position in informal networks of knowledge-sharing and also belong to core organizational units. This greater capacity to develop innovation depends on the way individuals establish ties inside their informal network: those whose ties extend to the periphery tend to have lower productivity; instead, maximum innovation productivity comes from having ties that are concentrated on co-workers who hold positions at the core the informal network.
- These conclusions have practical implications for managers who want to improve technological performance inside their companies. If we overlay the two correlated structures (core and periphery) we can distinguish a sub-group capable of developing more innovations than anyone else. These people enjoy legitimacy, recognition and support, and they have access to resources and invaluable knowledge.
- People affiliated with core units should be encouraged to maintain a network of relationships that revolve around other individuals who hold central positions. This does not mean isolating the team by impeding any connections with other parts of the network, but rather counteracting the tendency to dissipate too much time and energy in the network. What’s more, leaders in informal networks who work in peripheral organizational units should be transferred to core units and given more attention, more resources, and legitimacy. Lastly, managers who want to boost innovation productivity should also identify and protect existing cores, both formal and informal, in such a way that possible reconfigurations of informal structures do not stifle them by diluting focus and distracting attention from the development of more promising technologies.
