Industrial Marketing Management xxx (2014) xxx–xxx

IMM-06965; No of Pages 12

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Industrial Marketing Management

Structural social capital evolution and knowledge transfer: Evidence from an Irishpharmaceutical network

Raffaele Filieri a, Regina C. McNally b,⁎, Michele O'Dwyer b, Lisa O'Malley b

a Newcastle Business School, Northumbria University, United Kingdomb Department of Management and Marketing, Kemmy Business School, University of Limerick, Ireland

⁎ Corresponding author. Tel.: +353 61 234605; fax: +E-mail addresses: raffaele.filieri@northumbria.ac.uk (R

(R.C. McNally), michele.odwyer@ul.ie (M. O'Dwyer), lisa.o

0019-8501/$ – see front matter © 2013 Published by Elsehttp://dx.doi.org/10.1016/j.indmarman.2013.12.011

Please cite this article as: Filieri, R., et al., Stnetwork, Industrial Marketing Management (

a b s t r a c t

a r t i c l e i n f o

Article history:Received 29 June 2012Received in revised form 28 June 2013Accepted 12 July 2013Available online xxxx

Keywords:Structural social capitalKnowledge transferUniversity–industry collaborationPharmaceutical industry

Businesses are becoming increasingly involved in collaboration networks to access external knowledge andsustain innovation. In this context, knowledge and knowledge transfer are considered an important sourceof innovation and competitive advantage. Social capital theory offers a theoretical approach to explain howindividuals, groups, and organizations manage relationships and access knowledge resources. The structuraldimension of social capital has stimulated debate regarding optimal network configuration to achieve innova-tion. The extant literature suggests network structures evolve from a bridging configuration to a bonding config-uration without examining the details of how the evolution occurs within the network and its stage-by-stageimpact on knowledge transfer. This study explores this relationship by analyzing the evolution of a successfulIrish pharmaceutical network involving organizations from industry and academia. This research setting encom-passes a rare network configuration in an industry known for its lack of collaboration among competing firms.Findings show that structural holes provide access to a set of complementary and heterogeneous knowledge.However, for such knowledge to be exploited, the network configuration has to evolve from a sparse network(small in size and characterized by weak ties across multiple organizational networks), to a large and cohesivenetwork configuration characterized by high levels of commitment, trust, fine-grained information exchange,and joint problem solving. Mechanisms crucial to this evolution include consistently-scheduled meetings,training to communicate tacit knowledge, wide diffusion of knowledge through an on online portal, and relation-ship specific investments designed to safeguard intellectual property. Surprisingly, industry members appear totransition to a cohesive network faster than do academic members.

© 2013 Published by Elsevier Inc.

1. Introduction

In order to compete in a global knowledge economy, firms areurged to access and exploit knowledge to generate innovation,where innovation is defined as identifying and using opportunitiesto create new products, services, or work practices (Van de Ven,1986). Knowledge helps organizations achieve these objectives(Hargadon & Sutton, 1997). Hence, the process of innovation is com-monly equatedwith an on-going pursuit of new and unique knowledge(Nonaka& Takeuchi, 1995). Indeed, innovation is a knowledgemanage-ment process (Madhavan & Grover, 1998), and innovative companiesare those that create knowledge (Nonaka & Takeuchi, 1995). However,companiesmay not possess the required knowledge to innovate; there-fore, they form strategic alliances and other forms of external partner-ships and collaborations with a variety of actors such as suppliers,universities, research centers, and competing firms.

353 61 213196.. Filieri), regina.mcnally@ul.iemalley@ul.ie (L. O'Malley).

vier Inc.

ructural social capital evolut2014), http://dx.doi.org/10.10

Networks have emerged as the new locus of organizational activity,where firms of different sizes working together generate innovationsmore effectively and efficiently than previously (Lorenzoni & Lipparini,1999; Powell, Koput, & Smith-Doerr, 1996). Most of these relationshipsin knowledge-intensive industries are developed to help companiesaccess the knowledge required to develop new products (Inkpen &Tsang, 2005). Research suggests that the process of transferringknowledge from one organization or person to another is vital foroverall organizational effectiveness and innovation generation(Argote & Ingram, 2000; Kogut & Zander, 1992; Powell et al., 1996).The increasing importance of business networks demands a thoroughunderstanding of the way companies manage and leverage such rela-tionships in order to facilitate knowledge flows that can lead to im-proved innovation outputs.

Social capital is a powerful theory explaining how businesses accessknowledge resources through relationships (Adler & Kwon, 2002;Inkpen& Tsang, 2005; Lin, 2001; Nahapiet & Ghoshal, 1998). Social cap-ital has been defined as “the sum of the actual and potential resourcesembedded within, available through, and derived from, the networkof relationships possessed by an individual or social unit” (Nahapiet &Ghoshal, 1998, p. 243). These authors conceptualize social capital as a

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2 R. Filieri et al. / Industrial Marketing Management xxx (2014) xxx–xxx

multi-dimensional construct composed of the three components ofstructural social capital (i.e., relationship configuration), relational so-cial capital (i.e., relationship quality), and cognitive social capital(i.e., shared mental models).

This research focuses on the structural dimension of social capitalbecause prior research yields ambiguous results regarding the opti-mal social network structure for innovation generation (Alguezaui& Filieri, 2010; Eklinder-Frick, Eriksson, & Hallén, 2011). One view,known as the ‘bonding’ view of social capital, posits that social capi-tal arises from the network to which a person belongs where strongand reciprocal bonds between most or all members form as a resultof frequent interaction (Coleman, 1990). Such cohesive networkssupport development of trust, norms of reciprocity, and a sharedidentity among members, facilitating collaboration and knowledge-sharing through informal and trust-based governance mechanismsthat enable intense interactions (Hansen, 1999; Kogut & Zander,1992; Nahapiet & Ghoshal, 1998).

The other view, known as the ‘bridging’ view of social capital,proposes social capital arises as individuals connect different networksby brokering structural holes (Burt, 1992; Granovetter, 1973), wherestructural holes are defined as unique ties to others who are otherwiseunconnected to each other (Zheng, 2010). Individuals and firmsoccupying bridging positions experience a number of benefits, such asaccess to better or more varied resources or information, control ofand privileged access to unique knowledge and opportunities (Lin,2001), and access to novel communities, diverse experiences, and vary-ing ideas (Burt, 1992). Thus, networkswith larger ranges of participantsexhibit higher capabilities of exploring new ideas and creating newknowledge.

A central question in social capital research regards how the bondingand bridging views operate in knowledge transfer for innovation.Some suggest that the benefits of one configuration can only beachieved at the expense of the other, while others view the two con-figurations as complementary (Ahuja, 2000). It may be that a staticpicture of a network is ineffective in capturing networks' dynamicnatures as relationships and knowledge transfer processes evolvewithin it (Huggins, 2010). This might be the cause of inconsistentand sometimes contradictory results in the literature. The problemis that the extant research does not explain how this evolutionoccurs. Further research is needed to specify the conditions underwhich networks of firms benefit by moving from one configurationto one another, and how this impacts knowledge transfer. Phelps,Heidl, andWadhwa (2012) identify the need to understand the com-plementary nature of bridging and bonding to be one of the most ur-gent in social capital research.

In order to address this gap, this study adopts an evolutionaryapproach and investigates the development of an Irish pharmaceuticalnetwork comprised of organizations from industry and academia. Thepharmaceutical sector is as an example of a knowledge-intensive sectorwhere knowledge is a critical source of competitive advantage (Powellet al., 1996). This network is a rare example of competing pharmaceuti-cal multinationals and academia collaborating successfully to shareknowledge and advance innovation. The network studied is a researchcollaboration involving local subsidiaries of ninemultinational pharma-ceutical companies and five universities conducting research in the areaof solid states (i.e., pills) production. The pharmaceutical industry facessignificant technical and regulatory challenges impacting production:batch production processes are inefficient, uniform dispersion of activeingredients throughout the compound is difficult, and the highly regu-lated environment complicates changes to manufacturing processes.The pharmaceutical industry collaboration studied here aims to opti-mize the manufacturing process. As pharmaceutical firms typically donot collaborate with each other, this is a rare case study context thatis highly appropriate for examining how these knowledge-dependentfirms and universities created and availed of such a collaborativenetwork.

Please cite this article as: Filieri, R., et al., Structural social capital evolutnetwork, Industrial Marketing Management (2014), http://dx.doi.org/10.10

The research question investigated here is: How does the structureof this industry–university network evolve and influence knowledgetransfer for innovation? Specifically examined is: How do the networkties evolve over time from bridging to bonding across multiple sub-groups, and how does this structural evolution impact knowledgetransfer?

Based on our analysis of interview and archival data, we suggestthat innovation networks among established organizations initiallyemploy bridging configurations. In terms of network configuration,a small number of influential actors in diverse networks build ontheir weak ties to communicate the value of creating a cohesive net-work. Given the business purposes of such networks, relationshipspecific investments play a crucial role in safeguarding intellectualproperty (IP) and enabling network development, thus reflecting theimportance of integrating multiple theoretical approaches when exam-ining interorganizational relationships (Palmatier, Dant, & Grewal,2007). Eventually, however, such networks transition to bonding con-figurations to enable the fine-grained information transfer and jointproblem solving necessary for achieving objectives (Uzzi, 1996). Interms of the evolution of network configurations, networks grow insize while ties become strengthened through consistently-scheduledmeetings, training to communicate tacit knowledge, and wide diffusionof knowledge through an on online portal. Surprisingly, industry mem-bers appear to transition to a cohesive network faster than do academicmembers.

This article beginswith a summary of the relevant literature relatingto knowledge transfer and social capital, then proceeds with anexplanation of the research context. The results regarding how thecomplementary views of network structures are implemented overtime are explained and discussed, and finally the academic and man-agerial implications are reviewed.

2. Literature review

Recently, marketing and strategy studies have shifted focus frominvestigating value chains to examining value network configura-tions (Corsaro, Ramos, Henneberg, & Naude, 2012). The importanceof external value networks (e.g., strategic alliances) in sharingknowledge and supporting innovation generation has been high-lighted in several studies (Lorenzoni & Lipparini, 1999; Powellet al., 1996). Innovation networks are designed to provide quick ac-cess to unique resources such as technology, knowledge, and mar-kets (Inkpen & Tsang, 2005), which enable firms to innovate moreeffectively and efficiently. In this research, we examine how a strate-gic alliance network formed and developed to transfer knowledge toimprove operational efficiency and, ultimately, develop future radi-cal innovations.

2.1. Knowledge transfer

The competitive environment evolves rapidly and the capacity tomanage knowledge-based information is a critical ability in aknowledge-based economy (Quinn, 1992). In order to adapt to afast-changing environment, firms see themselves as learning organi-zations trying to continuously improve their knowledge capital(Senge, 1990). The importance of knowledge is particularly evidentin technology-based firms where its creation and exploitation requiresknowledge to be constantly updated and renewed (Lane & Lubatkin,1998). Davenport and Prusak (1998, p. 5) define knowledge as:

…a fluidmix of framed experiences, values, contextual information, andexpert insight that provides a framework for evaluating and incorporat-ing new experiences and information. It originates and it is applied inthe mind of knowers. In organizations, it often becomes embedded notonly in documents or repositories but also in organizational routines,processes, practices, and norms.

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3R. Filieri et al. / Industrial Marketing Management xxx (2014) xxx–xxx

Furthermore, knowledge often is categorized into explicit (easilyabsorbed and immediately transferable) or tacit (experientiallybased so difficult to express and transfer) (Nonaka & Takeuchi,1995). Tacit knowledge is difficult to codify and share in natural lan-guage and is embedded in people's mind and in performing complextasks. Because tacit knowledge is difficult to transfer within firmsand even more so between firms (van Wijk, Jansen, & Lyles, 2008),it can form the basis of competitive advantage (Argote & Ingram,2000). In a consulting firm, tacit knowledge has been found to im-prove work quality while codified knowledge improves efficiency(Haas & Hansen, 2007).

Knowledge is considered the raw material of innovation; therefore,knowledge transfer within and between organizations is an importantantecedent of knowledge creation and innovation (Argote & Ingram,2000; Kogut & Zander, 1992; Lane, Salk, & Lyles, 2001; Powell et al.,1996; Tsai, 2001; vanWijk et al., 2008). Knowledge transfer or organiza-tional learning is “a process of change and improvement in organiza-tional actions through better knowledge and understanding” (Fiol &Lyles, 1985, p. 803). Knowledge transfer has been conceptualized as amultistep process, including knowledge acquisition and knowledge ex-ploitation (Yli-Renko, Autio, & Sapienza, 2001). Knowledge acquisitionrefers to accessing technical know-how and market knowledge from abusiness partner, whereas exploitation refers to using external knowl-edge to generate new products, product or process improvements, ornew skills and capabilities. New knowledge can emerge when individ-uals discuss and combine pieces of existing knowledge in an innovativeway (Kogut & Zander, 1992). Thus, the acquisition and exploitation ofexternal knowledge (knowledge transfer) may lead to new knowledgegeneration and, ultimately, to innovation.

Given that knowledge transfer requires two or more entities (i.e.,individuals, teams, organizations, etc.) working together to combineknowledge that will generate new product offerings or improveexisting processes, knowledge transfer is predominantly a socialprocess (Kogut & Zander, 1992). At the same time, transferringknowledge across firm boundaries is more complicated than trans-fers occurring within firms (Inkpen & Tsang, 2005). As a result, thedevelopment of social capital across firm boundaries supportsknowledge transfer in this complex context and may boost innova-tion processes.

2.2. Social capital

Social capital is “the sum of the actual and potential resourcesembedded within, available through, and derived from the networkof relationships possessed by an individual or social unit” (Nahapiet &Ghoshal, 1998, p. 243). Social capital is particularly important for busi-ness networks as it enhances knowledge transfer (Adler & Kwon,2002; Inkpen& Tsang, 2005; Nahapiet & Ghoshal, 1998) and innovation(Carmona-Lavado, Cuevas-Rodríguez, & Cabello-Medina, 2010; Pérez-Luño, Cabello Medina, Carmona Lavado, & Cuevas Rodríguez, 2011).

Because it has received the most attention and has produced themost controversial results in the social capital literature (Alguezaui& Filieri, 2010), this research focuses on the structural dimension ofsocial capital. The structural dimension is defined as “the patternsof the social ties characterizing a group of actors, it concerns theproperties of the social system and the network of relations as awhole” (Nahapiet & Ghoshal, 1998, p. 244). Structural social capitalenhances the outcomes of knowledge transfer and innovation forseveral reasons: 1) it facilitates the flow of information, 2) it enablesinfluence on network members, 3) it certifies the network member'ssocial credentials, reflecting ability to access resources via social re-lationships, and 4) it reinforces identity and aids recognition as a so-cial group member who shares similar interests and resources asother members (Lin, 2001; Uzzi, 1996).

Four major structural social capital components have been identi-fied: network size, centrality, structural holes, and tie strength (Zheng,

Please cite this article as: Filieri, R., et al., Structural social capital evolutnetwork, Industrial Marketing Management (2014), http://dx.doi.org/10.10

2010). Network size, the most frequently studied variable of social cap-ital, refers to the total number of contacts an actor (i.e., individual or or-ganization) has in its network (Zheng, 2010). At the individual level,Rodan and Galunic's (2004) study of individual contact networksshowed that network size had a marginally positive influence on man-agerial innovation. At the organizational level, more direct partners areassociated with a higher number of patents (Ahuja, 2000). Generallyspeaking network size has a positive influence on innovation (Ahuja,2000; Hansen, Mors, & Lovas, 2005); however, research at the inter-firm level has suggested a tipping point where increasing the numberof ties may impact innovation negatively (McFadyen & Cannella, 2004).

Centrality refers to an actor's position in a network (Zheng, 2010).Centrality is important because it reflects the extent of knowledge anactor has about the rest of the network: the more central the actor,the more the actor knows about network members and linkages. Lin(2001) refers to centrality as position strength, positing that thosehigher in the network's hierarchy have more access to knowledgeabout network structure (actors, ties, and resources) and so are betterable to access and use social capital effectively. Tsai and Ghoshal(1998) found that centrality influenced innovation through trust, be-cause actors occupying a central location in a network tend to beperceived as trustworthy by others owing to frequent and close interac-tions, and trust leads to innovation. At an individual level, Ibarra (1993)found that centrality influenced involvement in administrative innova-tion, but not in technical innovation. Perry-Smith (2006) found that re-searchers who occupied a central position in their labs were morecreative when their outside ties were fewer. At the organizationallevel, a central firm in a network can be a firm that owns rare and valu-able knowledge and for that reason every firm wants to share knowl-edge with this firm. Previous studies have associated a centralnetwork position of organizations with heightened levels of organiza-tional knowledge sharing (Ahuja, 2000; Powell et al., 1996). Tsai(2001) found that a central position was one element positivelyimpacting firm/institution's performance and innovativeness.

Structural holes refer to unique ties to other actors that are other-wise unconnected to each other, reflecting a sparse network wheremembers are connected indirectly through bridging ties (Burt, 1992).Lin (2001) posits that a network member need not be the actor in thebridging tie, suggesting instead that being located close to a memberof a bridging tie leads to more successful instrumental action. Tie loca-tion strength relates to Burt's (1992) discussion of frequency decay,which accounts for the decline in tie strength as the number of mem-bership ties increases between two network members. Hargadon andSutton's (1997) qualitative study of IDEO noted the positive effects ofstructural holes in terms of new ideas and products generated bybrokering among a variety of organizations and their products.

Alternatively, networks may be cohesive where all memberswithin the network are connected to each other through bondingties (Coleman, 1990). Such bonding ties facilitate access to tacitknowledge, and enhance development of trust, social cohesion, anda shared identity (Edelman, Bresnen, Newell, Scarbrough, & Swan,2004). Because results for these two structural configurations—structural holes versus cohesive networks—and their contributionto innovation contrast, they are the subject of considerable debatewithin the field (Alguezaui & Filieri, 2010; Eklinder-Frick et al.,2011; Phelps et al., 2012). Ahuja (2000) observed that both bondingand bridging ties enhance the number of R&D alliances by providingcomplementary competences and knowledge transfer among part-ners. Koka and Prescott (2002) found arguments against dense net-works which were viewed as sources of redundant information,while structural holes provided information diversity. Similar resultswere obtained by Lazer and Friedman (2007), who suggest that net-work density reduces the diversity of information available in anetwork over time, thereby reducing innovation in the long term.Rindfleisch and Moorman (2001) also support this view, finding thatknowledge redundancy has a negative effect on information acquisition

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Table 1Informants.

Informant Organization Experience context

1 University 1 Industry and academic2 University 1 Industry and academic3 University 1 Industry and academic4 University 2 Industry and academic5 University 3 Industry and academic6 University 4 Industry and academic7 University 5 Industry and academic8 Pharmaceutical company 1 Industry and academic9 Pharmaceutical company 2 Industry and academic10 Pharmaceutical company 3 Industry and academic11 Pharmaceutical company 4 Industry12 Pharmaceutical company 5 Industry13 Pharmaceutical company 6 Industry and academic14 Pharmaceutical company 7 Industry and academic15 Pharmaceutical company 8 Industry16 Pharmaceutical company 9 Industry17 Pharmaceutical company 10 Industry18 Pharmaceutical company 11 Industry and academic

4 R. Filieri et al. / Industrial Marketing Management xxx (2014) xxx–xxx

but a positive effect on information utilization. Ultimately, the literaturesuggests that a cohesive network structure constrains innovation as itblocks access to new knowledge or ideas, while structural holes enableaccess to new ideas but suffer from an inability to transmit tacitknowledge effectively and coordinate action to implement newideas (Obstfeld, 2005).

In addition to the absence or presence of ties reflected in the notionsof structural holes and cohesive networks, Granovetter (1973) foundthat tie strength varies from weak to strong depending on social close-ness and interaction frequency between actors. Strong ties exhibittrust, transfer of fine-grained (i.e., proprietary and tacit) information,and joint problem-solving arrangements (i.e., using direct feedback towork through problems) (Uzzi, 1996). Lin (2001) suggests that strongties lead to more successful expressive action (behavior intended tomaintain valued resources), while weak ties lead to more successful in-strumental action (behavior intended to acquire additional valued re-sources). Tie strength has been identified as an antecedent of mutualunderstanding (Gilsing & Nooteboom, 2006), and of the transfer andconstruction of knowledge, especially complex knowledge (Hansen,1999). In a study on individual creativity, Perry-Smith (2006) foundthat weak ties are beneficial for creativity whereas strong ties have neu-tral effects. At an organizational level, Rowley, Behrens, and Krackhardt(2000) found that horizontal weak ties are positively related to firmperformance and horizontal strong ties negatively impact performance.

This study supports the view that cohesiveness and structuralholes are complementary rather than competing knowledge transfermechanisms, arguing that these two network types contribute toknowledge transfer and innovation at different stages of networkdevelopment across various sub-groups within the network. Byanalyzing the formation and development of a pharmaceuticalnetwork's structure and the types of knowledge transferred, thisstudy contributes to the literature by proposing how network config-urations evolve over time and showcasing how each evolutionarystage benefits knowledge transfer.

3. Research method and data analysis

This study employs the case study method to examine the evolutionof an inter-organizational innovation network. Case study research is awell-established research method in industrial marketing, manage-ment, and network research (Visconti, 2009), playing an “importantrole in theory development within industrial marketing and theindustrial networks paradigm” (Wagner, Lukasse, & Mahlendorf,2009, p.6). Since structural social capital is a multi-dimensional con-cept, its configurations are likely to differ at different stages of a net-work development. Thus the case study method is appropriate toinvestigate this issue (Yin, 2003).

Because the research context is that of a rare, successful industry–academic network collaboration for the purposes of knowledge transferand innovation, a single-site case study approach was adopted (Yin,2003). This study examines the formation and maintenance of the net-work via the theoretical lens of social capital among network sub-groups and how the network evolution impacted the content of knowl-edge transferred. According to Yin (2003), there are three typologies ofcase study: descriptive, exploratory, and explanatory case studies. Thepresent case study is exploratory since it seeks to examinehowdifferentstructural social capital configurations contribute to knowledge transferat various network development phases. A qualitative approach to datacollection was adopted since the phenomenon under investigation isnew and the study aims to explain ‘the how’ and ‘the why’ of the phe-nomenon under investigation (Yin, 2003). Data triangulation wasimplemented by using different data sources, such as interviewswith R&D managers and academics directly involved in the activitiesof the network, documentation, archival resources, newspaper arti-cles, presentations, etc.

Please cite this article as: Filieri, R., et al., Structural social capital evolutnetwork, Industrial Marketing Management (2014), http://dx.doi.org/10.10

Interviews were conducted with 18 informants, including 7academics and 11 industrymanagers. A summary of informants is in-cluded in Table 1. Each organization participating in the network hadat least one informant included in the sample. All interviews wereaudio recorded and transcribed verbatim. The interviews varied inlength from 45 to 105 minutes, and were carried out over a fourmonth period. Informants were asked to narrate the history of thenetwork over time. Subsequent questions asked informants to dis-cuss the problems they faced and how the problems were solved.

Data were analyzed using open coding (Strauss & Corbin, 1998),specifically searching for information that sheds light on how knowl-edge transfer and the structural elements of social capital (i.e., net-work size, centrality, structural holes, and tie strength) evolved asthe network developed. Abductive analysis was used to tease outthe development phases of the network and associate knowledgetransfer and the structural elements to each phase (Dubois &Gadde, 2002). Data analysis also revealed that intellectual propertyand specialized investments (e.g., funding, dedicated human re-sources, etc.) were important factors in the network's evolution. Inaddition to the trust exhibited in strong ties (Uzzi, 1996), a resourcebased view of interorganizational relationships suggests that suchrelationship specific investments also drive financial and relation-ship outcomes (Palmatier et al., 2007). Given their empirical andtheoretical importance, intellectual property and relationship specificinvestments are included in the results.

4. Results

The data analysis revealed four phases of network development.Prior to the network formation, a small number of well-placed indi-viduals recognized an opportunity to take a production process inthe aluminum industry, known as crystallization, and apply it in themanufacturing of pills. Crystallization enables uniform distribution ofraw materials throughout the mix, a problem area in pharmaceuticalpill production as dispersion of active ingredients throughout the pow-der from which pills are formed often is difficult. This pre-networkphase, Phase 0, is titled ‘Bridging ties enable network formation’ be-cause these well-placed individuals worked diligently to communicatethe value of a network to industry and academia. The first phase ofthe network was to seek funding from the Irish government and thefirms, so Phase 1 is titled ‘Gain commitment.’ Also, network membersrecognize that the intellectual property issues preventing collaborationin the past require an agreement relating to proprietary information ex-change. In Phase 2, ‘Develop trust and interaction routines’, the impor-tance of trust is recognized so routines are put in place to supportUzzi's (1996) fine-grained information transfer. Finally, in Phase 3,

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crystallization knowledge has been translated to the pharmaceutical in-dustry and broadly dispersed throughout the network, so they are turn-ing their attention to other thorny production issues and implementingUzzi's (1996) joint problem-solving arrangements. This phase is aptlytitled ‘Innovation results and further commitment.’ Next, each phaseis explained.

4.1. Phase 0: Bridging ties enable network formation

Before the foundation of the network, knowledge transfer consistedof basic academic research disseminated via academic conferences andjournal publications, and collaboration on a fewproprietary projects be-tween specific academics and specific firms. Managers collaborated in-formally through Pharma Chem Ireland's Research & DevelopmentInnovation (RDI) group. However, the RDI was unable to drive substan-tive knowledge transfer and game-changing innovations because therewas no collaboration between individual academics and no wide-spread industry–academic collaboration (see Table 2).

The lack of collaborationwas driven by concerns about the poten-tial loss of intellectual property and beliefs that academics wouldneither share knowledge nor work in teams. The idea of the networkstarted from a discussion between two actors in one academic insti-tution (University 1), who bridged the structural hole across the twodifferent disconnected networks of academia and the pharmaceuti-cal industry in Ireland. Please refer to Table 3 for supporting quotesrelated to structural holes and tie strength. These individuals, whowe refer to as the ‘bridging tie actors’, had experience in both fields(academia and industry) and had a very clear understanding of theneeds and work habits of both parties. They realized there was ashortage of expertise regarding pharmaceutical crystallization thatcould be overcome by bringing the relevant expertise together in anetwork. Theywere aware that other academic research laboratoriesin different Irish universities had adopted different perspectives andmethods while working on this topic and had developed comple-mentary capabilities. They contacted central academic actors withdiffering crystallization expertise and knowledge to bring togethercomplementary technical knowledge from the disciplines of chemis-try, pharmaceutics, pharmaceutical technology, chemical engineer-ing, and mechanical engineering.

I was involved with a couple of colleagues, Respondent 10, Pharmaceu-tical Company 3 and Respondent 8, Pharmaceutical Company 1 whowere keys sponsors, I guess, of the idea. They really saw the opportunitythat was there to pull the knowhow across these various institutes to-gether and to try and harness that knowledge.

[Respondent 14, Pharmaceutical company 7]

Table 2Tie strength and knowledge transfer.

Tie strength/knowledgetransfer

Phase 0Bridging ties enablenetwork formation

Phase 1Gain com

Nature of tie (bridging/bonding)

Industry to academia Weak/none Modera

Bridging tie BondingIndustry to industry Weak/none Modera

Bridging tie BondingAcademia to academia Weak/basic research Modera

basic resBridging tie Bridging

Academia to industry Weak/proprietary projects Moderapropriet

Bridging tie Bridging

Basic research: basic scientific research conducted by academics and disseminated via academProprietary projects: applied research between specific academics and firms.Structure: the basic structure of the network, including the intellectual property agreement.Platform projects: generic crystallization processes to improve pill manufacturability for all firm

Please cite this article as: Filieri, R., et al., Structural social capital evolutnetwork, Industrial Marketing Management (2014), http://dx.doi.org/10.10

These two individuals spanned network connections acrossorganizational and knowledge boundaries and connected five uni-versities in an effort to explore solid crystallization from differentangles. Despite the RDI, there was a certain degree of disconnected-ness in the pharmaceutical industry; there were structural holes(i.e., no ties) among the different multinationals and between theprivate sector and academia. The pharmaceutical industry was dom-inated by fragmentation and hierarchies between the applied or‘ethical’ firms producing pharmaceuticals under patent and the ge-neric companies producing non-patented pharmaceuticals. Thesetwo kinds of firms were disconnected and highly competitive.

The pharmaceutical industry is very…[concerned with] intellectualproperty …. Very much closed in terms of how they share information.That has come about specifically with the emergence of generic compe-tition. There is kind of a hierarchy…in the industry.

[Respondent 1, University 1]

The activity of bridging different actors and networks allowedaccess to a wide array of specialized and complementary resourcesand knowledge, which could improve knowledge regarding crys-tallization of solids. Prior to the network, companies had never col-laborated on a common project nor engaged in formal knowledgesharing activities. This non-collaborative stance was primarilydue to concerns over intellectual property loss, knowledge spill-overs, and risks related to opportunistic behavior. Despite theserisks, all five universities and nine of ten contacted companiesjoined the collaboration.

Respondent 3, University 1 got all of the academic expertise in thecountry, chemical engineering, analytics, organic chemistry, pharmacyin 5 of the universities and … Respondent 2, University 1 brought thecompanies.

[Respondent 1, University 1]

Within this context, the bridging role of University 1 through itsmain representatives played an important role in accessing a widerange of contacts and inmobilizing the knowledge resources embeddedin this potential network.

I think there were some key players in… University 1 as well thathelped to pull that together… the tech transfer officer… had comefrom the industry and…was aware of some of the issues in the indus-try and was therefore able to apply …knowledge of the materialsciences capabilities in University 1 … The success was pulling the

mitmentPhase 2Develop trust andinteraction routines

Phase 3Innovation results andfurther commitment

te/structure Strong/platform projects Strong/platform projects,proprietary projects

tie Bonding tie Bonding tiete/structure Strong/platform projects Strong/platform projectstie Bonding tie Bonding tie

te/structure,earch

Moderate/basic research,platform projects

Strong/basic research,platform projects

tie bridging tie Bonding tiete/structure,ary projects

Strong/platform projects,proprietary projects

Strong/platform projects,proprietary projects

tie Bonding tie Bonding tie

ic conferences and academic journal publications.

s.

ion and knowledge transfer: Evidence from an Irish pharmaceutical16/j.indmarman.2013.12.011

Table 3Structural social capital and knowledge transfer for Phase 0: Bridging ties enable network formation.

Structural social capital elements Phase 0Evidence

Structural holes So in fact itwas, you know, two consortiawere joined up tomake this. Even going back on that if you take one of those consortia that I was involvedin was formed from people saying look these people are doing something similar why don't you get in with them. We were invited to talk toRespondent 3, University 1 and Respondent 5, University 3 on that. So there was a fair bit of looking around at various levels to see what peoplewere working in the area and joining them up. (Respondent 7, University 5)Well I suppose initially SFI sent out a call for expressions of interest and University 4 put together an expression of interest which was for phar-maceuticalmaterials and formulation science [network]. It would have involvedmyself and Participant D fromUniversity 4whowas PI at the timefor theUniversity 4 group.… Therewas Participant D andmyself and then a couple of people fromUniversity 5 pharmacy and chemistry. TherewasParticipant C and Participant A from University 5 andwe had links with the engineering group in University 5 and engineering in University 2. So Ithink what happened then once SFI got the expressions of interest was that I think they held a meeting where they outlined the next step in theprocess, whichwas for people to submit pre-proposals and I think at that point SFI has suggested that because therewas some overlap between ourexpressions of interest and the expressions of interest that came from University 1, that the two groups should come together and put forward apre-proposal submission. Which is what happened. (Respondent 6, University 4)

Weak ties Having a group like IBEC Pharma Chem Ireland, that's got people to get to know each other a bit better (Respondent 8, Pharmaceutical Company 1)The industrypartners are brought together throughPharmaChemical Irelandbeing the overseeing bodywithin IBEC that supports the industry andthe employer's side and we had formed a research and development innovation group maybe 7 or 8 years ago. (Respondent 14, PharmaceuticalCompany 7)

Strong ties We would have known the people in University 1 from before the [network]. I would have known Respondent 1, University 1 and Respondent 3,University 1 because Pharmaceutical Company 6 is geographically quite close to University 1.Wewould have known them going back a long time,you know Respondent 3, University 1would have provided training in chemistry. Therewas actually a degree course run on site here in the late oreven early 1990s. Respondent 3, University 1 was one of the people that came to lecture on the site. He obviously went on to become the leader ofthe [network]. We would have known Respondent 3, University 1 quite well for a long time. (Respondent 13, Pharmaceutical Company 6)

Knowledge transfer So we knew we had to build up our technical knowhow so we formed this research and development innovation group to pull together theactivities within the company and get a more coherent picture of what was going on and how we could help each other to build that capability.(Respondent 14, Pharmaceutical Company 7)

Phase 0 summary Bridging ties dominate phase 0with recognition of a common technological problemhelping tomotivate participants to commit to participating inprinciple in this knowledge transfer network

6 R. Filieri et al. / Industrial Marketing Management xxx (2014) xxx–xxx

different colleges together to come up with a coherent program thatwould address the industry's needs.

[Respondent 8, Pharmaceutical company 1]

In terms of the structural configuration of the network, in phase 0the network was very small with only a few key actors, centrally lo-cated in their university network and the RDI, bridging the structuralholes and weak ties across different networks to create momentumfor network formation.

4.2. Phase 1: Gain commitment

Phase 1 sees multiple changes in network configuration once thebridging tie actors obtain a positive response to network formationfrom both business and academia. First and foremost, the networkgrows considerably in size.

Sowe said let's put some academics, students, and industry people fromdifferent companies into 8 groups and put them working together. Weended up with about 64 people working on this.

[Respondent 1, University 1]

In Table 4, Respondent 8 at Company 1 explains in detail theextent and length of discussions undertaken to get agreement onthe network structure so it could receive external funding. Furtherinsight is provided by Respondent 13 at Company 6 who alsoexplains the extent of interaction and discussion needed to gainwidespread approval of the network's structure.

Multiple actors helped develop a funding bid, increasing tiestrength somewhat as they work out the details of the bid. ScienceFoundation Ireland (SFI), an Irish organization responsible for man-aging, allocating, disbursing, and evaluating expenditures from theTechnology Foresight Fund, ultimately funded the network. Tomove forward with the bid, members first needed to agree on an IPstrategy, thereby eliminating their lack of willingness to transfer in-formation (Hansen, 1999). As a committee, they agreed to work on a

Please cite this article as: Filieri, R., et al., Structural social capital evolutnetwork, Industrial Marketing Management (2014), http://dx.doi.org/10.10

generic compound that would not generate any intellectual propertyconflicts.

The intellectual property was addressed but it was recognized that itwould be addressed by an IP committee. So people knew they had tomeet up, if it did come to it, or bail out if they like what was happening,you know. So there was lots of sort of options and all of these were ad-dressed with mechanisms in place. I think that was why companieswere comfortable enough to get involved.

[Respondent 8, Pharmaceutical company 1]

The IP agreement; really for that to be acceptable — no constraintson anything that comes out of the collaboration. Industry wouldrather pay money but then own whatever the result of collaborationis. Rather than have any complication or hindrance on anything thatmight come out of collaboration because any legal disputes wouldkill this thing.

[Respondent 13, Pharmaceutical company 6]

To facilitate start up, SFI guaranteed an initial financial commit-ment of €7 million for the first five years of the network. The fundingwas used to organize the network infrastructure, purchase the nec-essary equipment, and recruit a project manager, 6 post-doctoral re-searchers, and 22 PhD students. In total, the two bridging tie actorsbrought together a group of 60 people across the five institutes in-cluding principal investigator (PI) academics, PhD researchers, andpost-doctoral researchers, as well as managers and R&D employeesfrom 9 major pharmaceutical multinationals. Informants notedthat such relationship specific investments were a pre-conditionfor network development:

Well I suppose the [network] wouldn't exist without them [ScienceFoundation Ireland]. I mean that one was one of the chief objectivesin the beginning for the group to collaborate and it needed the finan-cial ability to be able to purchase equipment to start progressing theresearch and getting the researchers in and that was fundamentally

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Table 4Structural social capital and knowledge transfer for Phase 1: Gain commitment.

Structural social capital elements Phase 1Evidence

Structural holes Traditionally in the industry the drug product is developed by pharmacists and the active ingredient is made by chemists. Chemists andpharmacists don't necessarily speak the same language. The formulator then is the person in themiddle so the pharmacist is looking at the drug tosee how it can actually get into the body and have the therapeutic effect; the chemist is trying to look at the compound with all these lovelychemical symbols and see how I canmake this in themost efficient way and they never talk to each other, basically. So the formulator is the guy inthemiddle trying tomake the product the pharmacist wants and the chemist can produce. It is amazing how little is known between one and theother. (Respondent 1, University 1)

Weak ties I think it is important that the development group… understands the potential scope that the [network] can deliver. Headquarters developmentpeople can sometimes feel threatened by research and development that is carried out in the sites. They want to be clear there isn't anythingconflicting or re-producing efforts that are beingmade elsewhere. So in all the projects that I havementioned before we have had PhD students onplacement here… fromUniversity 1 butwe have always shared the program of workwith the development group… beforewe start the program.Just so they understand the aims of it and the likely benefits. Obviously they are comfortable on any aspects of confidentiality that is all beingmanaged in a responsible way. (Respondent 13, Pharmaceutical Company 6)In our original proposalwe thought thatwewouldn't really get industry engageduntil the end of year three. Thatwas the plan becausewe said let'stry and do that and take a while to build up the trust and capability to bring IP to the table. (Respondent 1, University 1)

Strong ties We supported the initial documentation although most of it came from academia. … We brought SFI funding in to the tune of around 7 million.What was very important then was the structures that we put in place. So we had an executive board and an operational board. The executiveboardhad two or three people from industry and fromall the academic institutions.What thatwas,was a… good forum for discussing and then theoperational side was solely the academic institutions getting their plans together for how they were going to buy their equipment, to get studentsand getting up on their programs. So from the get go it was good organization and getting an IP committee together as well helped too. (Re-spondent 8, Pharmaceutical Company 1)I suppose another thing that happened around that timewas when the [network] was being formulatedwas that Respondent 3, University 1wentto [firmheadquarters], we arranged for him to visit the Pharmaceutical Company 6 headquarters in [firmheadquarters] to let them get a corporateperspective of how they view this type of initiative. So Respondent 3, University 1 got a good reception in [firm headquarters] and he went toPharmaceutical Firm 6 and he also went to Pharmaceutical Company 12 but we helpedwith setting up the Pharmaceutical Company 6 visit. Thoselinks are still quite good. (Respondent 13, Pharmaceutical Company 6)

Knowledge transfer I think the fact that we did this [created problem-specific sub-groups] and we had the training done kind of jelled the [network] early on. It brokedown a lot of barriers because all of these people were openly sharing information about how to do things. (Respondent 1, University 1)[PCI R&D group] really saw the opportunity that was there to pull the knowhow across these various institutes together and to try and harness thatknowledge. (Respondent 14, Pharmaceutical Company 7)

Phase 1 summary Bridging/bonding ties are evidence in phase 1 with industry participantsmoving from bridging to bonding ties at a faster pace than academia. Thisis evident in the exchange of both explicit and tacit knowledge through agreement over the form of the network.

7R. Filieri et al. / Industrial Marketing Management xxx (2014) xxx–xxx

a huge requirement to get SFI approval and support in goingforward.

[Respondent 9, Pharmaceutical company 3]

The receipt of funding changed the attitude of academics and uni-versities towards sharing knowledge with business partners andeach other. Thus, ties among network members were beginning tostrengthen, although ties between the network members and theirown firms and ties between academics remained weak:

Sometimes the academics are almost reluctant to share their re-search with the other partners. They can want to hang onto whatthey are doing and not disclose it. But I think in the case of our [net-work] that hasn't been an issue and everyone is willing to shareand work with one another.

[Respondent 13, Pharmaceutical company 6]

Not only was the network funded by the Irish government, but alsothe firms involved committed their own relationship specific invest-ments to supporting the network:

So the commitment requirements, sometimes it is hard to get indus-try to sign up to something that they have to make financial contri-butions to, etc. It can be a show stopper. Respondent 3, University1 pitched at a level that was manageable and the companies werehappy enough to sign up to.

[Respondent 8, Pharmaceutical Company 1]

A final tactic in this phase was to appoint a manager who builton the momentum created in Phase 0. This manager was centrallylocated in the new network. In addition, the manager operatedfrom the university where the bridging tie actors were located,and had substantial industry experience. This background provid-ed him credibility with academics and industry managers alike.

Please cite this article as: Filieri, R., et al., Structural social capital evolutnetwork, Industrial Marketing Management (2014), http://dx.doi.org/10.10

So for Respondent 1, University 1 as manager it is important that heunderstands both the industry and academia in particular. I think itis very important for the industry people that they have somebodywho sees their view point and sees where they are coming from, in-volved in the academic side or involved in the running of it.

[Respondent 7, University 5]

4.3. Phase 2: Develop trust and interaction routines

As social capital research suggests (Uzzi, 1996), network mem-bers realized the importance of trust for the smooth functioning ofthe network and decided that developing trust should be their firstobjective. To build trust, it was critical to develop a set of mecha-nisms to connect all actors in the network while aligning knowledgeon crystallization and illustrating how it could be explored from dif-ferent angles, perspectives, and methods. Developing trust based onreputation and mutual benefits was also important for research lab-oratories that had to show they were skilled enough to improvepharmaceutical manufacturing processes through crystallization.Thus, several mechanisms were developed to enable members toget to know each other and build the strong ties that would supportmembers' confidence about sharing knowledge:

Intellectual property was always a concern and I thinkwe realized rightfrom the beginning that we are not going to get these guys to open up interms of IP. So we are going to have to spend a couple of years buildingtrust. That is what we did for our first couple of years. I think our firstprocess was: Let's try to get industry on board and demonstrate thatwe are trustworthy and yes we can deliver and see where that takes us.

[Respondent 2, University 1]

The development of trust was also facilitated by the creation of dif-ferent face-to-face communication channels such as quarterlymeetings,

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Table 5Structural social capital and knowledge transfer for Phase 2: Develop trust and interaction routines.

Structural social capital elements Phase 2Evidence

Structural holesWeak ties So I suppose the first part of it was really a getting to know you stage and the type of research that wewere presenting at the technical meetings

was research that we could speak freely about and the companies could learn what we were doing and then in some cases may have triggered aparticular idea on a project and they could pursue that separately. (Respondent 6, University 4)

Strong ties Creating environments where people actually sit down, initially the first thing we did was training because you were bringing them together inan environment where you weren't saying share with me all of your information. You were more doing it inadvertently. (Respondent 2,University 1)Companies came together and had a look at it and found that they were actually getting more value than they expected. They thought that itwould be just getting to knowyou bit at the beginningbut companies actually started to really buy into it. Itwas thefirst timewhere they thoughtit was a relationship where they were learning. (Respondent 2, University 1)I think on confidentiality there is just a good level of trust. (Respondent 13, Pharmaceutical Company 6)So I suppose one of the exciting things that we have done is we have succeeded in doing things that have never been done before.We started offtalking about learning and teaching the art of crystallization. So the guys were quite comfortable coming out and doing road shows and we gotour folks in and they ran lectures on crystallization. So that was an easy initial one. So the executive board said, “Okay, that's great okay, but howdo we keep it alive? How do we keep moving forward?” So we made the decision to put together our own website. (Respondent 8, Pharma-ceutical Company 1)

Knowledge transfer Well there was a number of working groups set up and there was one on analytics, one on PAT, various sub groups withmembers from industryand academics. There are on-going programs and meetings with those. There are quarterly technical meetings, which rotate around the variousuniversities and at thosemeetings there are some academic and some industrial presentationswhere people talk about their work. (Respondent13, Pharmaceutical Company 6)As well as that there are a number of training educational things that are involved. We have put on training courses in crystallization.(Respondent 7, University 5)They found they were learning as much from their peers as they were from the academics. (Respondent 2, University 1)We now co-own a website with each other. When you stand back and look at it I mean ten years ago that would have been really ‘shooting atdawn’ type of stuff. I was in [firm headquarters] two weeks ago and I did a presentation to all of the R&D, about 120 people from PharmaceuticalCompany 1 and all of the manufacturing people, and basically I put up the website and very simply said to them, “If you're planning on doingcrystallization next Monday morning, don't! Log onto this website.” (Respondent 8, Pharmaceutical Company 1)And we have been involved in the development of a website …. Everybody was involved in that. (Respondent 7, University 5)

Phase 2 summary Bonding ties dominate phase 2with Industry to Academia, Industry to Industry, and Academia to Industry all bonding through platformprojects,exchanging explicit and tacit knowledge through formal and informal networks. Academia to academia ties remain at bridging level given thattheir knowledge transfer relationships with each other are transactional and functional within the formal network.

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training programs, and other forms of communication between net-work participants. In this context, participants interacted more fre-quently and saw the benefits of such learning;

There are quarterly technicalmeetings, which rotate around the variousuniversities and at those meetings there are some academic and someindustrial presentations where people talk about their work and shareknowledge on crystallization.

[Respondent 12, Pharmaceutical company 5]

A 200+ person-days training program was developed by the aca-demic partners and offered to industry participants to align knowledgeon the crystallization process. These training courses ran several times ayear in various locations and included scientific topics on crystallizationsuch as computational fluid dynamics and analytical methods for solids.Training programs and information sessions strengthened the tiesbetween academia and industry and helped to align knowledge oncrystallization in order to facilitate mutual understanding. Duringthese sessions industry participants got to know each other's researchexpertise.

People from … all the universities in the [network] did come downand provide a training program on crystallization for our scientistsand engineers.

[Respondent 12, Pharmaceutical company 5]

Academic partners provided a set of value-added services toindustry, including provision of equipment; in-kind counseling ac-tivities; and assistance in problem-solving or investigation of novelproblems. Free access to these technologies, skills, and servicesraised the pharmaceutical company's value perceptions of networkparticipation. As a result of these initiatives, academics and industryparticipants started to share knowledge more openly; this not only

Please cite this article as: Filieri, R., et al., Structural social capital evolutnetwork, Industrial Marketing Management (2014), http://dx.doi.org/10.10

increased trust but also industry participants' willingness to contributeto the project. Furthermore, the network continued to grow in size:

It's owned by 9 companies and 5 universities… there is 150 people in 8teams.

[Respondent 8, Pharmaceutical Company 1]

Ultimately, network members agreed that a web portal was neededto document the crystallization knowledge that had been generated:

They agreed to put together a best practice document which wouldgather information that was already in people's heads and get it writtendown somewhere. Not in academic journals but more an ‘I've done thisbefore and I know it works’. So they broke into 6 or 8 working groups ofstudents, academics, and industry working together. They brainstormedon all the information that they had and put it together on an electronicportal.

[Respondent 2, University 1]

The reciprocity of the exchange and the perceived value of theknowledge shared were seen as an important enabler of the forma-tion of a trustworthy network. Knowledge sharing was mutual; in-dustry participants improved their knowledge of crystallizationand evaluated the potential for process improvements within theirfirm while academics were gaining awareness of industry needsand work methods. Thus, learning was taking place on both sides.These knowledge sharing mechanisms successfully achieved theirobjective by the end of the second year, with industry participantsreporting a high level of trust towards other members of thenetwork;

Well one thing that there is now is great respect for each other, abso-lutely great respect for each other. I think that is very important. You

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Table 6Structural social capital and knowledge transfer for Phase 3: Innovation results and further commitment.

Structural social capital elements Phase 3Evidence

Structural holes You have similar problems irrespective of the company they are working in. All they want to do is get through the production process asefficiently as possible. So, I think there was always an element of this kind of community of practice, and I thinkwhat the [network] managed todo is to gather that around a very specific topic. (Respondent 3, University 1)

Weak ties I knowwe have talked about the industry and academia but the government is an important part of the story here.What role have they had? SFIhave done a super job, they have been thorough, they have been demanding but not overly bureaucratic. IDA and Enterprise Ireland, well theyhave been tuning intowhat has been happening somuch so that they are interested in opening this national pharma competency center.… Theyhave been watching closely and they are happy with what they are seeing. (Respondent 8, Pharmaceutical Company 1)

Strong ties At themid-term review three years later, it was all completely different. The interaction reallywith the different colleagues, particularly industrycolleagues, was hugely influential.… They know the technology that they are not using today but that they expect to be using in two years' time.And that's what they want from the [network]. They want to be able to access expertise in these areas because they may have the expertise intwelve months' time, but at any given time they are probably looking at 10 to 12 projects. … They want to get some sort of insight. They arewilling to fund studies that help themmake these decisions. (Respondent 3, University 1)What happened then in terms of the spinout is that we have the companies now going individually to each of the five research centers oruniversities with their individual projects and paying for them themselves and getting research done on their pressing needs and there are highvolumes of that going on.… So that's wherewe are atwe have completed our three year reviewwith SFI and interestingly we passedwith flyingcolors there.(Respondent 8, Pharmaceutical Company 1)Butwe've had very good people. They've all had their— there has been a lot of engagement.…We're all still together, we're all working together.(Respondent 3, University 1)Then of course the research is ongoing. There is over 20 PhD students still involved. We have our technical meeting which keeps peopleconnected; all of the students will spend three months in industry. (Respondent 8, Pharmaceutical Company 1)

Knowledge transfer What we have succeeded in doing is building a decision tree,…where they can follow their way on the tree.… Basically it is around the conceptof what they call background knowledge. When people come into work on a project in the [network] they will have background information(Respondent 8, Pharmaceutical Company 1)The post docs, there are one or two in each university, have a group themselveswhosemission is to assist bench-to-bench collaboration betweenthe institutions. So that is anothermechanism for [information sharing].… So that was a bigmixing if you like there. The training is nowmovingonto amore formalized coursewhichwe are starting to put together and implement. Also there is an advisory board and that is another format fordiscussing what we are doing and particularly what everybody else is doing.…We are actually really familiar with what we are all doing. (Re-spondent 7, University 5)The relationshipswith theuniversities in the [networks] tend to bemore open… oneof the key thingswhen the [network] startedup in our letterof support for the [network] was the supply of expert people. You know a supply of expert graduates. (Respondent 13, Pharmaceutical Company6)

Phase 3 summary Bonding ties dominate phase 3 with all participants having transitioned from bridging to bonding ties. Explicit and tacit knowledge is now beingtransferred between all participants for platform and proprietary projects, with academics now engaged in the interpretation of discoverywhichtransitioned this relationship from bridging to bonding.

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know, there is a great sense that we can work together to get through aproblem.

[Respondent 8, Pharmaceutical company 1]

Thus, from a configuration perspective, the size of the networkgrew substantially and strong ties developed through the collabo-ration taking place through multiple mechanisms. Structuralholes were filled through this collaboration, not only within thenetwork but also between network members and firm managersat some firms. Furthermore, the crystallization website diffuses re-source information throughout the network. Interestingly, thisknowledge diffusion, in effect, diminishes the importance of cen-trality and paves the way for changes in the network manager'srole (Table 5).

4.4. Phase 3: Innovation results and further commitment

In less than two years, the pharmaceutical industry and academiahad evolved from a small network noted for its structural holes to alarge, cohesive network composed of people with complementarytechnical knowledge about crystallization. This cohesive network ischaracterized by a high level of commitment and trust, frequent in-teractions, and explicit knowledge sharing. The exploitation of com-plementary knowledge was facilitated through the evolution of thenetwork from a disconnected to a more connected network generat-ing additional know-how and leading to innovation:

The original plan was to work on company specific problems. …That was the idea but after the first couple of years they decidedthat they were actually working really good together and those

Please cite this article as: Filieri, R., et al., Structural social capital evolutnetwork, Industrial Marketing Management (2014), http://dx.doi.org/10.10

projects were bringing about incremental increases in their pro-cesses. But, what if a good group of companies and academics cometogether and put the money into having enough people to do re-search on a big problem?

[Respondent 2, University 1]

Based on this success industry participantsmade additional relation-ship specific investments and started to fund specific projects with cer-tain institutions. Different typologies of sub-projects evolved, such asplatform-projects or mini-projects, between research laboratories andindustry, with companies approaching research centers to fund tailoredresearch projects. Many of these projects go beyond the original man-date of the network and show sustained interest from industry. Thiscommitment from industry is the validation of the benefits acquiredfrom the initial knowledge sharing activities in collaboration withacademic institutions.

SFI had no requirement for industry to contribute in years one to three. Ithink we have got €180,000 cash and in-kind contribution from indus-try. That is conservative because we have also allowed the individualcompanies work with the universities individually as well … Therehas been a significant amount of funding come in as well from whatwe would call mini projects. They are putting money to what they arelooking for, otherwise why wouldn't they do it if they were getting itfor nothing?

[Respondent 1, University 1]

Regarding configuration, the network grew in size but also hasbegun to segment with groups working on specific problems. There

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also is recognition of the value ofworkingwith others in such a networkconfiguration.

So we now have three platforms identified where we would have 4–5companies working within each platform with 2–3 universities todevelop centers of excellence in three specific areas (Respondent 1,University 1)The more people you know or the more people you talk to aboutthings the more ideas you get so we try to approach other stuff thisway. There is the potential there for other [networks] on organic syn-thesis which is really the core of what we do here.

[Respondent 13, Pharmaceutical Company 6]

The knowledge transparency offered by the portal means memberscan see further into the future regarding technical developments, andare developing enough confidence in network colleagues that they areexperimenting with innovation addressing other operational problems.As a result, the project manager's role is evolving from active and in-tense directing to more of a background leadership style where innova-tions can develop and flourish from among themembers. While overalltieswithin the network remain strong, weak ties still have a role to play.The web portal enables new network members to work through thelearning curve at a faster pace, and government involvement mayhelp transfer collaboration best practices to other pharmaceutical in-dustry areas and even other industries altogether. Yet, despite the in-tense collaboration and strong ties between individuals, weak tiesbetween industry and academia remain due to very different metricsand goals, identifying a potential limit to the tie strength that can beachieved across these groups (Table 6).

5. Discussion

This study explores the optimal structural configuration evolu-tion of social capital for innovation generation. As noted previously,studies have produced contrasting results about structural holesand cohesive networks, each presenting both a ‘bright’ and a ‘dark’side (Edelman et al., 2004). This research supports the view thatthe two configurations are complementary to each other (Ahuja,2000; Burt, 2000), and beneficial in enhancing knowledge transferand innovation (Alguezaui & Filieri, 2010), explaining how they op-erated in tandem to enhance knowledge transfer in this case study.

The adoption of a structural social capital lens to examine theevolution of an Irish pharmaceutical network involving academiaand industry has provided interesting insight regarding differentstructural configurations of social capital and their influence onknowledge transfer and innovation at different stages of its evolu-tion. This case study emphasizes that a bridging role was fundamen-tal to connect the structural holes within the Irish pharmaceuticalindustry and academic institutions. The bridging ties connectedthese actors and formed a network to investigate pharmaceuticalcrystallization, and address a knowledge shortage in the industry.Such bridging enabled the formation of a network and the mobilizationof a diverse set of specialized and complementary knowledge and otherresources that potentially could be exploited to generate innovations.However, that mobilization was strongly influenced by the phases ofnetwork development as illustrated in Table 2. Social capital facilitatedknowledge transfer at different paces between the different actors dur-ing each of the four phases of network development. As illustrated inTable 2, industry became more deeply embedded in the network at afaster rate than academia. Driven by the need to augment innovationpotential, they utilized bridging ties to move more rapidly from one-way, asymmetric relationships to bonding ties which resulted in two-way, symmetric relationships based on trust and interaction routines.The innovation result was that knowledge transfer was accelerated ata rate unanticipated by the project leaders.

Please cite this article as: Filieri, R., et al., Structural social capital evolutnetwork, Industrial Marketing Management (2014), http://dx.doi.org/10.10

Notably this research illustrates that having structural holes withhigh knowledge range is not sufficient to achieve innovation. A net-work rich in structural holes has greater capacity to generate thenew ideas that are a prerequisite for successful academic perfor-mance and industry growth. However, it experiences an ‘action prob-lem’, where members are unable to exploit knowledge and produceinnovations (Obstfeld, 2005). The present study provides an explana-tion of the action problem in an Irish pharmaceutical network involvingacademia and industry. Results show that working on sharing explicitand tacit knowledge, developing trust, and enhancing mutually benefi-cial knowledge exchanges through face-to-face communication werenecessary preconditions to foster the combination of complementaryknowledge between network members. However, it transpires thatthe presence of structural holes is not sufficient for innovation; havingstructural holes with knowledge complementarities can be labeled‘innovation potential’. To achieve innovation, it is fundamental thatthe actors are active, developing a cohesive network with a long-termorientation through very frequent interactions where valuable explicitand tacit knowledge resources are shared. The creation of such an envi-ronmentwas critical to counteract the challenges of sharing knowledgein a high-technology sector such as the pharmaceutical industry, withdifferent organizations with different goals, different ways of working,and different attitudes towards each other.

This finding is new in social capital theory, and it sheds light onthe optimal contribution of social capital in achieving innovation.This study advances theory by demonstrating that a cohesivenetwork coupled with actors who have complementary technicalknowledge is more likely to succeed in innovation generation. Inthis network, cohesiveness based on frequent interactions, commit-ment, high levels of trust, and reciprocity created the strong foundationon which knowledge sharing activities could be developed, ultimatelyproducing innovation outputs in a very short period of time. For in-stance, the initial government funding commitment encouraged thepartners to interact with each other and disclose knowledge. This inturn generated norms and rules for interaction (e.g., disclosure ofnon-proprietary knowledge only), which engendered higher levels oftrust and knowledge sharing, creating a virtuous cycle of further en-hanced knowledge sharing and commitment in the form of ad-hoc pro-jects. Such interactions among social capital factors call for a morecautious approach to social capital, which is sometimes measured as asingle composite item (Perez-Luño et al., 2011).

These findings show that bridging ties are paramount in facilitatingaccess to heterogeneous and complementary knowledge and resourcesthat, if shared, can potentially generate innovation. This case study hasalso demonstrated that access to knowledge and the exploitation(sharing) of knowledge generated in the network required a morecohesive network structure. The development of a cohesive net-work was necessary to overcome several potential problems withsuch collaboration, such as the lack of trust of industrial partners to-wards academia, the primarily individualistic work patterns of aca-demics versus the team based work patterns of industry, the fear ofintellectual property rights losses, and of opportunistic behavior. Inreviewing the case study, it is notable that the relationship betweendifferent social capital configurations (e.g. cohesive networks and struc-tural holes) and innovation is mediated by factors such as trust, com-mitment, knowledge sharing, and interaction frequency. It issuggested that these elements are considered when investigating therelationship between structural social capital and innovation. These fac-tors, especially trust, need time to develop at differingpaces for differentparticipants, thus its measurement at different times may produce con-trasting results.

Adopting a case study approach and investigating the evolution ofsuch a rare network provides needed evidence of the evolution of struc-tural social capital: from a disconnected network with structural holesto a cohesive networkwith complementary knowledgewhere all actorsare connected to each other and collaborate to achieve the goals of the

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11R. Filieri et al. / Industrial Marketing Management xxx (2014) xxx–xxx

network. This finding supports the conclusion that a more dynamic ap-proach to social capital research is necessary (Huggins, 2010).

6. Managerial implications

The study provides several insights to marketing managersregarding the management of an industrial network and its evolution.The first recommendation made to marketers notes the importance ofstructural holes and the complementarity of skills to approach a specificscientific problem. Sometimes academics and industry partners arereluctant to collaborate; therefore, an investigation of the potentialobstacles to, and benefits of, establishing collaboration is paramount.A network with structural holes cannot work until the networkmembers feel comfortable disclosing valuable knowledge and theyare all working to achieve common, rewarding, and valid outcomes.Cohesiveness is a fundamental pre-condition in sharing knowledgein a high-tech context, where knowledge determines the competi-tive advantage of companies.

In particular, this study emphasizes some of the problems inindustry–academia collaborations, and the mechanisms that can beused by marketing managers to overcome them. The initial commit-ment provided by a governmental institution was vital in establish-ing the network; it provided resources and the motivation to shareknowledge and work together for a common goal. This commitmentenabled the development of different forms of interactions, such asquarterly meetings, training, and other face-to-face communica-tions, in which academic and business network members engagedin knowledge sharing activities approaching crystallization from dif-ferent yet complementary perspectives. These forms of interactionshave improved the overall knowledge of members on the processof crystallization, which was approached from different angles andvia different methods. Thus, mobilizing financial resources, facilitat-ing network members' interactions, fostering the necessary level oftrust, and reciprocal knowledge sharing have combined to generatedifferent types of innovation outputs in both contexts (academiaand industry). Incremental innovations in the industry have moti-vated further investments for achieving shared network goals andto solve firm-specific problems.

7. Limitations and future research

This study has several limitations;first, the research approach focusedon a single site case study in small open economy. The inclusion of addi-tional networks in similar economies or perhaps a contrasting economywould further strengthen the findings. Second, the qualitative researchmethod adopted means that findings can be inferred from the empiricaldata. However the adoption of a quantitative approach using establishedresearch measures to confirm or disconfirm the research findings is animportant next step. Finally, the case study focused on one industry inthis research project. While this is a common practice in studies of net-works, it can also be criticized as leading to conclusions that are industryspecific and not generalizable. The inclusion of additional industrieswould facilitate the extension of the results to other sectors.

To this end future research could include additional qualitativeanalyses, using a number of case studies, to explore the nature andextent of the relationships identified in this article. In addition, therelationship between structural social capital configurations, knowl-edge transfer, and innovation warrants further exploration in differ-ent organizational, geographical, and industrial contexts.

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Dr. Raffaele Filieri is a senior lecturer in marketing at the Newcastle Business School,Northumbria University, United Kingdom. Raffaele has received a Ph.D. in business engi-neering from Universita Roma 3. His current interests focus on knowledge managementprocesses and innovation at inter-firm level, on online customer co-creation, and electron-ic word of mouth. He has published in Journal of Knowledge Management,Marketing Intel-ligence & Planning, Journal of Travel Research, and Journal of Business Strategy.

Dr. Regina C. McNally is a senior lecturer of strategy at the Kemmy Business School, Uni-versity of Limerick, Ireland. She received a Ph.D. inmarketing from theUniversity of Illinoisat Urbana-Champaign. Her research interests focus on the processes and outcomes of stra-tegic firm decisions. She has published in Industrial Marketing Management, the Journal ofthe Academy of Marketing Science, and the Journal of Product Innovation Management,among others.

Dr. Michele O'Dwyer is a senior lecturer in entrepreneurship at the Kemmy BusinessSchool University of Limerick, having undertaken her Ph.D. in University of Ulster. Her re-search interests focus on innovation andmarketing particularly in small andmedium sizefirms. She has published in journals including Journal of Product and Innovation Manage-ment, European Journal of Marketing, European Business Review, Journal of InternationalManagement, Journal of Strategic Marketing, International Journal of Product Development,Journal of Services Marketing, and European Journal of International Management.

Dr. LisaO'Malley is a senior lecturer inmarketing and head of theManagement &Market-ing Department at the Kemmy Business School, University of Limerick. Her research inter-ests include the role of relationshipmanagement in radical innovations. She has publishedwidely onmarketing and herworkhas appeared in IndustrialMarketingManagement, Jour-nal of Business Research,Marketing Theory, The European Journal ofMarketing, Service Indus-tries Journal, and the Journal of Marketing Management.

ion and knowledge transfer: Evidence from an Irish pharmaceutical16/j.indmarman.2013.12.011