The power of reciprocal knowledge sharing relationships for startup success

TL;DR

This study shows that in biotech start-ups, dynamic communication patterns and diverse social ties, rather than geographic proximity, significantly enhance innovation success.

Contribution

It introduces a novel measure of communication style and demonstrates that changing leadership in communication predicts innovative performance, independent of location.

Findings

Location influences communication volume but not innovation success.

Communication intensity and recollection by others are key to innovation.

Rotating leadership in communication predicts better innovation outcomes.

Abstract

Purpose: The purpose of this paper is to examine the innovative capabilities of biotech start-ups in relation to geographic proximity and knowledge sharing interaction in the R&D network of a major high-tech cluster. Design-methodology-approach: This study compares longitudinal informal communication networks of researchers at biotech start-ups with company patent applications in subsequent years. For a year, senior R&D staff members from over 70 biotech firms located in the Boston biotech cluster were polled and communication information about interaction with peers, universities and big pharmaceutical companies was collected, as well as their geolocation tags. Findings: Location influences the amount of communication between firms, but not their innovation success. Rather, what matters is communication intensity and recollection by others. In particular, there is evidence that rotating leadership - changing between a more active and passive communication style - is a predictor of innovative performance. Practical implications: Expensive real-estate investments can be replaced by maintaining social ties. A more dynamic communication style and more diverse social ties are beneficial to innovation. Originality-value: Compared to earlier work that has shown a connection between location, network and firm performance, this paper offers a more differentiated view; including a novel measure of communication style, using a unique data set and providing new insights for firms who want to shape their communication patterns to improve innovation, independently of their location.