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Leveraging External Resources: The Effects of Network and Cluster Resources on Firm Innovation

This paper examines the extent to which resources in a firm’s network and cluster influence its ability to innovate and whether firms differ in their ability to leverage network and cluster resources. Using data from the U.S. semiconductor industry, we find that technological resources in a firm’s network and cluster enhance its ability to generate more patents. We also find that a firm’s own resource profile moderates the relationship between network and cluster resources and firm innovation. Specifically, resource-rich firms leverage network resources more effectively, while resource-deficient firms leverage cluster resources more effectively. These findings have important theoretical and managerial implications.