Cross-cutting ties, organizational density, and new firm formation in the U.S. biotech industry, 1994-1998

Bae, Jonghoon; Wezel, Filippo Carlo; Koo, Jun

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Journal article

Cross-cutting ties, organizational density, and new firm formation in the U.S. biotech industry, 1994-1998

Bae, Jonghoon Seoul National University, Graduate School of Business, Seoul, South Korea
Wezel, Filippo Carlo Institute of Management (IM), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera
Koo, Jun Korea University, College of Political Science and Economics, Seoul, South Korea

2011

Published in:

The academy of management journal. - Academy of management. - 2011, vol. 54, no. 2, p. 295-311

English The present paper examines the role of cooperative relations among incumbents in the formation of new firms. We argue that cooperative interfirm relations that bridge geographically remote and diverse sources of knowledge, i.e., cross-cutting ties, contribute to new firm formation. Employing data on state-level entries in the US biotech industry from 1994 to 1998, we find support to the following hypotheses: the formation of new firms in a focal region of an industry is positively related to the number of cross-cutting ties; the number of cross-cutting ties negatively moderates the effects of organizational density on the formation of new firms.

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