It is well established that spanning structural holes creates private benefits through innovation. However, the extent to which other network members profit from spanning structural holes remains unclear. This research considers how subunits that span structural holes within the MNE network reap private benefits in terms of innovation, as well as contribute to the common network benefits through knowledge outflows. Acknowledging that a direct relationship between knowledge sharing and innovation exists, we use a 3SLS model to elucidate the various individual and simultaneous links among brokerage, innovation and knowledge outflows. In this way, we decompose some of the ways in which brokerage simultaneously affects knowledge outflows and innovation to map out the private and common benefits of brokering within the MNE network. We find that brokerage is indeed positively related to innovation but negatively to knowledge outflows, given also that, as expected, innovation is positively related to outflows. The reason that existing literature has ignored the knowledge outflow patterns of the broker, and as such its value-added to the network, may be that the total effect of knowledge outflow is indeed positive, although the direct effect of brokerage on knowledge outflow is negative.
Academy of International Business. Annual Meeting. Proceedings, 2012, p. 228-229
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Academy of International Business. Annual Meeting. Proceedings