Does the way in which a firm interacts with its network partners influence its formulation of product innovation strategies?

This paper examines how network embeddedness influences firms’ formulation of product innovation strategies. We explored firms’ interactions with two types of network partners (business partners and technical partners) along two dimensions (relational and structural) of network embeddedness. The moderating effect of change dynamics on the interplay between network embeddedness and firms’ strategy formulation was also examined. Data were collected from 310 firms in five Chinese high-tech and three traditional manufacturing industries. Our findings indicate that strong, weak and non-redundant contacts are conducive to the formulation of product innovation strategies. Firms’ interaction with technical and business partners is also positively associated with the strategy formulation. However, geographic dispersion of partners has no impact. In addition, although technological dynamics exert a positive moderating effect on the relationship between network embeddedness and the formulation of product innovation strategies, radical changes in market conditions had no impact on firms’ engagement with network contacts, and consequently on strategy formulation.