Technology Shocks, Technological Collaboration, and Innovation Outcomes

A major technology shock can have a profound effect on numerous economic activities and outcomes. A technology shock may simultaneously unleash significant innovation opportunities, while creating great uncertainty in the economic environment. Though it is well-known that firms often use alliances both to respond to uncertainty and facilitate innovation, little is known about how technology shocks affect the collaboration behavior of firms, and how these two factors separately influence innovation outcomes. I integrate an inductive study of a technology shock and concomitant collaboration activity with existing research on alliances and networks to build a set of arguments about how technology shocks will influence alliance behavior, how changes in alliance behavior will influence the global technology collaboration network, and about how each of these changes is likely to influence the innovative outcomes of firms. I test these arguments using large sample panel studies of alliance formation and patenting by US firms. The results suggest that the rise of the internet created a technology shock that subsequently impacted innovation. This shock also led to the crystallization of a giant collaboration network that had innovative consequences of its own.