Overcoming local search through alliances and mobility

Recent research suggests that, due to organizational and relational constraints, firms are limited contextually – both geographically and technologically – in their search for new knowledge. But distant contexts may offer ideas and insights that can be extremely useful to innovation through knowledge recombination. So how can firms reach beyond their existing contexts in their search for new knowledge? In this paper, we suggest that two mechanisms – alliances and the mobility of investors – can serve as bridges to distant contexts and, thus, enable firms to overcome the constraints of contextually localized search. Through the analysis of patent citation patterns in the semiconductor industry, we first demonstrate both the geographic and technological localization of knowledge. We then explore if the formation of alliances and mobility of active inventors facilitate interfirm knowledge flows across contexts. We find that mobility is associated with interfirm knowledge flows regardless of geographic proximity and, in fact, the usefulness of alliances and mobility increases with technological distance. These findings suggest that firms can employ knowledge acquisition mechanisms to fill in the holes of the existing technological and geographic context.