469. The Emergence of a Small World in a Network of Research Joint Ventures

Stuart McDonald, Mohamad Alghamdi and Bernard Pailthorpe, School of Economics Discussion Paper No. 469 August 2012, School of Economics, The University of Queensland. Australia.

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Abstract

Using a data set spanning the period 1899-2000, we construct a network of RJVs and track the pattern of growth of this network over time. The resulting R&D network is emergent in the sense that RJVs are contained within it, connected to other RJVs by the existence firms sharing membership with multiple RJVs. This paper shows that the largest growth in the R&D networks occurred during the last three decades of the Twentieth Century. During this growth period, the R&D network has a pattern of collaboration that can be characterized as having the “small world” property. This has implications for the rate of information diffusion across the network, as it implies that many non- collaborating firms are in fact quite close to each other in terms of degree of separation. We show that this network structure is due to the presence of a small number of highly connected firms that collaborate across multiple RJVs. These firms have an important characteristic in that without their presence in the network, the R&D network looses its cohesiveness and the small world property disappears. Hence, these highly connected firms have an important role to play in determining the overall robustness of the R&D network.