Brokerage Stability and Innovation in Alliances

Much research has shown that firms acting as brokers that span structural holes in alliances achieve superior innovation outcomes. However, research has not examined if long-lasting brokerage continues to create innovation. In this paper, we investigate the outcomes of brokerage stability in an alliance context, arguing that the innovation advantages of brokerage may decay over time. At the same time, brokering firms may be able to limit the negative effects on innovation by spanning more structural holes in their alliance portfolios. We empirically test our hypotheses using 136 firms headquartered in the U.S. over a 21-year period from 1985 to 2005. As predicted, we find that long-lasting brokerage triads hurt innovation for the brokering firm, but having plentiful structural holes in its alliance network mitigates the ill-effects of brokerage stability.