Innovation Policy in a Networked World
Social relationships channel information, influence, and access to scarce resources. As a consequence, social networks – the patterns of these relationships across the members of a community – influence who comes up with important innovations, whether and how rapidly those innovations get adopted, and who has the ability to commercialize them. They therefore also affect the overall rate at which innovation occurs in the economy. This essay provides an introduction to and review of the research on social networks most relevant to innovation, with a particular focus on the earliest stages of the innovation process. It then discusses the likely consequences of a variety of policy interventions that could either reduce the importance of social relationships to innovation or alter the patterns of relationships in ways that might promote innovation.
The Yale School of Management provided generous financial support for this research. I also with thank Josh Lerner, Yasin Ozcan, Scott Stern, and participants of the 2017 NBER Innovation Policy and Economics conference for useful comments on earlier versions of this paper. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.