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Drawing on social network theory and technological innovation literature, this study investigates how firm innovation mediates the relationship between tie strength of alliance network and the probability of producing dominant designs. We argue that strong ties facilitate both exploratory and exploitative innovation, which enables firms to produce dominant designs. We test the hypotheses with data from the Chinese automotive industry during 2004 and 2012. The findings suggest that strong network ties help producing dominant designs through facilitating exploitative but not exploratory innovation. This study reveals how the social networks, as important resources, influence firm performance in the competition to produce a dominant design. Firms must engage in innovation activities, especially exploitative innovation activities, to realise the value of their networks.

How tie strength in alliance network affects the emergence of dominant design: the mediating effects of exploration and exploitation innovation