The strength of a weak tie in the innovative performance of firms: A case of Korean high-tech manufacturing small and medium-sized enterprises

Abstract

This study explores whether the 'strength of weak ties' theory, derived from social network theory, can equally apply to business activities. To address this question, we conduct an empirical analysis, utilising 3-year panel data encompassing 3881 samples of Korean small and medium-sized enterprises (SMEs) in the high-tech manufacturing sector. The primary objective is to examine the effects of inter-corporate tie strength on innovative performance. The results reveal an interesting pattern in high-tech manufacturing corporations, where the strength of a tie demonstrates an inverted U-shaped relationship with an SME's patent achievement. Moreover, we observe that the effect of tie strength on an SME's patent achievement is positively moderated by its research and development (R&D) intensity. Furthermore, when an SME maintains weak ties within its relationship with a large corporation, its innovative performance experiences a more positive impact than in cases where no relationship with a large corporation exists, or strong ties are maintained. These findings suggest that for SMEs, maintaining an appropriate level of embeddedness with large corporations is an effective strategy for generating sustained innovative performance within an environment characterised by active technological innovation and intense competition. The principal contribution of this paper lies in the empirical validation of the theory of weak ties concerning a firm's innovative performance.