Leveraging Structural Holes For Innovation: The Moderating Effects Of IT-Enabled Absorptive Capacity

Innovation has been a topic of considerable interest to researchers and practitioners. Particularly, the networks within which firms operate and their properties (e.g., structural holes) are suggested to affect firms’ innovation performance. One stream of research finds that structural holes are conducive to firms’ innovation because of the heterogeneous information about alternatives that firms can obtain through spanning structural holes. Another stream of research finds that structural holes inhibit knowledge transfer from knowledge sources and hence deter firms to innovate. This study aims to reconcile the two conflicting streams of research by identifying the conditions under which structural holes will be conducive to organizational innovation. Based on structural holes theory and absorptive capacity literature, this paper constructs a model to explain the moderating effects of ITenabled absorptive capacity on the relationship between structural holes and organizational innovation performance. This paper proposes that independently, structural holes may not influence innovation performance. However, when the exploration and transformation dimensions of ITenabled absorptive capacity are high, structural holes should positively affect innovation performance. Also, the exploitation dimension should positively affect innovation performance. The proposed methodology, measurement, and potential contributions of the study are discussed.