Dual Networks of Knowledge Flows:

We develop a model of complementarity of knowledge flows in software ecosystems through two knowledge-acquisition mechanisms: a formal, fine-grained, contractual governance mechanism through inter-firm alliances and a non-formal, course-grained, non-contractual mechanism of spillover capture. In contrast to studies that focus solely on knowledge-exchange in alliances, we focus on two mechanisms and test their additive and super-additive effects. We examine the effect of a software firm’s position in the alliance network (formal, contractual mechanism) and patent citation network (non-formal, noncontractual mechanism). We test our model using data on a set of leading firms in the packaged software sector during the period 1995 to 1999. Our results show that software firms’ sales performance is predicted by their positions within these two networks. Furthermore, these network positions are additive and complementary in their impact on sales performance. Our results are potentially generalizable to other settings that have inter-dependent information and knowledge flows across organizational boundaries within ecosystems.