Position and Value: Dynamic Network Capability, Dynamic Positioning, and Innovation in Complex Product Domain

Abstract

Network position has long been a focal point for network researchers. In today's dynamic environment, firms' positions within networks change over time. While evidence suggests that dynamic positioning is important for innovation, the exact relationship between the two remains unclear. Furthermore, empirical studies on how firms can improve their positions within networks are limited, significantly hindering the practical value of network position research. This article draws on network dynamics and social embeddedness theory to integrate dynamic network capability and the type of product innovation—modular innovation and architectural innovation—into a model that examines the driving and action paths of dynamic positioning in the complex product domain. Results from a sample of 270 complex product firms across eight key cities in China indicate that dynamic network capability is positively correlated with dynamic positioning, characterized by increased centrality and structural holes. These enhanced positions, in turn, positively influence innovation. In addition, the study finds that modular innovation strengthens the positive impact of increased centrality on innovation while architectural innovation weakens this effect. However, neither modular innovation nor architectural innovation moderates the relationship between increased structural holes and innovation. This study provides a dynamic perspective on network position, offering valuable insights and guidance for firms seeking to enhance their positions and drive innovation in the complex product domain.