Abstract

Greater job mobility among engineers and scientists has caused the extended social networks of inventors to become increasingly connected. As a result, invention increasingly occurs within small worlds (or social networks) that straddle firm boundaries. Small worlds provide both strategic opportunity and potential threat; while they can increase creativity within a firm, they also aid in the diffusion of creative knowledge to other firms through personnel and knowledge transfer. Firms that operate within small worlds such as in Silicon Valley long ago learned to manage invention in an environment of rampant knowledge spillovers across firm boundaries. Now, however, all firms need to learn how to manage innovation in a small world environment. This article offers them advice about how to do so.