Preparing for distant collaboration: Antecedents to potential absorptive capacity in cross-industry innovation

• We apply network analysis of 215 cross-industry collaborations by innovating firms.
• The data yield a new, empirical-based measure of organizational cognitive distance.
• Case study analysis reveals three alternative approaches to distant collaboration.
• Firms combining narrow and broad search efforts benefit from synergetic effects.
• We extend research on absorptive capacity into cross-industry innovation.

Cross-industry innovation entails distinctive innovation opportunities and challenges according to the knowledge heterogeneity between the collaborating firms. This heterogeneity yields increases in organizational-level cognitive distance. Whereas recent theory suggests cognitive distance is positively related to exploratory innovation, too much distance can hinder efficient knowledge absorption and results in a reduced effect on novelty value. This paper focuses on the research question of how to build potential absorptive capacity for distant collaboration beyond established industry boundaries to gain radical rather than incremental results. To address this question, we mapped a cross-industry network using survey data on 215 bilateral cross-industry collaborations between firms from a variety of industries and captured cognitive proximity (the inverse of distance) in terms of overall knowledge redundancy between firms. This approach introduces a new method to infer organizational-level cognitive distance from network analysis. Subsequently, based on results from the network analysis, we examined coordination antecedents to potential absorptive capacity for cross-industry innovation with partners at moderate and high distance applying case study analysis. Our study revealed three alternative approaches to coordination antecedents that drive a firm׳s potential absorptive capacity for distant collaboration. These findings extend research on absorptive capacity to the field of cross-industry innovation.