Empirical tests of optimal cognitive distance

Stefan Wuyts, Massimo G. Colombo, Shantanu Dutta and Bart Nooteboom ()

No 45, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: This article provides empirical tests of the hypothesis of optimal cognitive distance , proposed by Nooteboom (1999, 2000), in two distinct empirical settings. Variety of cognition, needed for learning, has two dimensions: the number of agents with different cognition, and differences in cognition between them (cognitive distance). The hypothesis is that in interfirm relationships optimal learning entails a trade-off between the advantage of increased cognitive distance for a higher novelty value of a partner s knowledge, and the disadvantage of less mutual understanding. If the value of learning is the mathematical product of novelty value and understandability, it has an inverse-U shaped relation with cognitive distance, with an optimum level that yields maximal value of learning. With auxiliary hypotheses, the hypothesis is tested on interfirm agreements between pharmaceutical companies and biotech companies, as well as on interfirm agreements in ICT industries.

JEL-codes: D83 L24 L63 L65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ino
Date: Written 2005
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Related works:
Working Paper: Empirical Tests Of Optimal Cognitive Distance (2004)
Journal Article: Empirical tests of optimal cognitive distance (2005)
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