How virtual clusters affect innovation performance: Evidence from global hydropower industry

With the fast development of information communication technologies, firms break through geographic restrictions and form into virtual clusters for innovation. Existing studies mostly explore the innovation ecosystem by applying either a macro-level perspective or a micro-level perspective, which cannot answer how firms establish connections in their virtual clusters to promote innovation. Therefore, using large-scale patent data and topological clustering algorithms, this study explores the impacts of firms’ characteristics within the virtual cluster on their innovation in the global hydropower industry from 1987 to 2019. The findings suggest that firms have better innovation performance with higher degree centrality and more structural holes within the virtual cluster. Moreover, small firms benefit more from degree centrality within the virtual cluster than big firms. This paper makes up for the lack of recent research on virtual clusters and provides implications for managers and policymakers.