Moving or doing? Knowledge flow, problem solving, and change in industrial networks Ulf Andersson a , Desirée Blankenburg Holm a , Martin Johanson a,b, ⁎ a Department of Business Studies, Uppsala University, Box 513, SE 75120 Uppsala, Sweden b Department of Social Sciences, Mid Sweden University, SE 851 70 Sundsvall, Sweden Received 1 October 2005; received in revised form 1 April 2006; accepted 1 September 2006 Abstract For decades, scholars have put forward the idea that change in industrial networks depends on the relationships and networks themselves. However, models are still lacking that conceptualize the heterogeneity of relationships and networks and that show how this heterogeneity actually affects change. This paper puts forward a model suggesting that network structure–in terms of an open or closed system–and relational embeddedness together affect the ways knowledge is gained, given knowledge flow and problem solving as two sources of knowledge. Moreover, the paper proposes that this effect influences the tacitness and novelty of the knowledge gained. Additionally, network structure and gained knowledge are postulated to have an impact on two changes, the establishment of relationships and the development of technology, which take place in industrial networks. The paper advances six propositions and concludes with implications for research and practice. © 2006 Elsevier Inc. All rights reserved. Keywords: Network; Structure; Knowledge; Change 1. Introduction Most industrial firms operate in markets that are structured as networks, where firms have long-term relationships with customers and suppliers. These structures tend to be stable over time, but are at the same time characterized by change (Gadde and Mattsson, 1987). Stability arising from the interdependence between firms makes the need for coordination significant. Paradoxical as it may seem, changes are therefore very often carried through within relationships. Thus, the networks constituted by the relationships have both an inherent dynamism as well as an inflexibility that represents both possibilities and constraints for the firm. Some changes are of a structural nature and arise in the firm's proximity, as for instance when relationships between customers and suppliers cease to exist or come into existence, or when new products or processes come into use. These kinds of changes in the network might lead to reactions by the firm, or the firm itself may be the very actor causing changes in the network, for instance by establishing new relationships or developing new technologies. Although the establishment of relationships and technology development are not exhaustive, they represent two important issues in the marketing literature: finding new markets and finding new products or technology. The purpose of this part of the paper is to briefly describe how relationship establishment and technology development are dealt with in the literature and then suggest why these changes emerge differently, depending on the firm's relationships and networks. The fact that change builds on new knowledge must be dealt with as a fundamental issue. Given that the industrial firm is operating in relationship networks, new knowledge might flow through the network from one firm to another or be created within the firm or within the relationship between two firms, as an outcome of problem solving. Hence, one must make a distinction between knowl- edge flow and problem solving. Several scholars observe that both the network and the relationships in themselves have an impact on how the industrial Journal of Business Research 60 (2007) 32 – 40 ⁎ Corresponding author. Department of Business Studies, Uppsala University, Box 513, SE 75120 Uppsala, Sweden. Tel.: +46 184711613; fax: +46 184716810. E-mail address: martin.johanson@fek.uu.se (M. Johanson). 0148-2963/$ - see front matter © 2006 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2006.09.010