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The purpose of this paper is to investigate the impact of large‐scale collaboration network structure on firm innovation capability.

The authors utilize negative binomial regression models to explore the relationships between network structure and patent productivity.

Results demonstrate that firms embedded in alliance networks with higher reach will have greater innovative output, but fail to support the higher clustering enhances innovative productivity significantly, which is different from recent concerns regarding positive effects of higher clustering on patent output. The authors also find that the effect of alliance network as a conduit of knowledge transfer decays over time. Furthermore, both clustering and reach have mutually positive effects on the firm innovation with increases in the other.

Network structure attribute should be considered adequately when firms develop alliance activities and when relevant government departments make industrial policies.

This paper aims to fill the gap in the literature by providing the first systematic research of the impact of large‐scale collaboration network structure on firm innovation in China, and exploring the implications for firms to develop alliance activities and for relevant government departments to make industrial policies. This paper adds new evidence to the topic that alliance network is an important mechanism of knowledge spillover in China.