Fast Success and Slow Failure: An Examination of the Costs of Collaboration across Formal Boundaries

Collaborating across formal boundaries is beneficial for performance outcomes like innovation. Yet it also costly as it requires actors to overcome spatial distance and enter new knowledge domains. The question then arises as to whether the benefits outweigh costs? We seek to answer this question by examining 5079 collaborations in the Internet Engineering Task Force (IETF). Our findings suggest that crossing formal boundaries is positively related to success of the collaboration, as well as efficiency of the project. Yet there are high costs associated with cross boundary collaborations for unsuccessful projects, as these take longer to fail, and therefore hold up resources that could be reallocated to other projects. We simulate the costs for these projects and show that even with a boost in success, the costs are higher than the expected benefits, suggesting that firms may be better off investing in non-diverse projects. This finding has important implications for how we think about organization design and the expected benefits of seeking novelty.