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While the outcomes of brokerage have been extensively investigated, the issue of when and why brokerage structures persist or decay has attracted relatively little research interest. Taking the per...

Research Summary Extant empirical work partitioning the variance in firm (business segment) profitability has identified industry, corporate parent, business segment, and time as key sources. However, this variance decomposition research stream has treated firms as atomistic, autonomous entities. We employ a fast-unfolding community-detection algorithm to detect firms' network memberships and use the Shapley Value method to isolate the effect of the firm's alliance network, in addition to industry, corporate parent, business segment, and year effects, on the variance in business unit performance. Our findings demonstrate that the effect of the firm's alliance network explains 11% of the variance in firm ROA among 16,381 business segments from 1979 through 1996. We also extend the time period through 2018 and find that our results broadly hold. Managerial Summary In the search for superior firm performance, managers typically focus their attention externally on profitable industries in which to operate, as well as internally on their firms' idiosyncratic and valuable resources and capabilities. In addition to these profitability sources, our work suggests another important, but heretofore overlooked, factor in the managerial quest for competitive advantage: the value-creating potential of alliance networks. We employ a machine-learning algorithm to detect firms' network memberships. Our findings indicate that as much as 11% of the variance in firm profitability (ROA) is explained by the network of alliances of which the firm is a part. Our study also implies that the emphasis on networks continues to be relevant in a technology age in which industry boundaries are blurring. Published version

Insights from social network research have generated significant advancements in disciplines such as sociology, economics, and psychology. In comparison, the incorporation of social network ideas into international business (IB) research remains more limited. The purpose of this special issue is to foster further research on social networks in IB. In our introductory essay, we provide a brief overview of network research in the IB domain to give a sense of some of the major ongoing themes and to illustrate how the social network approach can provide fresh insights and add substantive value to the field. To emphasize the considerable potential of using social network theories and ideas to advance research and understanding in IB, we also indicate some future directions. We follow these with a summary of the five articles in the special issue.

Much research has shown that firms’ ego network configurations—i.e., structural holes or network closure—help them achieve superior innovation outcomes. However, little is known about how the stabi...

Research Summary: We ask if managerial opportunism is a significant problem in alliance partner choice and examine the role of corporate governance mechanisms in explaining this choice. Using a sample of 313 alliances of U.S. firms from the pharmaceutical and biotechnology industries from 1992 to 2010, we find that managerial incentives lead to managerial preference for relationally risky distant partners over existing and new close partners. Further, board monitoring encourages managers to pursue existing and distant partners over new close ones, choices aligned with shareholder interests. In addition, we find that board monitoring substitutes for managerial incentives in alliance partner choice. We contribute to the literature on alliance partner choice to identify an important, and hitherto, unexplored perspective. Managerial Summary: This article examines whether managers and shareholders view alliance‐related risks differently, and how the divergent interests between managers and shareholders affect alliance partner choice. We argue that managers’ concern about their loss of employment and compensation from alliance failure impedes the choice of relationally risky alliance partners that may increase shareholder value. We also argue that managerial stock ownership and board monitoring mitigate this managerial propensity. Our findings suggest that stock ownership owned by managers and strong board monitoring are effective governance mechanisms to align managers’ interests with those of shareholders. Our study offers a novel perspective to understand alliance partner choice by viewing the firm as an entity comprised of fragmented interests.

Research in a number of fields has shown that brokerage is typically fragile while creating consequential outcomes. However, little work has examined the conditions under which brokerage ends, and furthermore, whether and when it terminates with closure in a closed triad that includes the broker, or in a dyad that connects the previously-disconnected alters but disintermediates the broker. We employ a comprehensive theoretical framework drawing on constrained agency to study these questions in a context of organizational innovation. Specifically, we investigate the role of hierarchy, inventors’ network neighborhoods and knowledge differences in shaping the evolution of brokerage. We test our ideas in the a setting of co-patenting in 41 large Chinese research-intensive organizations over the period 1996-2008, with a dataset of 36,338 patents applied for by these organizations. We first show that the type of brokerage ending matters for innovation outcomes by demonstrating that disintermediation creates more subsequent innovativeness than closure. Thereafter, we use a two-step model to first model the termination of brokerage and in the second step to predict the type of closing: disintermediation or closure. Our results show that the broker's and alters’ hierarchical rank similarity promotes disintermediation, as does alters’ connectedness in network neighborhoods, while knowledge differences among the broker and alters encourage the evolution of brokerage toward closure. We spell out the implications of our findings for organizational innovation and the management of R&D.

We investigate whether and under what conditions IPR reforms matter for domestic firms’ outcomes. Given that prior research has mostly adopted an inward focus on firm behavior in reforming countrie...

Research summary: In family businesses, investment decisions often involve both socioemotional wealth and economic considerations. Focusing on new technology adoption, we argue that multiple dimensions of socioemotional wealth contribute to complex effects within different types of family firms—depending on the level of family control—as well as in contrast to non-family firms. Results based on cable TV operators from 1983 to 1987 confirm that family ownership correlates negatively with technology adoption, especially when family owners hold a minority rather than majority position. We also show contingencies based on performance improvements and competitive threats. Our arguments contribute new insights about the tensions between economic and socioemotional factors within minority family ownership that are absent from non-family firms and more pronounced than in majority family firms. Managerial summary: We find evidence of greater reluctance toward new technology adoption among firms with minority family influence than majority family influence. This suggests that goals related to socioemotional wealth only partly explain the cautious decision-making observed in family firms, with further caution arising from conflicting priorities between family and non-family owners. Recent performance improvements help offset the reluctance to adopt new technology, albeit to a lesser degree among firms with minority family ownership. High levels of competitive threats also offset the reduction in new technology adoption, and contrary to expectations, to a greater extent among minority family firms. Copyright © 2016 John Wiley & Sons, Ltd.

Research summary: Although prior research has suggested that equity ties are important for business groups, less attention has been paid to the specific mechanisms through which equity ties create value. We develop a framework that specifies how centralization of intragroup equity ties affects the performance of group affiliates. We use the exogenous shock of the 2008 financial crisis and a difference-in-differences analysis of 51,730 observations of business group affiliates in Taiwan to show that centralization of equity ties enhances affiliate performance, but such effects weaken when the environment becomes turbulent. Moreover, we find that listed affiliates obtain fewer benefits from centralization than unlisted affiliates. Overall, our study deepens scholarly understanding of not only how groups create value, but also how value is differentially appropriated among affiliates. Managerial summary: Our research speaks directly to owner-managers of business groups with respect to creating an optimal equity network structure that binds the affiliated firms of the group. Our findings suggest to managers that the overall structure of equity ties in a business group has major implications for the performance of the affiliate firms of the group, and the network structure within the group should be designed deliberately and thoughtfully on an on-going basis. In particular, control through centralized equity ties is performance-enhancing in normal periods, but such control may be counterproductive as turbulence increases in business environments, or as the number of listed group firms increases. Hence, owner-managers may consider optimizing the network structure by lowering the degree of centralized equity ties under such circumstances, or at a minimum, lowering centralized control. Copyright © 2016 John Wiley & Sons, Ltd.

Drawing on the alliance learning literature, we propose that a firm's relative capability to learn partner-specific know-how holds the key to understanding the learning race phenomenon and its performance consequences. Specifically, we argue that a firm with higher specific learning capability relative to its partner's will be rewarded with superior stock performance. We also contend that equity alliance governance and market similarity between partners moderate this relationship in opposite directions. Equity alliance governance motivates firms to suppress competitive learning and thus reduces the positive impact of the specific learning capability gap on abnormal stock returns, while market similarity between partners aggravates the learning race and strengthens the positive impact of the specific learning capability gap. Results of an event study of 610 R&D alliances in the U.S. computing and biopharmaceutical industries in the period 1984-2003 support our hypotheses. Our study contributes to a better understanding of the learning race, its contingencies, and its performance implications

Firms with asymmetric learning capabilities often form alliances with each other. With the potential risks of learning race in alliances, it appears that firms with inferior learning capability are...

The goal of this symposium is to review some important theoretical perspectives associated with interfirm collaborations (or interfirm ties) to better understand how some of these theories can be b...

The field of international business examines the issues facing organizations and individuals who navigate cultural boundaries. An important and underexplored topic is antecedents, consequences, and...

In exploring the downsides of partnering with large firms, extant literature has typically focused on the external perspective and the alliance characteristics of small firms. We argue that jointly considering the internal dimension of firm capability together with the external perspective promises to yield a fuller understanding of the nature and consequences of a small firm's relationships with large partners. We analyze a longitudinal dataset on the alliance activities and growth of small, independent studios in the U.S. motion picture industry during 1990�2010. Our findings indicate that small firms that engage in higher levels of alliance activity with large partners, i.e., the major studios, realize lower growth benefits from their internal capability

Determining the appropriate level of integration is crucial to realizing value from acquisitions. Most prior research assumes that higher integration implies the removal of autonomy from target managers, which in turn undermines the functioning of the target firm if it entails unfamiliar elements for the acquirer. Using a survey of 86 acquisitions to obtain the richness of detail necessary to distinguish integration from autonomy, the authors argue and find that integration and autonomy are not the opposite ends of a single continuum. Certain conditions (e.g., when complementarity rather than similarity is the primary source of synergy) lead to high levels of both integration and autonomy. In addition, similarity negatively moderates the relationship between complementarity and autonomy when the target offers both synergy sources. In contrast, similarity does not moderate the link between complementarity and integration. The authors’ findings advance scholarly understanding about the drivers of implementation strategy and in particular the different implementation strategies acquiring managers deploy when they attempt to leverage complementarities, similarities, or both.

Some research suggests that knowledge transfer and performance suffer when entities are distant from each other, while other work emphasizes that distance is beneficial by allowing firms to access novel and diverse knowledge. We resolve this paradox by focusing on the differing roles of MNC subsidiaries and headquarters vis-a-vis its alliances: distance between technology alliance partners and subsidiaries hurts MNC performance, but MNCs benefit when such partners are located afar from headquarters. We find support for these ideas in a longitudinal sample (2002 to 2006) of 126 Fortune 500 firms. Our work broadens the concept of the geographic scope of the firm, and suggests that MNCs gain by searching globally but collaborating locally.

Research by Dyer and Chu (2000) suggests that trust in exchange varies significantly across borders and influences the level of trust in cross-border exchange dyads. However, while this is a good start, research has yet to develop the concept that not only can the countries of origin of the exchange partners influence the nature and outcomes of dyadic trust but also the country where the exchange dyad is located. Furthermore, such home and host country differences may interact with dyad-level differences in trust creation capabilities and influence trust violation and repair. We develop a framework and propositions along these lines.

Extant work in the network literature suggests that brokers’ advantages dissipate quickly as alters come to know about brokerage. However, taking the alter’s perspective, we ask whether and under what conditions an alter might choose to continue its relationship with the broker despite having information about the broker and the other alter. We argue that the broker-alter relationship is more likely to persist when they are geographically collocated, for reasons of trust, informal multiplex ties and lowered transaction costs. We further posit that the relationship between alter and broker is less likely to persist if the other alter is a competitor. Finally, we posit that the positive effect of collocation between alter and broker will be negatively moderated in case of transactions with a competing alter. We test our hypotheses using a unique dataset of 2166 transactions between a ship operator (the focal alter) over the period 2011-2015, with 191 brokers and 522 associated alters (charterers) in the bulk shipping industry. Our results broadly support our theorizing. We thereby contribute to the stream of research studying the role of geography and network persistence, and also explore the contingent effects of alter characteristics on the continuation of the structural hole.

This study introduces a theory of “network bounding,” which pertains to the formalization of informal network relationships. Network bounding views formalization of a group as the establishment of ...

Executive Overview The application of social network analysis to interorganizational contexts has seen an explosion of interest in the past several years. We argue that not only does the network or structural perspective add explanatory power to scholarly understanding of organizations' behavior and outcomes, but that it expands the universe of observed phenomena from an autonomous to a relational view for studying and explaining organizational action and outcomes. We develop an organizing framework based on three levels of network analysis (the dyad, the ego, and the whole network) and four theoretical mechanisms (resource access, trust, power/control, and signaling) to organize and review the key findings and debates in the interorganizational network literature. We point to avenues for future research based on the linkages across the boxes in our framework, gaps in the framework, and finally, extensions beyond the framework.

How can relationships be repaired after being damaged? There is a small but growing body of work on the topic from a number of different disciplinary perspectives using different theoretical lenses and at different levels of analysis. We begin by examining the existing streams of work on relationship repair and organizing them into a conceptual framework. We then consider four questions that probe assumptions or overlooked issues in existing research with the intent of moving toward a more comprehensive conceptual foundation.

Drawing on expectancy, equity, and collective effort theories, we argue that the level of involvement of individual firms in multifirm alliances depends on both individual firms’ self-focused interests and factors stemming from the firms’ membership in the alliance group. We apply our theoretical arguments to the context of venture capital syndicates and test the hypotheses using data about 160 venture capital firms (VCFs) drawn from a survey instrument and a secondary data source. The results show that individual firms’ involvement in a multifirm alliance is somewhat dominated by group effects; specifically, financial stake relative to that of the group and the reputation of the other group members significantly influence the focal firm's involvement. However, focal firms’ involvement relates negatively to their own reputation. We discuss the implications of these findings for future research. Our results imply that firms in multiparty alliances pay attention to the characteristics of their alliance partnership to calibrate their own behaviour. In our specific setting, VCF involvement in syndicates depends more on relative syndicate characteristics than on the focal firm's absolute level of investment. Further, because reputation is negatively associated with involvement, entrepreneurs and potential syndicate entrants should ensure that they fully leverage VCF reputation to achieve their goals.

Defining 'geographic signature' as a firm's national presence, we apply it to the pharmaceutical and biotechnology industries, deemed as 'alter' to each other. Higher firm performance is associated...

We make the case for fresh approaches to examine the role of trust in international collaborations, based on the idea that not only do the levels of trust differ across international borders but also both the nature of trust and the institutional and cultural support for trust can vary across different national contexts. Collaboration partners from different countries are therefore likely to bring either symmetric or asymmetric conceptions of trust to the business relationship. We develop a model and propositions linking symmetry and asymmetry in the institutional and cultural support for trust in international collaborations with the degree of partner interdependence, and identify implications for governance and trust-building investments. We conclude with some suggestions for research that incorporates trust asymmetries between partners. Journal of International Business Studies (2006) 37, 21–29. doi:10.1057/palgrave.jibs.8400180

While strategy scholars primarily focus on internal firm capabilities and network scholars typically examine network structure, we posit that firms with superior network structures may be better able to exploit their internal capabilities and thus enhance their performance. We examine how innovative capabilities—both those of focal firms and those they access through their networks—influence the performance of Canadian mutual fund companies. We find that a firm's innovative capabilities and its network structure both enhance firm performance, while the innovativeness of its contacts does not do so directly. Innovative firms that also bridge structural holes get a further performance boost, suggesting that firms need to develop network-enabled capabilities—capabilities accruing to innovative firms that bridge structural holes. Copyright © 2005 John Wiley & Sons, Ltd.

The extensive literature on geographical clusters has argued that firms stand to gain from the knowledge spillovers and the easy availability of skills in regional agglomerations. At the same time, the research on strategic alliances, particularly in technology-intensive industries, views alliances as vehicles for the transfer of technology and knowledge. Does membership in a geographical cluster or a network of alliances}an alliance cluster}benefit firms equally? More importantly, does it matter whether firms form alliances with firms within their geographical cluster, or do they do better by reaching out beyond their cluster? In this paper, we investigate these and other related questions in the context of technology-intensive industries such as biotechnology and argue that the high-level knowledge sensing and acquiring needs of firms in such industries may require combinations of both kinds of knowledge-access mechanisms. We use the BioScan database to obtain 648 alliances for the period 1985–1998 among 248 public companies, and complement it with COMPUSTAT data to examine the effect of clustering and alliances on market value. Our results suggest that merely being part of geographical clusters is not enough, and nor is it adequate for firms to join alliance clusters. Rather, firms gain by forming alliances both within and beyond their geographical clusters, which highlights the complexities of acquiring technology-intensive knowledge and suggests that the acquisition of knowledge in technology-intensive settings is best achieved through mechanisms both formal and informal, both proximate and distant. Copyright # 2004 John Wiley & Sons, Ltd.

Geography and its effect on the formation and stability of network structures is conspicuously absent from the studies of structural change. We suggest that geographic distance between the network’...

Why do some networks perform better than others? Although strong ties have been shown to be beneficial for interorganizational activity at the dyadic level, we argue that this relationship may be m...

On-line marketplaces raise several interesting issues, among them the relevance of location when content is digitized, and the assessment of a supplier's capabilities when buyers worldwide only have electronic contact with sellers. In global B2B on-line marketplaces, market microstructures, i.e. which firms compete for the same customers, are thus likely to be influenced by how customers value location and firm capabilities in their decisions to do business with different suppliers on-line. We suggest that both these sets of attributes will continue to matter on-line—firms possessing similar capabilities, as well as firms that are similar in location by country, time zones or clusters, will compete for business from the same customers. We model the similarity in competitive positions between pairs of firms based on the overlap in their customer networks, using data on actual interactions between supplier and customer banks on an electronic trading system. Using QAP network regression techniques on the 100 largest banks in this industry, we find that similarity in capabilities influences who competes with whom, and that location still matters in a global B2B exchange. Interestingly, location influences who a firm's competitors are, but not where its customers are from. Copyright © 2001 John Wiley & Sons, Ltd.