Agency in Network Signaling: When Do Biotech Firms Signal their Alliance Formation in Press Releases

Abstract

Social network research suggests that actors are strategic in forming and activating social structures. Actors strategically manage their networks in order to reap the direct benefits of networks such as access to information or resource. Yet, network research has not fully investigated the extent to which agency exists in reaping the indirect benefits of networks. I examine whether agency extends beyond formation and activation to also apply to the signals organizations send to audiences about the status of the partners with which they affiliate. I address the following research question: to what extent does partner’s relative status influence the organization’s choices of sending signals about their networks? In an analysis of press releases about strategic alliance formation by biotechnology firms, I find support for the claim that firms are strategic in sending signals to audiences about their alliance partner. This paper contributes to social network research by connecting research on agency in networks and signaling benefits of networks. The key implication advanced by the paper is that signals about partners constitute another source of network benefit, in addition to the direct materials resources derived from actors’ relations and positions within a social structure.