How do network ties affect firm performance growth and its variability? The mediating roles of exploratory and exploitative knowledge utilization

Abstract

In studying the implications of alliance networks on firm performance, one stream of research has underscored the structural properties of alliance networks whereas another has highlighted alliance partner characteristics such as partner trustworthiness, relationship duration, and relationship quality. Grounded in the knowledge-based view (KBV) and the social capital theory (SCT), this study examines how strong ties and bridging ties facilitate firm performance through the mediation of exploratory utilization and exploitative utilization in the context of alliances. Analysis of 332 manufacturing firms in China reveals a full mediating role of ERU. Meanwhile, the findings reveal that strong ties (or bridging ties) have a positive effect on performance growth, but no effect on performance variability through exploitative utilization. More specifically, we find a double-edged effect of exploratory utilization on firm performance. This study advances alliance research by reconciling the two divergent perspectives. We conclude with a discussion of future directions for research.