Informal Managerial Networks and Formal Firm Alliances

Abstract

We investigate the relationship between managerial-level advice ties and organizational-level alliance ties in the context of an institutionalized biotech cluster. Cross-level processes are assumed to influence networking activities of managers and their organizations and lead to specific structural patterns characterizing networks with two levels. Applying exponential random graph models (ERGMs) to multilevel network data collected in a German biotech cluster we find that formal strategic alliances and the informal exchange of advice are inseparably interdependent. Managers have a higher propensity to exchange advice if their organizations are allied. Moreover, managers with many informal ties belong to firms with few alliance partners and vice versa.