Network influence and organizational performance: The effects of tie strength and structural equivalence

Abstract

Summary We combine theory and empirical evidence to develop and test three related claims about how ties strength and structural equivalence affect interorganizational performance similarity. First, network partners attain similar levels of performance because direct network ties facilitate information and resource sharing, and the diffusion of organizational practices. Organizations occupying similar network positions attain similar levels of performance because they face similar competitive constraints. Second, because mechanisms underlying performance similarity implied by direct network ties and similarity in network positions are different, strength of network ties and network position affect different dimensions of organizational performance. Third, we expect that tie strength will affect aspects of performance that are more likely to be influenced by processes activated by the direct contact between network partners. We expect structural equivalence to affect more strongly those aspects of organizational performance that are more directly influenced by competition. An analysis of interorganizational networks and organizational performance within a regional community of hospitals provides evidence in support of these claims. Models estimated on a sample of 8190 interorganizational dyads suggest that the effects of tie strength and structural equivalence on organizational performance are highly differentiated and contingent on specific aspects of performance. We show that these conclusions are robust with respect to a wide variety of other factors that may be responsible for performance similarity including competitive interdependence, structural homophily, and resource complementarity.