Network ties and absorptive capacity for learning and decision-making

Abstract

The decision-making literature emphasizes that social ties play an important role in high-stake decisions. However, research on small- and medium-sized enterprises has only partially covered these influences by focusing on the direct link between social ties and the effectiveness of decision-making. In this paper, we focus on absorptive capacity of decision-makers as a critical mechanism that gives social ties their potency in explaining collaborative decision-making in an inter-organizational network (ION) context. In a sample of key individuals in 13 export consortia, this study identifies the extent to which the characteristics of personal network affect individuals’ absorptive capacity. Our results suggest that weak and heterogeneous ties between key individuals in an ION are central mechanisms that influence their ability to access, assimilate, transform and utilize information. However, indirect ties do not show a positive impact on absorptive capacity, as it was hypothesized. Our findings add to the literature on the role of network ties in collaborative decision-making by making explicit a mechanism through which personal network of individuals in an ION influence their information-processing capabilities for effective decision-making. We show that decision-making in interfirm networks is not only a political process but also a learning process.