Resource idiosyncrasy, performance, and inter-firm small-world networks

Abstract

Purpose – Many networks take a small-world structure, with a high degree of clustering and shortcut ties that reduce the path-length between the clusters. It can be argued that small-world networks have benefits that are simultaneously related to network closures and the spanning of structural holes, but research on the network members’ performance is nonetheless inconclusive. The purpose of this paper is to argue that the concept of resource idiosyncrasy can explain the mixed findings. Firm idiosyncratic resources are not easily generalizable across enterprises. Design/methodology/approach – Industries may vary in terms of resource idiosyncrasy, and the paper elaborates how this can moderate shortcut ties’ effect on performance in an inter-firm network. Findings – If resource idiosyncrasy predominates in an industry, the paper proposes that inter-firm shortcut ties may increase performance, whereas shortcut ties may decrease performance if non-idiosyncratic resources predominate. Originality/value – Applying the concept of resource idiosyncrasy as a moderating variable, the paper aims to explain shortcut ties’ effect on performance in an inter-firm network. The theory advanced here can have practical implications and also motivate future empirical studies to gain further knowledge about small-world networks’ effect on performance.