Inter-firm Networks Research Articles

Bonding versus bridging: disentangling effects of CEO social capital on firm exploratory innovation

CEOs and the influence of their social networks have been considered as important drivers for firm innovation. Yet, both theories and empirical evidence are lacking. To advance this stream of research, our paper fills the gap by exploring how bonding and bridging social capital influence exploratory innovation in firms. Through an examination of executive social ties and patent‐based technology indicators, our findings reveal nuanced relationships: Excessive bonding social capital exponentially hampers exploratory innovation due to information overload, while bridging social capital enhances exploratory innovation and mitigates over‐bonding effects (inverted U‐shape). We test our hypotheses with a sample of 7,540 firm‐year observations of public U.S. firms from 2000 to 2014. Our study not only contributes to research on strategic leadership, social capital, interfirm networks, and technological innovation but also offers important managerial implications. It suggests that CEOs and R&D directors foster balanced social networks in their pursuit of enhanced innovation management.

Firm Default Prediction by GNN with Gravity-Model Informed Neighbor Node Sampling

AbstractFirm default prediction is important in credit risk management and understanding economic trends. Both practitioners and academic researchers have long studied it. While traditional statistical methods such as discriminant analysis and logistic regression have been used recently, machine learning and deep learning methods have been widely applied. The graph neural network (GNN) is one of the latest applications of deep-learning approaches. With the use of GNNs, it is possible to reflect the non-linear relationships of features among neighboring companies around the target company, whereas ordinary machine learning and deep learning methods focus only on the features of the target company. However, when handling large-scale graphs such as inter-firm networks, it is difficult to apply vanilla GNNs naively. Although uniform neighbor node sampling is commonly used for large-scale graphs, to the best of our knowledge, no research has focused on better sampling methods for GNN applications for default prediction. From the practical viewpoint, it means which companies should be considered with priority for firm default prediction. In this study, we propose a novel gravity model-informed neighbor sampling method based on the estimated transaction volume by utilizing knowledge from econophysics. The scope of this research is to determine whether we can improve default predictions by considering neighboring companies with larger transaction amounts compared to ordinary uniform sampling. We also verified that the proposed method improves the prediction performance and stability compared to GNNs with other sampling techniques and other machine learning methods using real large-scale inter-firm network data.

The Effect of Strategic Change on Strategic Performance Mediated by Inter-Firm Network and Strategic Alignment

The Effect of Strategic Change on Strategic Performance Mediated by Inter-Firm Network and Strategic Alignment

Inter-organisational human resource management and network orientation of worker representatives: a practice-based perspective

We develop a practice-based framework of inter-organisational human resource management that puts multi-employer work arrangements in inter-firm networks at its centre. By reinterpreting existing knowledge on multi-employer work arrangements and how they are managed, we delineate four processes in the assemblage of inter-organisational HR management. To illustrate the usefulness of our framework, we explore the question of whether and how an inter-organisational HR management develops in four exemplary cases of multi-employer work arrangements. These cases reveal that the quality and degree of inter-organisational HR management varies considerably, also depending on whether worker representatives show network awareness and orient their activities towards inter-organisational relations.

Role of Managerial Social Ties in Firm Performance: Lessons from Grain-Milling Firms in Tanzania

ABSTRACT This article explores the role of managerial social ties in the performance of grain-milling firms in Tanzania. Specifically, it explores the composition of managerial social ties, investigates the resources embedded in the explored ties, and examines their influence on firm performance. A qualitative study was done based on 22 case studies of grain-milling firms operating in selected commercial cities in Tanzania. The findings reveal the major types of managerial social ties associated with the families, friends and ethnic groups. Interestingly, business ties (competitors, customers and suppliers) were embedded in the top managers’ connections rather than in their firms’ routines and processes. It is also evident that firm performance was greatly influenced by managers’ social ties, particularly with family members, which were beneficial in terms of market expansion, and access to micro-credits and new business ideas. Unlike previous studies, this study amplifies the role of social embeddedness in the development of inter-firm networks. This is because of the dominance of owner-managers in of the business operations hence hard to distinguish between the owner and the firm. The article adds knowledge on the sources of social capital and the kind of resources generated by social ties.

Inter-Firm Network and Analyst Effort Allocation

Inter-Firm Network and Analyst Effort Allocation

The dynamic impact of inter-firm network agreements

This paper sheds new light on the dynamic effects of inter-firm network agreements on firm performance and investigates whether the specific combination of partner profiles triggers heterogeneous causal effects. Using a staggered difference-in-differences design, we find that participation in network agreements has a persistent impact on firms’ revenues, value added, and EBITDA that is amplified at least through the third year of collaboration. Our results show that micro firms benefit more from collaboration in network agreements, especially when they enter into relationships with larger partners. In addition, companies benefit more from network ties when most of their partners belong to the same travel-to-work area.

Collaborations between MNEs and entrepreneurial ventures. A study on Open Innovability in the energy sector

As environmental challenges continue to mount, sustainable innovation has become a pressing need. Small entrepreneurial ventures and multinational enterprises (MNEs) have started to join forces to address this challenge. However, the dynamics of this collaboration, especially from the standpoint of smaller ventures, remain largely unexplored. In this paper, we shed light on the division of entrepreneurial labor in global interfirm networks by investigating the collaboration between MNEs and entrepreneurial ventures in the energy industry, addressing SDG goal 7. We conduct semi-structured interviews with six ventures and employ grounded theory to analyze the data. Our findings indicate that smaller ventures need to be ready to overcome obstacles when collaborating with MNEs, as the expected benefits drive the partnership. Notably, the ventures express interest in continuing the collaboration and share similar paths of growth, including accidental internationalization.

Building a Macroeconomic Simulator with Multi-Layered Supplier–Customer Relationships

This study constructs an agent-based model suitable for analyzing the propagation of economic shocks based on a macroeconomic agent-based model structure that covers major economic entities. Instead of setting an upstream and downstream structure of firms in the inter-firm networks, our model includes a mechanism that connects each firm through supplier–customer relationships and incorporates interactions between firms mutually buying and selling intermediate input materials. It is confirmed through the proposed model’s simulation analysis that, although a firm’s sales volume temporarily falls due to an economic shock of the type that causes a sharp decline in households’ final demand, the increase in assets held by households as they refrain from spending rather expands their capacity for consumption. As a result, after the economic shock ceases to exist, the firm’s sales volume tends to be even greater than that of the preceding periods of the shock. Furthermore, we found that when the sales volume of products in a final consumer goods sector falls during the shock, the falls in sales in the non-final consumer goods sectors are suppressed due to replacement demand, and the increase in sales volume for the non-final consumer goods sectors is moderated after the shock ceases to exist.

Do inter-firm networks sustain the resilience of regional industrial ecosystems? A network-based analysis of the South Korean automotive industry

ABSTRACT Firms may grow and decline, and their impact on the regional economy can be attributed not only to each firm but also to their inter-firm networks in the region. Therefore, firms and their connectivity should be understood within the context of the regional industrial ecosystem. To empirically show the role of inter-firm networks for the sustainability of the regional industrial ecosystem, this study analyses the automotive industry in South Korea. The Automobile Parts Yearbook, the main data source for the study, provides the addresses of 892 firms and the connectivity between five major automakers and their subcontractors. A network-based approach is chosen to untangle the complex production network and compare the network structure by region. Specifically, the number of nodes, links and connections, as well as density and modularity measures, are analytically compared across six sub-regions in the country. There are more links within the groups than between the groups, which suggests preferential attachment in the network structure. Multiple centralised structures are observed to exist around the five major automakers in sub-regions in South Korea. The empirical results of the paper imply that firms with multiple trading networks in the regional industrial ecosystem tend to recover from an industrial crisis or employment shock crisis more successfully than companies with a single trading network. Overall, these findings highlight the importance of understanding the role of inter-firm networks in regional industrial ecosystems for promoting sustainability and resilience.

Investigating the impact of digital transformation on relationship and collaboration dynamics in supply chains and manufacturing networks – A multi-case study

The digital transformation (DT) is reshaping the economy and society. In supply chains (SCs), DT involves adopting digital technologies to collaborate. DT opportunities are particularly diverse in globally distributed manufacturing networks (GDMN) and SCs. Here, DT influences both internal and external collaboration activities, i.e., configuration and coordination of the intra-firm network and network relationships, structure, and governance in the inter-firm network. This study investigates if and how DT changes relationship dynamics and collaboration efficiency in SCs and distributed manufacturing networks through information sharing and jointly used digital technologies. While existing studies have mainly focused on individual digital technologies and their potential for SCs and manufacturing networks, this study contributes to a better understanding of the adoption process and the change in relationship dynamics through DT and joint use of digital technologies. The methodology follows a qualitative approach in a multi-case study setting with six multi-national manufacturing companies operating extensive intra-firm and inter-firm networks. A theoretical framework based on organisational information processing theory guides the study. Data is collected in semi-structured interviews and enriched by secondary data from internal company documents and publicly available sources. The results indicate that digital tools are triggering a centralisation trend in intra-firm networks that leverages efficiencies but is met with stakeholder scepticism. SC collaboration is becoming increasingly dynamic through digital tools, which the SC partners often promote. Non-adopters are not being dropped yet, but the pressure of digital transformation is increasing and becoming more of a threat to small businesses.

Interfirm Network Structure and Innovation Creation: a Simulation Study

Interfirm Network Structure and Innovation Creation: a Simulation Study

How Internal Capability Matters in Increasing Firm Performance? An Empirical Analysis of Interfirm Network in Indonesia’s High-Tech Industry using Multi-Mediation Model

This study aims to determine the different effects of the multi-mediating role of innovation capability, foreign ownership, export, and royalty expense in the firm’s network on the performance of Indonesia’s high-tech firms. This study uses data from the high-tech industry with a total sample of 2,578 firms from the Indonesian Central Statistics Agency. The study results prove that there is a positive and significant effect of the Interfirm network on firm performance. The interfirm network also positively and significantly influences Innovation Capability, Export Participation, Foreign Ownership, and Royalty Expense. Innovation capability and foreign ownership as part of internal capability also positively and significantly influence firm performance both directly and as a mediator. However, external capability has a negative influence as shown by exports and royalty expenses on firm performance, either directly or indirectly, as a mediator. Internal capability has an important influence on firm performance compared to external capability. Firms should have internal knowledge transfer rather than depending on the market. Innovation capability has the best mediating role compared to other mediating variables and the best strategy that the firm can do is to implement an interfirm network strategy in maximizing the firm's performance. Thus, the study results provide input to firms in the high-tech industry to optimally utilize their interfirm network to optimize firm performance. Further research is needed to see the effect of each type of industry in the high-tech industry and outside this industry.

The impact of innovation evolution and interaction control on interfirm network performance

ABSTRACT Most existing studies have focused on the innovation capabilities of organisations within interfirm networks while neglecting to consider the impact of the choice of innovation evolution mechanisms and the degree of internal interaction control on this system. This study addresses this research gap based on the NK model framework to investigate how different innovation evolution mechanisms and the degree of internal interaction control affect interfirm network performance. In addition, we investigate the moderating role played by the frequency of technological change between the innovation evolution mechanism and the degree of internal interaction control of the interfirm network. The results show that to achieve higher performance levels, the interfirm network should be assigned a self-organisational model in the early stage of innovation evolution, while in the later stage of innovation evolution, it should undergo organisational changes and be assigned a federated alliance model to establish an alliance coordination committee with a certain degree of interactive control over the supporting firms. When the frequency of technological change is low, the alliance coordinating committee takes relatively strong control over the supporting firms as the best, and when the frequency is high, the degree of control over the supporting firms should be appropriately weakened.

The role of networks and capabilities in the internationalization of SMEs in North Africa: The case of Egyptian SMEs

AbstractExecutive SummaryThis research studies the role of networks in the internationalization of small and medium enterprises (SMEs) in an emerging country; mediated by internationalization capabilities. Self‐administered surveys targeting 300 SMEs in Egypt were employed, and Structural Equation Modeling (SEM) was used to test the proposed hypotheses. The results indicated that nonbusiness institutional networks have a direct positive impact on Egyptian SMEs' international performance, while the direct relationship between interfirm networks and social networks with international growth showed insignificant results. Moreover, the mediating role of the internationalization capabilities showed significant results between the three types of networks and SMEs' international performance. This study is an original attempt to differentiate among the types of networks, and how each affect SMEs' international growth. Additionally, empirical evidence is provided for the role of networks in building SMEs' internationalization capabilities in an emerging country context, where research has received less attention.AbstractThis research aims to study the role of networks in the internationalization of small and medium enterprises (SMEs) in an emerging country. The research also investigates the mediating effect of internationalization capabilities; namely disruption and value‐adding capabilities in the internationalization process. This study is following a conclusive descriptive research design, utilizing a quantitative methodology using self‐administered surveys. Data were collected from 300 SMEs in Egypt from various industries. The results indicated that nonbusiness institutional networks have a direct positive impact on Egyptian SMEs' international performance. However, the direct impact of interfirm networks and social networks on SMEs' international performance showed insignificant results. Moreover, the mediating role of the internationalization capabilities, namely disruption capabilities and value‐adding capabilities, showed significant results; mediating the relationship between the three types of networks and SMEs' international performance. This study contributes to the networks theory as well as the dynamic capabilities theory, where we postulate that various types of networks support the development of specific capabilities crucial for firms' internationalization. The study is important for SME managers as it identifies the specific importance of business, social, and nonbusiness institutional networks to enhance SMEs' international performance in emerging countries. This study employed AMOS‐SPSS version 21 for data analysis.

Supply chain dynamics beyond optimization: Metabolism of regional inter-firm networks

Sustainable supply chain networks are critical to the survival of companies in interconnected business ecosystems. Today's rapidly changing market conditions require firms to restructure their network resources flexibly. In this study, we quantitatively investigated how firms' ability to adapt to the turbulent market depends on the stable maintenance and flexible recombination of inter-firm relationships. Using the proposed quantitative index “metabolism,” we measured the micro-level dynamics of the supply chain, which represents each firm's average replacement rate of business partners. We applied this index to longitudinal data on the annual transactions of about 10,000 firms from 2007 to 2016 in the Tohoku region, which was affected by the 2011 earthquake and tsunami. The distribution of metabolism values differed across regions and industries, indicating differences in the adaptive capacity of the corresponding firms. We also found the typical balance between supply chain flexibility and stability for successful companies that have survived in the market for a long time. In other words, the relationship between metabolism and duration was not linear but U-shaped, indicating an appropriate metabolism value for survival. These findings provide a deeper understanding of supply chain strategies for adapting to regional market dynamics.

Prospects for growth and prosperity in West Cumbria: Nuclear decommissioning and regional economic adjustment

The objective of the paper is to trace out the effects of decommissioning of the Sellafield nuclear complex on the economy of West Cumbria. I seek to show how decommissioning expenditures are stimulating the formation of an agglomeration of advanced nuclear processing and engineering firms in the region and how this process is reinforced by a diverse array of emerging private and public institutions. With the aid of patent data, I indicate some possible pathways of industrial development in the region. I then proceed to examine how policy makers might enhance the developmental impacts of decommissioning especially in regard to measures focused on inter-firm network activities, training, and institutional infrastructures.

Evolution of Russian and foreign approaches to defining the content of industrial cooperation

Aim. The presented study aims to analyze and substantiate practical recommendations for the formation and application of controlled interaction technologies, the development of importdependent and export-oriented enterprises, as well as systems comprising a unified business space at the meso, macro, and global levels within the framework of inter-firm cooperation during import substitution and localization.Tasks. The authors substantiate their original approach to the formation and development of inter-firm network interaction, which involves integrating the management of the internal and external environment of an import-dependent and export-oriented enterprise of the real sector of the economy at the global, macro, meso and micro levels into a unified business space; consider an important component of strategic management as a function of the formation of managed interaction systems by a unified business environment that determines the sustainable development of enterprises, industries, and regions.Methods. This study uses general scientific and special methods of cognition to investigate the process of finding and applying new forms of enterprise management within the framework of inter-firm cooperation in the context of maximum environmental fluctuations.Results. It is found that scientific interest in cooperation is spiral in nature and each subsequent whorl reflects the realization of the opportunities provided by cooperation with regard to the current and future waves of innovation (for example, as it happens in the current historical period exhibiting the signs of transformation of inter-firm industrial cooperation into cybersocial networks organizing the interaction between man and machine). According to the authors, as industrial cooperation evolves based on a capacious base of theoretical and applied scientific research in the field of formation and management of network entities, it requires additional study of the possibility of development through the implementation of interaction in the systems of a unified business space.Conclusions. The study shows that the systems of a unified business space are a specific and promising form of implementation and management of the development of industrial cooperation that is in demand within the framework of the strategy of innovative development of production and products during the implementation of the policy of import substitution and industrial localization.

Corporate Social Responsibility Knowledge Transfer in Interfirm Networks

This study investigates the effects of the alliance network structural properties on corporate social responsibility (CSR) knowledge transfer in the interfirm network context. Alliances and partnerships allow firms to access valuable CSR knowledge. While most research investigating knowledge transfer focuses on the dyadic level, the current research investigates CSR knowledge transfer within the interfirm network context. By integrating data from multiple datasets, this study investigates how a firm centrality and brokerage in its interfirm network influence its acquisition of CSR knowledge. The findings of 298 firms show that firm betweenness centrality and network brokerage enhance CSR knowledge transfer from its alliance partners. To the contrary, the greater the number of alliance partners (i.e., degree centrality), the weaker is the firm's ability to acquire CSR knowledge.

Licensing early-versus late-stage technologies: The licensee perspective

Inward licensing of technology is an important route for firms to secure technological advances. With varying uncertainties and licensing opportunities along the innovation process, firms face challenges in deciding whether to license technologies during their early stages of development when they present opportunities as well as high uncertainty, or to wait until they have developed further towards commercialization, when they have lower technological uncertainty and are left with few opportunities. Building on studies of interfirm networks, we investigate how a firm's network structure and reputation affect such decisions. Our empirical analysis of licensing agreements in the biotechnology and pharmaceutical industries shows that firms tend to initiate licensing agreements during the early stage of technology development when their network structure is rich in structural holes. This tendency is higher when they are of good reputation. This research contributes to our understanding of how licensing agreements occur along the innovation process.