Inter-firm Networks Research Articles

Corporate Strategy and Network Change

Networks change when either the ties or the nodes are modified. Research on interfirm networks has conceptualized network change as being driven almost exclusively by modifications in ties (additio...

Estimation of sales decrease caused by a disaster: Hokkaido blackout after earthquake in 2018

We simulate the inter-firm trading network which consists of approximately 1 million nodes, and we estimate the firm sales in Japan. We apply the gravity interaction model to the real Japanese inter-firm trading network to calculate the money transport between firms. Sales of each firm are evaluated through the scaling relation between the money flow and the sales, and then the total sales are calculated as an economic indicator. This calculation method is applicable to other situations. As an example, we present an estimation of sales decrease caused by the blackout due to the Hokkaido earthquake in September 6, 2018. The total sales are calculated in both cases: before and just after the earthquake. The total loss of sales is estimated as 35 billion yen per day for direct decrease in the firm sales in Hokkaido, while as 90 billion yen per day for indirect decrease in the other areas. The indirect sales decrease is about 2.6 times as well as the direct sales decrease.

Matches between network structure and competitive strategies

Drawing on social network theory and Porter's competitive strategy analysis consistent with extant literature, this study investigates characteristics that leverage the matches between network structure and competitive strategies and explores if the combination of effects can also influence firms' performance. Using data from a special unit within Chinese floricultural cluster, we test the interaction effects between network structure (measured by centrality, structural holes and key ties) and competitive strategies (cost leadership strategies and differentiation strategies) Results show that inter-firm networks with a high degree of centrality should be matched with cost leadership strategies. In addition, these findings indicate that key ties, which may affect how firms process non-redundant resources are a great help to execute cost leadership strategies but are detrimental to the effectiveness of differentiation strategies. Managerial implications and directions for future research are discussed.

Matches between network structure and competitive strategies

Drawing on social network theory and Porter's competitive strategy analysis consistent with extant literature, this study investigates characteristics that leverage the matches between network structure and competitive strategies and explores if the combination of effects can also influence firms' performance. Using data from a special unit within Chinese floricultural cluster, we test the interaction effects between network structure (measured by centrality, structural holes and key ties) and competitive strategies (cost leadership strategies and differentiation strategies) Results show that inter-firm networks with a high degree of centrality should be matched with cost leadership strategies. In addition, these findings indicate that key ties, which may affect how firms process non-redundant resources are a great help to execute cost leadership strategies but are detrimental to the effectiveness of differentiation strategies. Managerial implications and directions for future research are discussed.

Inter-industry Heterogeneity of Inter-firm Network Structure through Data from Business Card Exchange

Inter-industry Heterogeneity of Inter-firm Network Structure through Data from Business Card Exchange

Influence of mentors on networking behaviour of small business owners: a conceptual framework

The core purpose of this paper is to review the literature on networks and networking in relation to mentors within the small business context. The method was a review of literature including research and case studies related to mentors and networks and networking within the small business context from various databases. This literature review presents six propositions and a research framework for future studies in these areas where gaps are identified. New directions offered include: 1) examining the influence of mentors on small business owners' networks (structure, interaction and content) during different stages of network formation for both planned and accidental, or one off interactions; 2) researching the influence of mentors on the two main types of barriers to networking: operational and psychological barriers; 3) whether mentors can affect the success of inter-firm networks between a small business and other businesses.

Influence of mentors on networking behaviour of small business owners: a conceptual framework

The core purpose of this paper is to review the literature on networks and networking in relation to mentors within the small business context. The method was a review of literature including research and case studies related to mentors and networks and networking within the small business context from various databases. This literature review presents six propositions and a research framework for future studies in these areas where gaps are identified. New directions offered include: 1) examining the influence of mentors on small business owners' networks (structure, interaction and content) during different stages of network formation for both planned and accidental, or one off interactions; 2) researching the influence of mentors on the two main types of barriers to networking: operational and psychological barriers; 3) whether mentors can affect the success of inter-firm networks between a small business and other businesses.

Modeling and simulation of Japanese inter-firm network

A modeled Japanese inter-firm trading network is simulated to investigate phase transition structure in money transport. First, the network structure is calculated as a steady state in a stochastic process. Second, the money transport between the firms is estimated in terms of the gravity interaction model. A linear stability analysis is performed to detect the phase transition in the transport. Some of the phase transitions are accompanied by the significant changes in the sales of the several top firms.

From individual social capital to collective social capital: empirical evidence from inter-firm financing trust network

The paper proposes two theoretical hypotheses about how collective social capital is constructed based on the operation of individual social capital in Chinese context: the logic of particularist guanxi operations and the logic of social prestige recognition. The two hypotheses are tested by an empirical study about inter-firm networking for financing supports It is found that the former logic, which is strengthened by guanxi proximity including kinship proximity, geographic proximity, and industrial proximity, would make the focal firm restrain its trust relationship within a particular small group, leading the firm to become part of a sectarian small-group trust network; and the latter logic, which is strengthened by classification homogeneity, would encourage the focal firm to trust unspecified business partners, leading firms to become part of a large-scale open trust network. The trust radius of the focal firm has a mediating effect on the relationship between individual social capital and the collective-level structure of inter-firm financing trust network, thus exerting important influence on the construction of collective social capital.

Change in domestic network centrality, uncertainty, and the foreign divestment decisions of firms

We investigate the role of domestic interfirm networks for the foreign divestment decisions of firms. We argue that firms’ foreign operations risk being divested when a firm becomes more central in its domestic network. Positive changes in firm centrality at home facilitate access to information about new business opportunities, but they may also lead firms to consider reconfiguring their value chain activities and resources across locations. The resulting opportunity costs of maintaining foreign operations could subsequently lead to their divestment. Moreover, we argue that the positive association between an increase in firm centrality in the domestic network and foreign divestment is stronger under higher uncertainty, as pursuing new business opportunities at home becomes more appealing. We distinguish between firm-specific uncertainty and domestic market uncertainty. We test and get support for our hypotheses using foreign subsidiary data from U.S. firms in the ICT industry.

Does size still matter? How micro firms and SMEs vary in network learning

ABSTRACT How can geographically constrained Micro firms and SMEs in emerging markets upgrade their products? How might firm size affect the benefits from accessing diverse knowledge and from participating in different learning relationships? Although access to diverse knowledge can be vital to innovation, smaller firms have a limited understanding about which new knowledge is most relevant to their context and how they may convert their capabilities into a more innovative organization. These latter aspects, we argue, come largely from relationships embedded in interfirm networks and certain types of non-market institutions that act as knowledge bridges and provide tutelage. Such institutions appear to benefit Micro firms in processing diverse knowledge. In contrast, product upgrading for SMEs improves more from their inter-firm networks, but these networks do not aid with managing diverse knowledge. We argue that differences in complementary capacities explain these variations. We use unique survey data from the Argentine wine industry.

Resource access mechanisms in networks and SME survival in Ghana

PurposeThe study aims to determine the resource access mechanism in inter-firm networks that aids SME survival in Ghana.Design/methodology/approachThe authors collect census data on a poultry cluster in Ghana and construct a directed network. The network is used to extract direct and indirect ties both incoming and outgoing, as well as estimate the structural holes of the actors. These variables are used to estimate for survival of SMEs after a one-year period using a binary logit model.FindingsThe study finds that out-indirect ties and structural hole have a significant influence on SME survival. This works through the global influence and the vision advantage that these positions and ties offer the SMEs.Originality/valueThe study offers SMEs a choice of whom to collaborate with for information (resources) in the form of outgoing and incoming ties at both the global and local level.

Rethinking the city and innovation: A political economic view from China's biotech

The city is arguably where innovations concentrate. Agglomeration and diversity are two major explanations for why innovations concentrate in the city. Existing studies tend to focus on knowledge dynamics, in particular interfirm networks, while paying insufficient attention to the process of urban development in which knowledge dynamics are materialized. We concur that the city itself does not possess such a power for innovation (Shearmur, 2012). Rather, it is an arena where various actors exert impacts on knowledge dynamics. In a view from China, we reveal why bio-tech innovations concentrate in particular places and what political economic processes contribute to such concentration. We highlight the need for a political economic analysis in economic geographical studies of innovation.

Strategic Network Change

Research has demonstrated the value of interfirm networks for firm performance, but less attention has been given to how firms strategically modify their networks. We develop a framework that treat...

Behind the scenes: the evolving urban networks of film production in China

ABSTRACTUrban networks in the modern economy have become a focus of research in geography and other related disciplines. However, the network of the motion picture industry has remained an underdeveloped topic in the relevant literature. Drawing on data from film production projects, this paper presents a pilot study of the changing inter-city networks that are created by the motion picture industry in mainland China over the past 15 years. Combining the perspectives of both the urban network and economic geography literature, this study not only advances the research on urban networks by offering new insights into the project-based, inter-firm cooperation networks of an important cultural industry sector but also enriches our knowledge of the functioning of local clusters and trans-local networks in new economic activities. In addition, the paper also contributes to our understanding of the evolution of modern urban networks in a transitional economic system.

Quantifying knowledge exchange in R&D networks: a data-driven model

We develop an agent-based model to reproduce the process of link formation and to understand the effect of knowledge exchange in collaborative inter-firm networks of Research and Development (R&D) alliances. In our model, agents form links based on their previous alliance history and then exchange knowledge with their partners, thus approaching in a knowledge space.We validate our model against real data using a two-step approach. Through an inter-firm alliance dataset, we estimate the model parameters related to the alliance formation, at the same time reproducing the topology of the resulting collaboration network. Subsequently, using a dataset on firm patents, we estimate the parameters related to the process of knowledge exchange.The underlying knowledge space that we consider in our study is defined by real patent classes, allowing for a precise quantification of every firm's knowledge position. We find that real R&D alliances have a duration of around two years, and that the subsequent knowledge exchange occurs at an extremely low rate - a firm's position is rather a determinant than a consequence of its R&D alliances. Finally, we propose an indicator of collaboration performance for the whole network and, remarkably, we find that the empirical R&D network extracted from our data does not maximize such an indicator. However, we find that there exist configurations that can be both realistic and optimized with respect to the collaboration performance. Effective policies, as suggested by our model, would incentivize shorter R&D alliances and higher knowledge exchange rates.

Imitation strategies and interfirm networks in the tourism industry: A structure–agency approach

Abstract The paper investigates the association between tourism firms’ imitation strategies and the interfirm network structure in which they are embedded. In particular, it analyzes how imitation contributes to (1) tie formation and (2) clustered structures. It also tests reverse relationships; i.e. how tie formation and clustered structures cause imitation. The paper combines network and survey data within and across nine Norwegian destinations. Estimations with instrumental variables show that imitation is an effect, and probably also a cause, of the network structure. More specifically, clustered structures increase imitation, which increases firms’ involvement and tie formation activities with other firms in the interfirm network. The study illustrates how the structure-agency duality can be addressed in a tourism destination context.

Change Is Good, But Not Too Much: Dynamic Positioning in the Interfirm Network and New Product Development

This research considers the dynamic positioning of an enterprise in an interfirm network and its propensity for new product development. Specifically, we explore how firms reconcile the dichotomy between central and structural holes network positions, by dynamically shifting from a central to a structural holes position (and vice versa) over time. By grounding this research in network dynamics theory, we argue how prior strong central (structural holes) network positions in the interfirm network increase the likelihood the firm will benefit from structural holes (central) positions in the following time period. We also propose that these positions can be modeled by an inverted U‐shaped relationship, which determines the firm's ability to develop new products. Indeed, by balancing central and structural holes positions, firms derive product development advantages from both network positions while reducing the relative drawbacks. However, a risk of such dynamic behavior is that when applied too often, it may prevent firms from assimilating the advantages brought by the two network positions. We test our theoretical framework with a sample of firms from the biopharmaceutical industry over a period of 10 years (2001 until 2010) using two approaches. First, we test the presence of dynamic behaviors using a panel data sample consisting of a network of 3121 firms observed for 10 years (2001–2010). Second, we explore the effect of dynamic behavior on each firm's ability to develop new products using a cross‐sectional data sample of 544 public firms belonging to the network of the 3121 firms. Our results suggest that a dynamic perspective employed in reconciling the dichotomy between central and structural holes network positions increases the ability of a firm to develop new products. However, findings also suggest that if firms shift too often from one network position to another, benefits of the dynamic network strategy are diminished.

Corporate Strategy and Network Change

Networks change when either the ties or the nodes are modified. Research on interfirm networks has conceptualized network change as driven almost exclusively by modifications in ties (additions and deletions). Yet firms frequently engage in actions that modify the ownership and existence of nodes: acquisitions ‘collapse’ nodes, divestitures ‘split’ nodes, industry entries ‘create’ nodes, and industry exits ‘remove’ nodes. The literatures on corporate strategy and organizational networks have mostly overlooked the implications of node-modifying actions for network change. We explore those implications in three ways. First, we systematically analyze and compare the network-changing properties of the six node- and tie-changing actions. Second, we link the strategic objectives that boundedly rational firms pursue through each corporate action to changes in their ego network positions (openness, closure, and status). Third, we consider how these ego-network changes set off ripple effects that create externalities for the networks of the focal firm’s immediate partners and that produce unintended structural effects at the global network level. The result is a much more expansive understanding of the mechanisms driving structural change in interfirm networks.

Endogenous dynamics of innovation networks in the German automotive industry: analysing structural network evolution using a stochastic actor-oriented approach

The generation of innovation is well known to be a social process depending on mutual interactions, aiming at accessing and exchanging knowledge in order to generate novel goods and services. Accordingly, interest in interfirm innovation networks has increased sharply over the last decade. Preceding research indicates that the structural dynamics of networks is driven both by endogenous and exogenous forces. In particular, we focus on the role of the endogenous determinants of the network evolution of interfirm networks - a category of often underestimated forces. We employ a longitudinal dataset that comprises German automotive firms' performance between 2002 and 2006 and apply a stochastic actor-oriented model (SAOM) designed to analyse both the endogenous and exogenous determinants of network change. Our results show that endogenous determinants - approximated by measures for local and global clustering - exhibit greater explanatory power than exogenous firm characteristics such as age, size, and R&D activity.