Network Of Firms Research Articles

Family firm network strategies in regional clusters: evidence from Italy

Knowledge networks in regional clusters are fundamental to support innovation and local development. Within clusters, family firms are key in creating business opportunities and supporting the establishment of inter-organizational networks. Yet, their role within regional clusters for knowledge transfers is still not well understood, especially in comparison with non-family firms. This paper applies Exponential Random Graph Models (ERGMs) to network data collected from the Parabiago cluster, one of the most important Italian footwear clusters, to contribute to a better understanding of the network strategies of family firms. We identify distinct network strategies associated with the cluster firms, accounting for different knowledge exchange types: technological, market, and managerial. In our modelling, we control for firm-level attributes and dyadic-level attributes, such as geographical distance and cognitive proximity between cluster firms. Our results suggest that the proneness of family firms to grow networks is highly robust relative to non-family firm relationships, irrespective of knowledge types being exchanged. Moreover, family firms tend to establish connections with other family firms, showing the presence of homophily in their networking approach; however, non-family firms are rather different, since they do not have the same homophilous approach when it comes to exchange knowledge with other non-family firms. These results indicate that the nature of ownership is driving knowledge exchange differences. This key feature of family-only relationships in clusters may help managers and policymakers in devising more effective and targeted cluster strategies.

The synergistic effect of the industrial international competitiveness and coopetition network position on market share: evidence from global automobile industry

PurposeThis paper aims to examine how the firm’s global coopetition network position impacts market share and to explore the multiple moderating effects of trade network strength and structures on the relationship between firm global coopetition network position and market share.Design/methodology/approachThis paper selects global automobile manufacturing firms as samples whose classification is “Automobile” in the Factiva database from 2014 to 2018 and develops the measurement for global coopetition network and trade network by using Ucinet6. Finally, Stata was used for data analysis.FindingsThis paper finds that structural holes and centrality are beneficial to improve global market share. And the trade network strength and structures have positive multiple moderating effects on the relationship between the firm global coopetition network position and market share.Originality/valueThis paper explores industrial international competitiveness according to the intricate trade relations among countries and the impact of industrial international competitiveness on the relationship between global coopetition network position of brand firms and market share. The results of this paper expand the current literature on the relationship between characteristics of coopetition network and trade network.

Canada's Ocean Supercluster initiative: A national policy in regional clothing?

AbstractSince the late 1980s, there has been no explicit regional policy in Canada. Indirectly, though, equalization payments, industrial policies, as well as regional agencies encouraging the adoption of federal industrial and innovation policies, impact regional economies. In 2017, the federal government appeared to alter its approach: the Supercluster initiative was announced, drawing upon the idea that localized networks of interrelated firms can generate innovation and local development. In this paper, we discuss the mechanisms through which spatially focused industrial innovation policy can lead to regional development. We then focus on Canada's Ocean Supercluster initiative. The question we address is as follows: to what extent can this initiative (and, more widely, Canada's Supercluster policy) be understood as a regional development strategy driven by a coherent rationale for regional intervention? Apart from the fact that each Supercluster focuses on a pre‐existing core of firms located within a region, there is little evidence that the Supercluster initiative has regional development objectives or impacts.

Where do knowledge-intensive firms locate in Germany?—An explanatory framework using exponential random graph modeling

This paper analyzes how positional and relational data in 186 regions of Germany influence the location choices of knowledge-based firms. Where firms locate depends on specific local and interconnected resources, which are unevenly distributed in space. This paper presents an innovative way to study such firm location decisions through network analysis that relates exponential random graph modeling (ERGM) to the interlocking network model (INM). By combining attribute and relational data into a comprehensive dataset, we capture both the spatial point characteristics and the relationships between locations. Our approach departs from the general description of individual location decisions in cities and puts extensive networks of knowledge-intensive firms at the center of inquiry. This method can therefore be used to investigate the individual importance of accessibility and supra-local connectivity in firm networks. We use attributional data for transport (rail, air), universities, and population, each on a functional regional level; we use relational data for travel time (rail, road, air) and frequency of relations (rail, air) between two regions. The 186 functional regions are assigned to a three-level grade of urbanization, while knowledge-intensive economic activities are grouped into four knowledge bases. This research is vital to understand further the network structure under which firms choose locations. The results indicate that spatial features, such as the population of or universities in a region, seem to be favorable but also reveal distinct differences, i.e., the proximity to transport infrastructure and different valuations for accessibility for each knowledge base.

Exploring the audit quality and audit fee impacts of joining different types of non-Big Four accounting networks and associations: evidence from China

Purpose This paper aims to explore the audit quality and fee implications of joining a global accounting firm network and association (“AF N&A”). Design/methodology/approach A hand-collected sample focusing upon the pre- and post-periods around the time when an independent audit firm joins an AF N&A is developed. A propensity score-matched sample is created to address the endogeneity and self-selection bias. OLS regression is used on a sample of around 2,000 firm-year observations from 2003 to 2014. Findings Membership with an AF N&A is associated with higher levels of audit quality and audit fees. Furthermore, audit quality and fee increases are more pronounced for audit firms that become members of a larger, more formal AF N&A. Originality/value This paper provides additional insights into the conflicting results regarding the audit quality implications of membership with AF N&As in China. This paper also extends the discussion by exploring the audit quality and fee differentials among the non-Big Four AF N&As. These findings have significant implications for independent audit firms pursuing membership with an AF N&A and regulators seeking to reduce market concentration around the Big Four.

When the chickens come home to roost: The short‐ versus long‐term performance implications of government contracting and supplier network structure

AbstractThe old adage “it is not what you know, but who you know” suggests that in connection(s) lies the key(s) to success. But what does success mean, and for how long will it last? What does the choice of partner, and network connections say about the performance implications of contracting, particularly in the case of a public–private partnership? With countries such as the United States accounting for the world's largest buyer (of any and everything), several suppliers eagerly await their opportunity to contract with large government entities, but is it always a wise decision? Such questions remain largely unexplored and require answers. This research provides answers to these questions by integrating congruence, and network theory to investigate how government contracting impacts private suppliers' financial performance and how suppliers' supply chain network connections moderate this relationship. Results using panel data over several years suggest that while contracting with government bolsters' short‐term financial performance (ROA), it negatively affects long‐term supplier performance (Tobin's Q). In addition, the prominence of a firm's connections (i.e., who they know) and the composition of these connections enhances the performance gains, highlighting the critical role of a firm's network structure on their performance within the contracting relationship. We therefore find that the power of supply chain network connections enhances the short‐term positive effects and mitigates the long‐term adverse effects when contracting with government buyers, as the relationship is not always universally positive.

Economic network dynamics: a structural analysis of the international connectivity of Chinese manufacturing firms

PurposeThis paper explores international trade of the Chinese manufacturing industries through the lenses of network analysis (NA) to visualise the world trade network of the Chinese economy, describe its topology and better explain the international organisation of Chinese manufacturing industries.Design/methodology/approachThe authors built a dataset of 40,550 Chinese companies and their 107,026 subsidiaries in 118 countries from Orbis-BVD and used a NA to investigate the connection between China and other countries. In particular, the authors studied the connections between Chinese companies and their subsidiaries in order to build a network of Chinese industries.FindingsThe authors found that the network of Chinese companies is ramified but not wide and it can be divided into two clusters. Moreover, the relations between China and other peripheral countries are strongly mediated by a few leading locations (e.g. Hong Kong and the USA).Originality/valueThis paper contributes to the literature in several ways. First, the authors provide empirical evidence on the magnitude and ramifications of Chinese enterprises in the world. The existing studies generally focus on applying NA to sectoral insights (Mao and Yang, 2012; Shaikh et al., 2016; Zheng et al., 2016; Wanzenbö ck, 2018; Krichene et al., 2019), whereas in this work the authors take a comprehensive view of the entire Chinese manufacturing system. Second, this paper complements the existing literature identifying the difference between cluster levels in Chinese manufacturing (Wu and Jiang, 2011) by proposing a cluster centralisation method to analyse the international network of Chinese firms rather than just the national network. Finally, the results also shed light on the international trade relationship between China, Hong Kong and the USA.

Industrial policy, local firm growth paths, and capability building in low-income countries: lessons from Ethiopia’s floriculture export sector

Abstract The industrial policy literature has made important contributions to understanding how to catalyze industrialization, but it tends to focus more on the industrial policies required to incentivize learning than on studying firm-level learning dynamics and investments in technological capabilities. Furthermore, global value chain studies on export sectors in low-income countries rarely consider whether local firms are part of broader business groups and if so, how that position within business groups affects local firms’ business strategies regarding the global supply chain in question as well as investments outside it. This article examines local firms’ investments in a new export industry, and they are shaped by dynamics linked to their family business groups, industrial policies, and the wider national economic and political contexts of low-income countries. It does so through a case study of Ethiopia and the emergence of its floriculture export industry. The article explains firm-level motivations in acquiring knowledge and building capabilities as well as their export trajectories and firm growth paths and how they are shaped by owners’ decisions related to the overall business group. It argues that industrial policies need to consider not only the existing capabilities, organizations, and networks of local firms but also tailor industrial policies to the potential of the family business groups to drive capability building in new industries.

Beyond the platform: Social media as a multi-faceted resource in value creation for entrepreneurial firms in a collaborative network

In this study we review the literature on SM as a resource and how it has been linked to value creation. Conceptualising SM as a multifaceted resource (using the 4R Model) in a collaborative network of entrepreneurial firms, we analyse 30 h of interview data and 10,664 SM interactions using Ethnographic Content Analysis to assess the classification and identify the subsequent value creation. We find support for classifying SM as a multifaceted resource and a wider set of value created as a result. SM can be mobilised to create value in: sales and marketing activities, developing new and maintaining existing relationships, developing a firm’s reputation and network identity, and being part of the product offering to the market. In addition, we also found SM to be a dynamic resource in practice – moving between and present in more than one resource category in any collaborative activity.

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.

Interlocking Network, Banker Interlocking Director and Cost of Debt

ABSTRACT This study examines whether the cost of debt decreases when a banker interlocking director sits on the boards and exists within interlocking directors' network using a panel dataset during the period from 1998 to 2014. This study finds that the interlocking directors' network in Korea has gradually increased each year, and Korean firms' cost of debt is reduced when a banker interlocking director is participating on the boards and within interlocking directors' network. Specifically, Chaebols more strategically use a banker interlocking directors to lower the cost of debt than non-Chaebols. This result suggests that a banker interlocking director on boards with a strong firm network alleviates the burden of the cost of debt.

Communities of co-occurrence network of financial firms in news

The correlations between financial firms have a significant impact on the emergence and spread of systemic financial risks. In addition to traditional numerical data, text data also contains a lot of relational information and could serve as a data source for unveiling cross-firm relationships. This paper uses news data to construct a co-occurrence network of Chinese financial firms and subsequently employs the Louvain algorithm to detect communities, showing clusters of firms with dense interconnections. Relationships among firms are further examined from a community perspective. The results demonstrate that firms within the same industry have a greater degree of interconnections in the co-occurrence network. Besides, the level of correlation between communities fluctuates in response to shocks and policies.

Carbon Leakage within Firm Ownership Networks

Carbon Leakage within Firm Ownership Networks

СТРАТЕГУВАННЯ ЗОВНІШНЬОЕКОНОМІЧНОЇ ДІЯЛЬНОСТІ В КОНТЕКСТІ ВИХОДУ НА ЗОВНІШНІ РИНКИ

The article substantiates the strategy of foreign economic activity in the context of entering foreign markets. As a result, we applied a statistical regression to predict the relationship between dependent and independent variables, the main purpose of which is to predict the probability of proposed factors (firm size, International Experience, Innovation, Network, Product Characteristics, assets, export intensity, and industry) affecting the level of resource utilization obligations in firms ' choice of entry modeThe article also explains that the size of SMEs strongly and positively affects the extent to which firms participate in the choice of entry method.International experience also has a significant impact on firms ' decisions regarding participation in certain ways of entering the market. As expected, network relationships significantly influence the choice of ways to enter the foreign market. The intensity of assets and exports is indicated as positive and very important. Empirical results show that innovations not only significantly influence the firm's choice of a way to enter the foreign market, but also correspond to the forecast direction.Also, the product characteristic factor has a strong positive effect. In addition, firms that engage in higher levels of advertising are more likely to choose high-level resource commitments, such as joint ventures or direct investment. The high level of export intensity also encourages firms to choose high-level resource commitments. The industry also positively correlates with the probability of choosing high-level resources in the selected mode of entering the foreign market.

Political instability, resources, and political networking of firms in transition economies

Firms engaging in political networking is a widely witnessed phenomenon in transition states where the economy shifts from central planning to market mechanism. In this article, we integrate the institutional-based and resource-based perspectives to propose that firms located in transition countries with higher political instability tend to invest more in political networking; firms with substantial specific resources help enhance/devalue the political networking as political instability increases. This paper tests these arguments by using a sample of 24,959 firms in former communist countries. Our results reveal an inverted U-shaped influence of political instability on firm political networking. Specifically, with the political environments getting increasingly unstable, innovation investment and industrial experience motivate firms to maintain political networks, while financial capital demotivates firms’ investment in political networking. These findings shed light on deepening understandings of when and how political environments shape firms’ strategic behaviors in transition economies.

Organizational knowledge networks, search and exploratory invention

This paper examines the effect of decomposability in a firm's knowledge network—the extent to which knowledge elements in a firm's knowledge base are coupled with each other or isolated from each other in separate knowledge clusters—on external knowledge sourcing and exploratory invention. We contend that decomposability shapes the process of inventive search and knowledge recombination. We show that the extent of external knowledge sourcing decrease and then increases with an increasing level of decomposability in a firm's knowledge network. Second, we reveal that the opposite—inverted U-shaped—relationship exists between decomposability and new knowledge creation; nearly decomposable networks enhance the creation of new knowledge elements in a firm's inventions. To test our hypotheses we investigate the innovation activities of a sample of firms from the global photographic equipment and supplies industry between 1975 and 2008. We highlight the contributions of these findings for research on knowledge networks, knowledge search, and recombination and discuss their implications for practice.

The impacts of highways on firm size distribution: Evidence from China

AbstractThis paper examines the impact of highway construction on the size distribution of manufacturing firms using Chinese firm and highway network data. I construct instrumental variables using historical and counterfactual road approaches to identify the causal effects of highway construction. I find that highway construction can increase firm size dispersion and market concentration. Areas near highways have a higher number of firms, more outsourcing activities, and more large firms; while areas further from highways have a higher share of new entry firms.

The Structural Features and Centrality Optimization of a Firm Interlocking Network of the Nodal Cities on the South Route of the 21st-Century Maritime Silk Road: The Case of Fujian Province

The 21st-Century Maritime Silk Road is an important part of the “Belt and Road Initiative”. It is intended to carry out broader and deeper regional cooperation and to provide a Chinese solution for reforming the world economic governance model. Fujian Province, as the starting point of the historical Maritime Silk Road, its development status, and the development strategy is of vital importance for the 21st-Century Maritime Silk Road’s sustainable and balanced regional development. Based on the data on the spatial distribution of the headquarters and branches of enterprises in information-related industries, this study, from the perspective of enterprise connection, constructed a firm interlocking network along the south route of the 21st-Century Maritime Silk Road covering nodal cities along the southeast coast of China and cities in Southeast Asian countries. In addition, this paper analyzed the structural features of the firm interlocking network in the region from the perspectives of centrality and connectivity and considered the goal of constructing the core area of the 21st-Century Maritime Silk Road to extract the influencing factors of the firm interlocking network. The core factors influencing the centrality of cities were analyzed and identified by taking Fujian Province as an example. The study found that cities in Fujian Province generally have problems such as unremarkable centrality and weak connectivity in the firm interlocking network in the region and that the three dimensions of policy coordination, financial integration, and technology exchange in the three cities of Fujian Province need to be strengthened despite the achievements made in the three dimensions of facility connectivity, unimpeded trade, and closer people-to-people bonds. Policy suggestions for promoting the centrality of nodal cities in Fujian Province and accelerating the integration into regional city networks were made based on the above research findings and Fujian Province’s development goal of constructing a core area of the 21st-Century Maritime Silk Road.

Collaboration strategies in buyer-supplier relational (BSR) networks and sustainable firm performance: A trade-off story

A buyer firm can increase collaboration in its buyer-supplier relational (BSR) network by focussing on supplier-to-supplier interconnectivity (i.e., network density) or alternatively, by enabling supplier clustering. While the extant literature has considered the effects of these two strategies on firm financial performance, it has not shown whether a focal firm's buyer-supply network collaboration strategy affects its sustainable firm performance (SFP), specifically its environmental and economic performance. This paper investigates three key questions: (a) How do collaboration strategies influence SFP? (b) Is there an optimal mix of these two network strategies for fostering collaboration in a firm's BSR network? (c) Can a manager win on both environmental and economic frontiers by pursuing either strategy? Leveraging extant research on BSR networks, ambidexterity, and network theory, we propose a model linking collaboration strategies to SFP. We construct 330 multi-tier BSR networks and find strong support for the non-linear effects of both collaboration strategies on SFP. A response function analysis identifies the combination of strategies yielding the best outcome for SFP. We also find strong evidence for trade-offs between the performance variables. The results show that managers should focus on density as a lever while developing a minimal level of supplier clustering. We discuss academic and managerial implications of our findings for managing buyer-supplier relationships and enhancing a firm's performance.