Skip to main content

Network architecture and firm performance: A resources-based view

Abstract

Previous studies have investigated alliance networks primarily from two alternative views, a relational view that focuses on the “strength of strong/weak ties,” or a structural view that refers to a firm’s position and structural embeddedness. We posit a firm’s network architecture, i.e., the portfolio of strong/weak ties, influences its conduct and performance. From a resource-based view, the network architecture itself could be a source of sustained competitive advantage. We argue that both network architecture and duration of a firm can enhance its performance. However, their effects and the interaction are contingent on different performance outputs. Using strategic alliance networks data from a survey of the manufacturing industry in China, we examine the performance implications of network architecture. Results suggest that benefits from networks may evolve with network duration, hence firms should search for optimal network configurations. By integrating an alliance portfolio, firms with dual network architectures can enjoy both the strengths of strong ties and weak ties and avoid the risks inherent in a pure strong/weak-tie network.

References

  1. Ahuja, G. 2000a. Collaboration networks, structural holes, and innovation: A longitudinal study. Administrative Science Quarterly, 45(3): 425–455.

    Article  Google Scholar 

  2. Ahuja, G. 2000b. The duality of collaboration: Inducements and opportunities in the formation of interfirm linkages. Strategic Management Journal, 21(3): 317–343.

    Article  Google Scholar 

  3. Aiken, L. S., & West, S. G. 1991. Multiple Regression: Testing and interpreting interactions. Newbury Park, CA: Sage Publications.

    Google Scholar 

  4. Barney, J. 1991. Firm resources and sustained competitive advantage. Journal of Management, 17(1): 99–120.

    Article  Google Scholar 

  5. Bian, Y. 1997. Bringing strong ties back in: Indirect ties, network bridges, and job searches in China. American Sociological Review, 62(3): 366–385.

    Article  Google Scholar 

  6. Bian, Y., & Huang, X. 2009. Network resources and job mobility in China’s transitional economy. Research in the sociology of work, vol. 19: 255–282. Bradford: Emerald Group Publishing Limited.

    Google Scholar 

  7. Burt, R. S. 1987. Social contagion and innovation-cohesion versus structural equivalence. American Journal of Sociology, 92(6): 1287–1335.

    Article  Google Scholar 

  8. Burt, R. S. 1992. Structural holes: The social structure of competition. Cambridge, M A: Harvard University Press.

    Google Scholar 

  9. Burt, R. S. 1997. The contingent value of social capital. Administrative Science Quarterly, 42(2): 339–365.

    Article  Google Scholar 

  10. Burt, R. S. 2000. The network structure of social capital. Research in Organizational Behavior, 22(2): 345–423.

    Article  Google Scholar 

  11. Capaldo, A. 2007. Network structure and innovation: The leveraging of a dual network as a distinctive relational capability. Strategic Management Journal, 28(6): 585–608.

    Article  Google Scholar 

  12. Coleman, J. S. 1988. Social capital in the creation of human-capital. American Journal of Sociology, 94: S95–S120.

    Article  Google Scholar 

  13. Contractor, N. S., Wasserman, S., & Faust, K. 2006. Testing multitheoretical, multilevel hypotheses about organizational networks: An analytic framework and empirical example. Academy of Management Review, 31(3): 681–703.

    Article  Google Scholar 

  14. Gibbons, D. E. 2004. Network structure and innovation ambiguity effects on diffusion in dynamic organizational fields. Academy of Management Journal, 47(6): 938–951.

    Article  Google Scholar 

  15. Goerzen, A. 2007. Alliance networks and firm performance: The impact of repeated partnerships. Strategic Management Journal, 28(5): 487–509.

    Article  Google Scholar 

  16. Goerzen, A., & Beamish, P. W. 2005. The effect of alliance network diversity on multinational enterprise performance. Strategic Management Journal, 26(4): 333–354.

    Article  Google Scholar 

  17. Granovet M. S. 1973. The strength of weak ties. American Journal of Sociology, 78(6): 1360–1380.

    Article  Google Scholar 

  18. Granovetter, M. 1985. Economic-action and social-structure—The problem of embeddedness. American Journal of Sociology, 91(3): 481–510.

    Article  Google Scholar 

  19. Gulati, R. 1998. Alliances and networks. Strategic Management Journal, 19(4): 293–317.

    Article  Google Scholar 

  20. Gulati, R. 1999. Network location and learning: The influence of network resources and firm capabilities on alliance formation. Strategic Management Journal, 20(5): 397–420.

    Article  Google Scholar 

  21. Gulati, R., Nohria, N., & Zaheer, A. 2000. Strategic networks. Strategic Management Journal, 21(3): 203–215.

    Article  Google Scholar 

  22. Hite, J. M., & Hesterly, W. S. 2001. The evolution of firm networks: From emergence to early growth of the firm. Strategic Management Journal, 22(3): 275–286.

    Article  Google Scholar 

  23. Inkpen, A. C., & Tsang, E. W. K. 2005. Social capital, networks, and knowledge transfer. Academy of Management Review, 30(1): 146–165.

    Article  Google Scholar 

  24. Kogut, B. 2000. The network as knowledge: Generative rules and the emergence of structure. Strategic Management Journal, 21(3): 405–425.

    Article  Google Scholar 

  25. Koka, B. R., & Prescott, J. E. 2002. Strategic alliances as social capital: A multidimensional view. Strategic Management Journal, 23(9): 795–816.

    Article  Google Scholar 

  26. Koka, B. R., & Prescott, J. E. 2008. Designing alliance networks: The influence of network position, environmental change, and strategy on firm performance. Strategic Management Journal, 29(6): 639–661.

    Article  Google Scholar 

  27. Lau, C. M., & Ngo, H. Y. 2001. Organization development and firm performance: A comparison of multinational and local firms. Journal of International Business Studies, 32(1): 95–114.

    Article  Google Scholar 

  28. Lavie, D. 2006. The competitive advantage of interconnected firms: An extension of the resource-based view. Academy of Management Review, 31(3): 638–658.

    Article  Google Scholar 

  29. Lavie, D. 2007. Alliance portfolios and firm performance: A study of value creation and appropriation in the US software industry. Strategic Management Journal, 28(12): 1187–1212.

    Article  Google Scholar 

  30. McEvily, B., & Marcus, A. 2005. Embedded ties and the acquisition of competitive capabilities. Strategic Management Journal, 26(11): 1033–1055.

    Article  Google Scholar 

  31. McEvily, B., & Zaheer, A. 1999. Bridging ties: A source of firm heterogeneity in competitive capabilities. Strategic Management Journal, 20(12): 1133–1156.

    Article  Google Scholar 

  32. Nahapiet, J., & Ghoshal, S. 1998. Social capital, intellectual capital, and the organizational advantage. Academy of Management Review, 23(2): 242–266.

    Google Scholar 

  33. Osborn, R. N., & Hagedoorn, J. 1997. The institutionalization and evolutionary dynamics of interorganizational alliances and networks. Academy of Management Journal, 40(2): 261–278.

    Article  Google Scholar 

  34. Portes, A. 1998. Social capital: Its origins and applications in modern sociology. Annual Review of Sociology, 24: 1–24.

    Article  Google Scholar 

  35. Rothaermel, F. T., & Deeds, D. L. 2004. Exploration and exploitation alliances in biotechnology: A system of new product development. Strategic Management Journal, 25(3): 201–221.

    Article  Google Scholar 

  36. Rowley, T., Behrens, D., & Krackhardt, D. 2000. Redundant governance structures: An analysis of structural and relational embeddedness in the steel and semiconductor industries. Strategic Management Journal, 21(3): 369–386.

    Article  Google Scholar 

  37. Schilling, M. A., & Phelps, C. C. 2007. Interfirm collaboration networks: The impact of large-scale network structure on firm innovation. Management Science, 53(7): 1113–1126.

    Article  Google Scholar 

  38. Soh, P. H. 2010. Network patterns and competitive advantage before the emergence of a dominant design. Strategic Management Journal, 31(4): 438–461.

    Article  Google Scholar 

  39. Swaminathan, V., & Moorman, C. 2009. Marketing alliances, firm networks, and firm value creation. Journal of Marketing, 73(5): 52–69.

    Article  Google Scholar 

  40. Tiwana, A. 2008. Do bridging ties complement strong ties? An empirical examination of alliance ambidexterity. Strategic Management Journal, 29(3): 251–272.

    Article  Google Scholar 

  41. Tsai, W. P. 2001. Knowledge transfer in intraorganizational networks: Effects of network position and absorptive capacity on business unit innovation and performance. Academy of Management Journal, 44(5): 996–1004.

    Article  Google Scholar 

  42. Tsai, W. P., & Ghoshal, S. 1998. Social capital and value creation: The role of intrafirm networks. Academy of Management Journal, 41(4): 464–476.

    Article  Google Scholar 

  43. Uzzi, B. 1997. Social structure and competition in interfirm networks: The paradox of embeddedness. Administrative Science Quarterly, 42(1): 35–67.

    Article  Google Scholar 

  44. Walker, G., Kogut, B., & Shan, W. J. 1997. Social capital, structural holes and the formation of an industry network. Organization Science, 8(2): 109–125.

    Article  Google Scholar 

  45. Wernerfelt, B. 1984. A resource-based view of the firm. Strategic Management Journal, 5(2): 171–180.

    Article  Google Scholar 

  46. Zaheer, A., & Bell, G. G. 2005. Benefiting from network position: Firm capabilities, structural holes, and performance. Strategic Management Journal, 26(9): 809–825.

    Article  Google Scholar 

  47. Zajac, E. J. 1998. Commentary on “alliances and networks” by R. Gulati. Strategic Management Journal, 19(4): 319–321.

    Article  Google Scholar 

Download references

Author information

Affiliations

Authors

Corresponding author

Correspondence to Qin Wang.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Wang, Q., Gao, S. Network architecture and firm performance: A resources-based view. Front. Bus. Res. China 5, 559–579 (2011). https://doi.org/10.1007/s11782-011-0145-0

Download citation

Keywords

  • network architecture
  • alliance portfolio
  • dual network
  • duration