How far do network effects spill over? Evidence from an empirical study of performance differentials in interorganizational networks

Organizations join interorganizational networks in the hope of gaining exposure to learning opportunities, and accessing valuable extramural resources and knowledge. In this paper we argue that participation in interorganizational networks also reduces performance differentials among organizational nodes. We examine three alternative mechanisms capable of sustaining this prediction. The first (strength of ties) operates at a strictly local level defined in terms of dyadic relations linking organizations. The second mechanism (social proximity) operates at an intermediate – or meso level of interdependence defined in terms of membership in overlapping cliques into which interorganizational networks are typically organized. The third mechanism (structural equivalence) is global and pertains to jointly occupied network positions. The objective of this paper is to examine at which of these levels network effects operate to reduce performance differentials among members of interorganizational networks. Our empirical analysis of performance differentials between hospitals in a regional community supports the following conclusions: (i) performance spillover effects are highly differentiated and vary significantly across network levels; (ii) organizations occupying similar positions within the network are more similar in terms of performance; (iii) joint membership in multiple sub-groups (or cliques) reduces performance differentials up to a limit; after this limit is reached, the performance of organizational partners begins to diverge; (iv) the strength of direct collaboration between organizational partners does not necessarily reduce interorganizational performance differentials. The results of the study are new because available research on interorganizational networks says little about the range of network effects, i.e., about how far the performance spillover effects that operate through networks propagate throughout organizational fields and communities. These results are also consequential because they suggest that network effects on performance differentials are sensitive to the specification of network boundaries

Obstacles, Networking Approaches and Entrepreneurial Network Changes

While recent work has considered network change, little is known about how certain factors determine such changes. This study focuses on two factors – the type of obstacles entrepreneurs face and their networking approach – and employs a two‐stage research design and network visualisation approach to capture entrepreneurs’ experiences in managing networks during their entrepreneurial journey. Using an inductive approach, the first stage of the study identifies the obstacles and networking approaches that influence different types of network changes. The second stage employs a deductive approach to test the hypotheses developed from the first stage using a larger sample. We find that in experiencing obstacles from internal sources, entrepreneurs are more likely to find support from weak ties while strong ties are beneficial for overcoming obstacles from external sources. In having difficulties in acquiring entrepreneurial knowledge and skills, entrepreneurs are more likely to develop a low‐density network consisting of many structural holes. Conversely, dealing with difficulties in accessing market and resources imposes over‐reliance on high‐density network. Furthermore, the entrepreneurs’ networking approaches also influence network changes and partially mediate the relationship between the networks and the obstacles they face

Essential Micro-foundations for Contemporary Business Operations: Top Management Tangible Competencies, Relationship-based Business Networks and Environmental Sustainability

Although various studies have emphasized linkages between firm competencies, networks and sustainability at organizational level, the links between top management tangible competencies (e.g., contemporary relevant quantitative-focused education such as big data analytics and data-driven applications linked with the internet of things, relevant experience and analytical business applications), relationship-based business networks (RBNs) and environmental sustainability have not been well established at micro-level, and there is a literature gap in terms of investigating these relationships. This study examines these links based on the unique data collected from 175 top management representatives (chief executive officers and managing directors) working in food import and export firms headquartered in the UK and New Zealand. Our results from structural equation modelling indicate that top management tangible competencies (TMTCs) are the key determinants for building RBNs, mediating the correlation between TMTCs and environmental sustainability. Directly, the competencies also play a vital role towards environmental practices. The findings further depict that relationship-oriented firms perform better compared to those which focus less on such networks. Consequently, our findings provide a deeper understanding of the micro-foundations of environmental sustainability based on TMTCs rooted in the resource-based view and RBNs entrenched in the social network theory. We discuss the theoretical and practical implications of our findings, and we provide suggestions for future research

Networks of corporate power revisited

This paper examines developments through the quarter century since the publication of Stokman, Ziegler and Scott's (1985) iconic ten-nation study of the structure of interlocking directorships. The surprising decline of research in the area following the publication of Networks of Corporate Power is in part testimony to the rigour of the comparative methods used, raising the standard of evidence required for subsequent director interlock studies. But it also reflected a critical weakness in director interlock research to that point, the limited ability to answer what Mark Mizruchi has called the “So what?” question. While replicated studies found clear structures in director interlocks, varying from country to country, and there was some speculative fit with the distinctive political economies of these countries, there was little evidence of any effect of these structures on firm performance or activity. The more recent resurgence in director interlock research is in some ways rooted in a second generation of the original drivers; the ready availability of now large masses of data on firm governance and firm level performance and further advances in social network analytical techniques. Where Stokman and his colleagues manually compiled lists of directors scoured from company reports, these data are now routinely collected and compiled in accessible databases by government agencies and business information services in many countries. And there has been a gradual accumulation of advances in addressing the “so what” question

Networks of corporate power revisited

This paper examines developments through the quarter century since the publication of Stokman, Ziegler and Scott's (1985) iconic ten-nation study of the structure of interlocking directorships. The surprising decline of research in the area following the publication of Networks of Corporate Power is in part testimony to the rigour of the comparative methods used, raising the standard of evidence required for subsequent director interlock studies. But it also reflected a critical weakness in director interlock research to that point, the limited ability to answer what Mark Mizruchi has called the “So what?” question. While replicated studies found clear structures in director interlocks, varying from country to country, and there was some speculative fit with the distinctive political economies of these countries, there was little evidence of any effect of these structures on firm performance or activity. The more recent resurgence in director interlock research is in some ways rooted in a second generation of the original drivers; the ready availability of now large masses of data on firm governance and firm level performance and further advances in social network analytical techniques. Where Stokman and his colleagues manually compiled lists of directors scoured from company reports, these data are now routinely collected and compiled in accessible databases by government agencies and business information services in many countries. And there has been a gradual accumulation of advances in addressing the “so what” question

Modelling the impact of organizationan structure and whistle blowers on intra-organizational corruption contagion

We complement the rich conceptual work on organizational corruption by quantitatively modeling the spread of corruption within organizations. We systematically vary four organizational culture-related parameters, i.e., organization structure, location of bad apples, employees’ propensity to become corrupted (“corruption probability”), and number of whistle-blowers. Our simulation studies find that in organizations with flatter structures, corruption permeates the organization at a lower threshold value of corruption probability compared to those with taller structures. However, the final proportion of corrupted individuals is higher in the latter as compared to the former. Also, we find that for a 1,000-strong organization, 5% of the workforce is a critical threshold in terms of the number of whistle-blowers needed to constrain the spread of corruption, and if this number is around 25%, the corruption contagion is negligible. Implications of our results are discussed

Exceptional boards: Environmental experience and positive deviance from institutional norms

This paper explores the phenomenon of positive organizational deviance from institutional norms by establishing practices that protect or enhance the natural environment. Seeking to explain why some organizations practice positive environmental deviance while others do not, we locate our inquiry on the board of directors—the organizational body that interprets external issues and guides organizational response. We find a strong correlation between positive deviance and the past environmental experience of board directors and the centrality of the organization within field-level networks. Organizations located on the periphery of the network or whose boards possess a high level of environmental experience are more likely to deviate in positive ways. Our conclusions contribute to multiple literatures in behavioral and environmental governance, the role of filtering and enaction in the process of institutional conformity and change, and the mechanisms behind proactive environmental protection strategies within business