Are Social Networks a Double-Edged Sword? A Case Study of Defense Contractors

Abstract

Utilizing a survey of defense contractors in the New England region, this study explores the effect of social networks on business performance—measured by annual employment growth and market diversification—during a time when defense spending in the United States was contracting. In contrast to prevailing literature focusing on entrepreneurial firms, this study offers insights on how social networks function in defense contractors, which tend to be mature firms. The main conclusion is that having more network connections is associated with faster short-term employment growth (from 2014 to 2015) for defense contractors, but there is a limit to that benefit. The analysis also shows that social networks do not aid market diversification for defense contractors. This poses an interesting challenge for defense contractors, as they need to balance the priorities of short-term growth and long-term success.

Entrepreneurial Orientation, Collaborative Engagement, and Performance: Evidence From Rural Economic Development Organizations

“…Network size is a count measure of the total number of collaborative partners of a given organization. Since network size could be indicative of access to more network resources and capabilities, it could potentially enhance performance (Shuai & Chmura, 2018). Since some organizations had a large number of ties, we took the natural logarithm of this variable to correct the skewness of the distribution.…”