Benefiting from network position: firm capabilities, structural holes, and performance

Abstract

While strategy scholars primarily focus on internal firm capabilities and network scholars typically examine network structure, we posit that firms with superior network structures may be better able to exploit their internal capabilities and thus enhance their performance. We examine how innovative capabilities-both those of focal firms and those they access through their networks-influence the performance of Canadian mutual fund companies. We find that a firm's innovative capabilities and its network structure both enhance firm performance, while the innovativeness of its contacts does not do so directly. Innovative firms that also bridge structural holes get a further performance boost, suggesting that firms need to develop network-enabled capabilities-capabilities accruing to innovative firms that bridge structural holes.

A Network-based view of regional growth

“…They also find significant differences in the characteristics of regional and non-regional inter-organisational knowledge flows, and whilst regional knowledge flows are characterised by a higher number of face-to-face contacts, knowledge exchanged through non-regional knowledge flows is found to be more valuable (Weterings and Ponds, 2009). Indeed, there is a growing school of thought that non-proximate actors are often equally, if not better, able to transfer complex knowledge across such spatial boundaries, providing a high-performing network structure is in place (Davenport 2005;Dunning 2000;Lissoni 2001;McEvily and Zaheer 1999;Palazzo 2005;Zaheer and Bell 2005).…”

The role of incentives and communication in strategic alliances: an experimental investigation

“…Strategic alliances are ongoing cooperative relationships and represent an important organizational form for governing transactions (Reuer, Zollo, and Singh, 2002;Zaheer and Bell, 2005). Strategic alliances have the potential to create economic value (Gulati and Singh, 1998;McEvily and Zaheer, 1999) and, on average, empirical evidence corroborates this view (Chan et al, 1997;Sarkar, Echambadi, and Harrison, 2001).…”

How university incubators may be overprotective and hindering the success of the young firm: Findings from a preliminary study

“…This may lower the likelihood that spin-off entrepreneurs spot opportunities in the business environment or develop new relationships that are driven by commercial trade-offs. As they remain close to the established academic network, they will favour the trust and efficiency that close networks promote [25] but miss the performance boost from bridging structural holes which are crucial innovative firms [26].…”