Exploring Mediators: Effects of the Composition of Organizational Affiliation on Organization Survival and Mediator Performance

Abstract

Market mediation literature has been taking primarily a triadic view in studying the role and impact of mediators, actors that occupy a middle position, on supply and demand conditions in markets. Mediating organizations facilitate exchange relationship on continuous basis between multiple networks of interdependent affiliated actors. An affiliation structure gives rise to the property of duality whereby the behavior and performance of the affiliates affect the behavior and performance of mediators and vice versa. In the context of the banking industry, this study examines how the structural properties of the underlying network of affiliated organizations affect the survival of affiliated organizations and the performance of mediating organizations. The results show that firms that are affiliated with mediating organizations having high customer-set connectedness or with those that are industry specialists increase their chances of survival. Furthermore, mediating organizations having high customer-set connectedness experience lower loan loss than peripheral ones. The study contributes to organizational studies by incorporating a network view to the predominately triadic market mediation literature, explicating the determinants of the effectiveness by which mediating services are rendered, and suggesting new sources of competitive advantage that advance as well as complement established explanations. Implications for the network perspective, organizational technology and the economic theory of the banking firm, as well as firm and mediator management are considered.

The behavioral theory of the (community‐oriented) firm: The differing response of community‐oriented firms to performance relative to aspirations

“…Previous strategy research has examined a wide variety of outcomes using banking data, including risk‐taking (McNamara & Bromiley, ), market entry (Knott & Posen, ), M&A success (Marquis & Lounsbury, ; Zollo & Singh, ), geographic diversification (Marquis & Huang, ), deviation from established policies (Ramanujam, ; Sutcliffe & McNamara, ), top management turnover (Semadeni, Cannella, Fraser, & Lee, ), and the performance implications of banks' role as intermediaries (Saparito, Chen, & Sapienza, ; Sasson, ). For example, McNamara and Bromiley (), using actual lending decisions, found that profitability pressures influence risk‐taking by causing banks to give customers overly favorable risk ratings.…”

Ideational Influence, Connectedness, and Venue Representation: Making an Assessment of Scholarly Capital

“…An affiliation network is a two-mode network with a single set of actors where the second mode is a set of events, such as a club or a social gathering to which the actors belong. In the affiliation network, the links are not between the actors but between actors and events: an affiliation network is a network in which actors join together by being members in a group (Sasson, 2008). A subset of actors engage in each of the events, and, thus, the event describes the subset of actors and the actors describe the subset of events to which they belong (Wasserman & Faust, 1994).…”

“…The structural embeddedness of mediating organizations (Granovetter, 1985) affects the value that accrues both to affiliates and to mediators. The duality of the nested structure of affiliation implies that the behavior and performance of actors in the affiliation affects the behavior and performance of mediators and vice versa (Breiger, 1974;Sasson, 2008).…”

Logistics Service Providers and Value Creation Through Collaboration: A Case Study

“…Whereas production and manufacturing logic dominate traditional frameworks such as Porter's (1985), it has been claimed that service-based firms or so-called knowledge-intensive firms follow other paths of value creation (e.g., Maister, 1993;Løwendahl, 1997;von Nordenflycht, 2010). More recently, mediation-based firms have attracted increased attention, including those in fields such as banking (Sasson, 2008), insurance (Fjeldstad and Ketels, 2006), telecommunications (Andersen and Fjeldstad, 2003), and logistics (Huemer 2006;2012). From a collaborative perspective and considering VLIs, the strategic work of LSPs offers an interesting setting.…”