What Is a Relationship Worth? Repeated Exchange and the Development and Deployment of Relational Capital

Elfenbein, Daniel W.; Zenger, Todd

doi:10.1287/orsc.2013.0824

Cited by 111 publications

(93 citation statements)

References 87 publications

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“…If employees have many ties to organizational members at entry, they may have less incentive to build new and beneficial connections outside their existing network. At the firm level, strategy research has also underlined the value of relational capital (e.g., Elfenbein & Zenger, ; Hoetker, ; Uzzi, ) and more recently has explored how a firm's existing relationships influence its strategic decisions (Mawdsley & Somaya, ). A possible generalization of our hypothesis may be that a firm's existing relational capital may limit how much a firm is influenced by proximate firms.…”

Section: Resultsmentioning

confidence: 99%

Prior ties and the limits of peer effects on startup team performance

Hasan

Koning

2019

Strategic Management Journal

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Research Summary We conduct a field experiment at an entrepreneurship bootcamp to investigate whether interaction with proximate peers shapes a nascent startup team's performance. We find that teams whose members lack prior ties to others at the bootcamp experience peer effects that influence the quality of their product prototypes. A 1‐SD increase in the performance of proximate teams is related to a two‐thirds SD improvement for a focal team. In contrast, we find that teams whose members have many prior ties interact less frequently with proximate peers, and thus their performance is unaffected by nearby teams. Our findings highlight how prior social connections, which are often a source of knowledge and influence, can limit new interactions and thus the ability of organizations to leverage peer effects to improve the performance of their members. Managerial Summary Researchers and policymakers believe that accelerators, incubators, and bootcamps help entrepreneurial ecosystems spur innovation and drive startup growth. The effectiveness of these organizations, in large part, depends on the new social interactions fostered among colocated entrepreneurs. Yet, little evidence exists about the extent to which such interactions actually lead to spillovers. We ran a controlled experiment at a startup bootcamp to investigate when entrepreneurs were most affected by their colocated peers. Not everyone benefited. We found that entrepreneurs with many prior ties to others at the bootcamp made fewer new connections, especially to neighboring peers, and thus did not experience significant spillovers. In contrast, those without prior connections experienced the greatest spillovers because they interacted frequently with people on nearby colocated teams. Our findings highlight how organizations like incubators and bootcamps, designed to foster new connections, might sometimes just reinforce old networks.

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Section: Resultsmentioning

confidence: 99%

Prior ties and the limits of peer effects on startup team performance

Hasan

Koning

2019

Strategic Management Journal

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“…Building from prior work, we expect that firms will be less likely to integrate as they develop relational capital, which is comprised of the relationship‐specific assets that underpin relational governance (Elfenbein & Zenger, ; Poppo, Zhou, & Zenger, ). Our primary argument is that relational capital is most relevant and valuable when partnering organizations remain working together in the same product market.…”

Section: Introductionmentioning

confidence: 99%

The limits of relational governance: Sales force strategies in the U.S. medical device industry

Chatterji

Cunningham

Joseph

2018

Strategic Management Journal

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Research Summary: We explore how interorganizational relationships shape firm boundary decisions. Using data on 545 U.S. medical device manufacturers' product portfolios and sales‐governance choices (i.e., internal or external sales forces) from 1983 to 1996, we find relational capital between manufacturers and external sales forces influences future firm boundary decisions. Relational capital lowers the likelihood of integrating the sales function, but only when firms remain focused on the same product market. Further, launching an innovative product has a nuanced effect. For firms lacking relational capital, innovation increases the likelihood of sales integration. This pattern reverses as relational capital accumulates, but only when innovations are in the firm's existing focal product market. Our findings suggest important limits on the effect of relational governance on firm strategy. Managerial Summary: Choosing between in‐house or external sales is a key strategic decision. In the medical device industry, this decision is particularly important because salespeople are conduits between R&D and customers. For firms who initially choose external sales, the trade‐off between maintaining existing links (via external sales) and developing new, direct relationships (by bringing sales in‐house) can change significantly as product portfolios change. Analyzing 545 U.S. medical device manufacturers from 1983 to 1996, we find that existing relationships with external sales forces reduce the likelihood of bringing sales in‐house, but only when firms remain in the same product market, such as orthopedic implants. When firms launch products in new markets, especially innovations, they are more likely to bring sales in‐house.

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“…Research on alliances has often used the core assumption discussed above derived from social exchange theory --trust formation from repeated exchanges --to presume the existence of trust between alliance partners from their prior alliance agreements, or prior ties (e.g., Elfenbein & Zenger, 2014;Garcia-Canal, Valdes-Llaneza, & Ariño, 2003;Gulati, 1995;Gulati & Singh, 1998;Gulati, Lavie, & Singh, 2009;Li et al, 2008;Parkhe, 1993;Reuer & Ariño, 2007). Research on alliances has often used the core assumption discussed above derived from social exchange theory --trust formation from repeated exchanges --to presume the existence of trust between alliance partners from their prior alliance agreements, or prior ties (e.g., Elfenbein & Zenger, 2014;Garcia-Canal, Valdes-Llaneza, & Ariño, 2003;Gulati, 1995;Gulati & Singh, 1998;Gulati, Lavie, & Singh, 2009;Li et al, 2008;Parkhe, 1993;Reuer & Ariño, 2007).…”

mentioning

confidence: 99%

Isolating Trust Outcomes from Exchange Relationships: Social Exchange and Learning Benefits of Prior Ties in Alliances

Lioukas

Reuer

2015

AMJ

139

103

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Social exchange theory is a broad theory that has been used to explain trust as an outcome of various exchange relationships, and research commonly presumes trust exists between exchange partners that have prior relationships. In this paper, we contribute to research on social exchange theory by isolating the trust outcomes of interorganizational exchanges from other outcomes emphasized by learning and knowledge-based perspectives, and by specifying important boundary conditions for the emergence of trust in interorganizational exchanges. We make such a theoretical contribution within the domain of strategic alliances by investigating the effects of previous alliance agreements, or prior ties, between the partnering firms. We find that prior ties generally lead to learning about a partner's anticipated behavioral patterns, which helps a firm predict when self-interested behavior may occur and know how to interact with the partner during the coordination and execution of the alliance tasks. By contrast, it is evident that the kind of trust emphasized in social exchange theory is not generally rooted in prior ties and only emerges from prior relationships under certain conditions. We discuss the implications of these findings for research on social exchange theory.

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What Is a Relationship Worth? Repeated Exchange and the Development and Deployment of Relational Capital

Cited by 111 publications

References 87 publications

Prior ties and the limits of peer effects on startup team performance

Prior ties and the limits of peer effects on startup team performance

The limits of relational governance: Sales force strategies in the U.S. medical device industry

Isolating Trust Outcomes from Exchange Relationships: Social Exchange and Learning Benefits of Prior Ties in Alliances

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