Prescriptions for network strategy: Does evidence of network effects in cross-section support them?
AbstractAlthough intuitively appealing (and common), drawing network strategy implications from empirical evidence of network performance effects in pooled cross-section is not necessarily warranted. This is because network positions can influence both the mean and variance of firm performance. Strategic prescriptions are warranted if empirically observed network effects reflect increases in mean firm performance. If network effects reflect increases in firm performance variance, however, such prescriptions are warranted only if the increase in the odds of achieving high performance is sufficient to compensate for the concomitant increase in the odds of realizing poor performance. Our simulation study, designed to examine network performance effects in both pooled cross-section and within-firm over time across a wide range of conditions, counsels caution in drawing implications for network strategies. We discuss the implications of our findings for research on network effects, and more broadly for drawing strategic inferences from studies of firm performance in pooled cross-section.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology in its series UNU-MERIT Working Paper Series with number 044.
Date of creation: 2012
Date of revision:
Contact details of provider:
Web page: http://www.merit.unu.edu
network formation; strategic alliances; innovation; network strategy; interfirm networks;
Find related papers by JEL classification:
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-22 (All new papers)
- NEP-BEC-2012-05-22 (Business Economics)
- NEP-CSE-2012-05-22 (Economics of Strategic Management)
- NEP-NET-2012-05-22 (Network Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lori Rosenkopf & Paul Almeida, 2003. "Overcoming Local Search Through Alliances and Mobility," Management Science, INFORMS, vol. 49(6), pages 751-766, June.
- Joel BAUM & Robin COWAN & Nicolas JONARD, 2009.
"Network-independent partner selection and the evolution of innovation networks,"
Working Papers of BETA
2009-23, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- Joel A. C. Baum & Robin Cowan & Nicolas Jonard, 2010. "Network-Independent Partner Selection and the Evolution of Innovation Networks," Management Science, INFORMS, vol. 56(11), pages 2094-2110, November.
- Baum, Joel & Cowan, Robin & Jonard, Nicolas, 2009. "Network-independent partner selection and the evolution of innovation networks," UNU-MERIT Working Paper Series 022, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology.
- Nooteboom, B. & Gilsing, V.A. & Vanhaverbeke, W.P.M. & Duijsters, G.M. & Oord, A., 2006.
"Network Embeddedness and the Exploration of Novel Technologies: Technological Distance, Betweenness Centrality and Density,"
2006-32, Tilburg University, Center for Economic Research.
- Gilsing, Victor & Nooteboom, Bart & Vanhaverbeke, Wim & Duysters, Geert & van den Oord, Ad, 2008. "Network embeddedness and the exploration of novel technologies: Technological distance, betweenness centrality and density," Research Policy, Elsevier, vol. 37(10), pages 1717-1731, December.
- Gilsing, Victor & Nooteboom, Bart & Vanhaverbeke, Wim & Duysters, Geert & Oord, Ad van den, 2008. "Network embeddedness and the exploration of novel technologies: technological distance, betweenness centrality and density," Open Access publications from Maastricht University urn:nbn:nl:ui:27-23364, Maastricht University.
- Victor Gilsing & Bart Noteboom & Wim Vanhaverbeke & Geert Duysters & Ad van Noord, 2006. "Network embeddedness and the exploration of novel technologies: technological distance, betweenness centrality and density," Eindhoven Center for Innovation Studies (ECIS) working paper series 06-08, Eindhoven Center for Innovation Studies (ECIS), revised Apr 2006.
- Gilsing, V.A. & Nooteboom, B. & Haverbeke, W.P.M. van & Duijsters, G.M. & Oord, A., 2008. "Network embeddedness and the exploration of novel technologies: Technological distance, betweenness centrality and density," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3159316, Tilburg University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ad Notten).
If references are entirely missing, you can add them using this form.