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Membership Matters: On the Value of Being Embedded in Customer Networks

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  • Øystein D. Fjeldstad
  • Amir Sasson

Abstract

Learning about customers and their contexts is vital to firm strategy. We examine how firms can learn by participating in their customers' networks. Specifically, we explain how a bank can increase the value that it creates for customers by being embedded in the networks in which the customers are embedded. We argue that knowledge pertinent to a particular customer is available in the network of affiliated, inter-related customers, and that being structurally embedded in this network can help banks overcome information asymmetries. We use hierarchical linear modelling to test the argument that a bank's structural embeddedness in its customers' network positively affects the bank's ability to offer favourable credit terms. We find that not only does such structural embeddedness affect credit terms, but it also moderates the effects of previously examined relational embeddedness on credit terms. Copyright (c) 2010 The Authors. Journal compilation (c) 2010 Blackwell Publishing Ltd and Society for the Advancement of Management Studies.

Suggested Citation

  • Øystein D. Fjeldstad & Amir Sasson, 2010. "Membership Matters: On the Value of Being Embedded in Customer Networks," Journal of Management Studies, Wiley Blackwell, vol. 47(6), pages 944-966, September.
  • Handle: RePEc:bla:jomstd:v:47:y:2010:i:6:p:944-966
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    References listed on IDEAS

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    Cited by:

    1. Hervás Oliver, José Luís, 2015. "How do multinational enterprises co-locate in industrial districts? An introduction to the integration of alternative explanations from international business and economic geography literatures," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 32, pages 115-132.
    2. Eriksson, Kent & Fjeldstad, Øystein & Jonsson, Sara, 2017. "Transaction services and SME internationalization: The effect of home and host country bank relationships on international investment and growth," International Business Review, Elsevier, vol. 26(1), pages 130-144.
    3. Fjeldstad, Øystein & Moen, Espen R & Riis, Christian, 2010. "Competition with Local Network Externalities," CEPR Discussion Papers 7778, C.E.P.R. Discussion Papers.

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