Competitive Position: Network Integration

This chapter discusses how networks enhance a firm's competitive position. The new economy has brought forth a wave of business operations that emphasize agility, risk resistance, modularity, cooperative capabilities, and digital technology. Many businesses are reconfiguring themselves to establish connections with external resources. As a result, network integration has become a crucial strategic initiative for numerous corporations to leverage their network advantages. So, how should SMA contribute to this important initiative? First, I will argue why network cooperation contributes to corporate success. Then, I will explain the sources of network effects, such as scale effect, scope effect, learning effect, and value creation, and how these effects are embedded in various network forms, ranging from simple supplier-customer networks to more complex collaborative alliances and business ecosystems. Financial evaluation plays a vital role in the assessment of new proposals. I will demonstrate through examples how evaluating network effects provides insights and justifications for strategic initiatives involving networks. Moreover, network integration necessitates cooperation with stakeholders in the alliance. Equally important is the focal firm's ability to exert network influence. To elucidate the conditions that lead to optimal network influence, I will employ social network analysis and the concept of symmetry of interests.