When Do Networks Matter? A Study of Tie Formation and Decay

Andrew V. Shipilov, Tim J. Rowley, Barak S. Aharonson

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

Abstract

Interorganizational partner selection decisions are plagued with uncertainty. When making partnering decisions, firms strive to answer two questions: does the prospective partner have resources which can be used to generate value in the relationship; and will the partner be willing to actively share these resources and cooperate in good faith? Answers to these questions help reduce three types of uncertainty - partner capability uncertainty, partner competitiveness uncertainty and partner reliability uncertainty. For a relationship to benefit both partners, they have to possess complimentary resources of comparable quality, avoid explicit competition as well as be willing to engage in the cooperative behaviors within the confines of their relationship. In this paper, we examine the importance of prospective partners' characteristics (differences in size, status and specialization) as well as their network characteristics (existence of a common partner and membership in the same clique) to the formation and longevity of their social relationships, as these characteristics reduce firms' value generation and partner reliability uncertainty.

Original languageEnglish
Title of host publicationEcology and Strategy
EditorsJoel Baum, Stanislav Dobrev, Arjen Witteloostuijn
PublisherEmerald
Pages481-519
Number of pages39
ISBN (Electronic)978-1-84950-435-5
ISBN (Print)0762313382, 9780762313389
DOIs
StatePublished - 2006

Publication series

NameAdvances in Strategic Management
Volume23
ISSN (Print)0742-3322

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