Resource Configuration, Inter-Firm Networks, and Organizational Performance
University of Texas at Austin
June 18, 2013
Empirically - documented associations between network position and organizational performance could potentially be driven by unobserved variation in resources. I study this issue theoretically, by developing an equilibrium model of inter-firm network formation. More specifically, I investigate how an organization's exogenous resource configuration vis-a-vis other organizations in the economy - which, due to its complexity, is unlikely to be observable or easily measurable - affects the two endogenous outcomes of interest, network position and performance. I find that variation in resource configuration induces no relationship between performance and either degree or centrality, or this relationship is even negative. The key channel behind this result is that performance is importantly determined by organizations being able to find a complementary partner. If an organization finds a complementary partner, its resources are endogenously focused within that relationship, which makes the organization be involved in fewer exchanges in equilibrium. Therefore many high-performing organizations display low degree and centrality.
Number of Pages in PDF File: 28
Keywords: networks, social capital, strategic alliances, resource-based view
JEL Classification: D23, L14, L24, M2, Z13working papers series
Date posted: March 10, 2012 ; Last revised: June 18, 2013
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