To Have a Cake and Eat it Too? Structural Holes' Influence on Status Accumulation and Market Performance in Collaborative Networks

Abstract

In this paper, we examine the relationship between structural holes in a firm's ego network and firm performance. We argue that the firms need two types of information - about new business opportunities and partner cooperativeness - to pursue, respectively, two types of self-reinforcing performance goals: status accumulation and market performance. Firms' open ego networks facilitate access to information about new business opportunities, which helps them attain status accumulation. However, open ego networks limit access to information about partner cooperativeness, which dampens market performance. Analyses of investment banks acting as advisers for merger and acquisition transactions in the United Kingdom during 1992-2001 provide support for these arguments.

Keywords: Structural Holes, Status Accumulation, Revenue Generation, Strategic Alliances, Firm Performance, Interorganizational Network