The Role of Ego Networks in Manufacturing Joint Venture Formations

Abstract

This paper develops a network theory based framework of manufacturing joint venture formations and provides an empirical test in the context of the automotive industry. Hypotheses are developed regarding the implications of the network structure for a firm’s partner selection in manufacturing joint ventures. The roles of network theory constructs such as ego network size, ego network density, and ego network betweenness centrality on new manufacturing joint venture formations are explored using a dynamic framework. A comprehensive time series panel dataset with 3,247,124 observations containing the joint venture information of 1,158 automotive firms collectively engaging in 589 manufacturing joint ventures over 19 years is utilized to test the hypotheses. Results provide strong empirical support for the role of network structure in equity based partnership formation. Specifically, ego network size and ego network betweenness centrality of both focal manufacturer and potential partner have significant effects on new manufacturing joint venture formations. Findings regarding the role of ego network density are mixed.

Keywords: joint ventures, partnerships, social networks