Coevolution of Governance and Networks: Governance Economization and Value Creation as Drivers of Network Evolution

Posted: 1 May 2015 Last revised: 15 Mar 2020

See all articles by Sungho Kim

Sungho Kim

Southern Illinois University - Edwardsville

Jay B. Barney

University of Utah - David Eccles School of Business

Date Written: March 27, 2015

Abstract

This study examines the coevolution of inter-firm networks and the choices that firms make about governance. Prior studies on inter-firm networks and alliances have provided insights into how networks shape firms’ decisions about organizational governance. This stream of research has focused on the impact of networks on governance without fully incorporating the impact of governance on networks. This research fills the gap by examining how network evolution is shaped by firms’ actions to economize on transaction costs and maximize value creation and value capture. Through simulation experiments, this study shows that exchange conditions such as asset specificity and resource heterogeneity dictate how social capital is developed, and thus determine the coevolutionary paths of governance and networks. Implications for the network and governance literature are discussed.

Keywords: coevolution, networks, organizational governance, exchange conditions, asset specificity, resource heterogeneity, simulation, model

JEL Classification: M10

Suggested Citation

Kim, Sungho and Barney, Jay B., Coevolution of Governance and Networks: Governance Economization and Value Creation as Drivers of Network Evolution (March 27, 2015). Available at SSRN: https://ssrn.com/abstract=2600656 or http://dx.doi.org/10.2139/ssrn.2600656

Sungho Kim (Contact Author)

Southern Illinois University - Edwardsville ( email )

1 Hairpin Drive
Edwardsville, IL 62026-1102
United States

Jay B. Barney

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

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