Environmental Demands and the Emergence of Social Structure: Technological Dynamism and Interorganizational Network Forms

Abstract

This study investigates the origins of variation in the structures of interorganizational networks across industries. We combine empirical analyses of existing interorganizational networks with an agent-based simulation model of network emergence. Our insights are twofold. First, we find that differences in technological dynamism across industries and the concomitant demands for value creation engender variations in firms’ collaborative behaviors. On average, firms in technologically dynamic industries pursue more open ego networks, which fosters access to new and diverse resources that help sustain continuous innovation. In contrast, firms in technologically stable industries on average pursue more closed ego networks, which fosters reliable collaboration and helps preserve existing resources. Second, we show that because of the observed cross-industry differences in firms’ collaborative behaviors, the emergent industry-wide networks take on distinct structural forms. Technologically stable industries feature clan networks, characterized by low network connectedness and rather strong community structures. Technologically dynamic industries, in turn, feature community networks, characterized by high network connectedness and medium-to-strong community structures. Convention networks, which feature high network connectedness and weak community structures, were not evident among the empirical networks we examined. Taken together, our findings advance an environmental contingency theory of network formation.

Keywords: networks, strategic alliances, dynamics

JEL Classification: M10