Networks Bequeath Networks: How Collaboration Networks Drive the Evolution of Competition Networks

Abstract

This study contributes to the competition and collaboration networks literature by offering a new perspective of collaboration networks as antecedents to the evolution of competition networks through the mechanism of reducing information asymmetry related to competitors, customers and the environment. We use this integrated perspective of collaboration and competition networks to also explain the performance effects of competition networks. We further suggest that as firms in competition networks do not directly share information, competitors require information management capability (IMC) to effectively manage the public information and signals displayed by competitors in competition networks. Using a sample of 262 US firms across 11 industries over a 7-year period, we find support for the hypothesis that collaboration networks and IMC are both antecedents of competition networks. We also find that since collaboration networks and IMC have similar effects of reducing information asymmetry, they can substitute one another to drive the evolution of competition networks. Our findings are robust to endogeneity concerns and alternative model specifications.

Keywords: Competition Networks, Collaboration Networks, Information Management Capability, Firm Performance, Interorganizational Relationships