Positional Advantage in Networks

26 Pages Posted: 2 Mar 2006

See all articles by Michael D. Ryall

Michael D. Ryall

University of Toronto - Rotman School of Management

Olav Sorenson

Yale School of Management

Date Written: February 2006

Abstract

Recent research in strategy has called attention to the fact that particular positions in inter-firm networks may serve as a source of competitive advantage for the firms occupying them. This empirical literature has nonetheless found it difficult to separate the effects of positions from those of firm capabilities and resources. We develop a general model for addressing this issue analytically. Our results suggest that agents can enjoy a competitive advantage due only to their positions, but only when several conditions hold, most notably: (i) the agent has relationships to at least three other firms; and (ii) the agent does not hold too strong a position. We also assess the stability of competitive advantages, finding that, while capabilities and resources can confer a stable competitive advantage, positional advantage is not robust to the activities that others might use to diffuse them.

Keywords: social networks, strategy, biform games

JEL Classification: C7, L1, M2

Suggested Citation

Ryall, Michael D. and Sorenson, Olav, Positional Advantage in Networks (February 2006). Available at SSRN: https://ssrn.com/abstract=886108 or http://dx.doi.org/10.2139/ssrn.886108

Michael D. Ryall

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Olav Sorenson (Contact Author)

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

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