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Gulati et al. (2000) "Strategic networks

53 important questions on Gulati et al. (2000) "Strategic networks

Why is the location of firms in interfirm networks an important element of competition?

Competition is more intense among actors who occupy a similar location relative to others but is mitiated if actiers are tied to each other

What is the difference between a transaction cost perspective and a network approach?

While the transaction cost perspective stresses the efficiency benefits from reducing the governance cost of a transaction, a network approach allows consideration of the strategic benefits from optimizing not just a single relationship but the firm’s entire network of relationships.

What are the five traditional sources of differential returns to films in strategy research?

Industry structure - including the degree of competition and barriers to entry
Positioning within an industry - including strategic groups and barriers to mobility
Inimitable firm resources and capabilities
Contracting and coordinating costs
Dynamic and path dependent constraints and benefits

What did the industrial organization school begin with?

With models of perfect competition

What did they argue (organization school)?

That oligopoly, or greater concentration generally, led to increased profitability for the firms in an industry

Why do the authors propose that a consideration of strategic networks allows a more refined understanding of industry structure?

Since industry participants can be seen as embedded in networks of resources, information, and other flows

What can such networks influence?

The nature of competition in the industry and the degree of profitability beyond traditional measures of industry concentration

Which three types of relational characteristics are considered to illustrate the implications of viewing the industry level of analysis from a network perspective?

Network structure
Network membership
Tie modality

Where does network structure refer to?

To the overall pattern of relationships within which the industry is embedded

What do the authors mean with network membership?

The composition of the network - the identities, status, resources, access, and other characteristics of the focal industry's

What is tie modality?

The set of institutionalized rules and norms that govern appropriate behavior in the network

What does network membership influence?

The location of an industry in a broader network of resource flows that might influence its profitability

How do the authors consider tie modalities at the level of ties that form the network?

The strength of connections and the nature of the ties, both within the industry and across to supplier and customer industries

How may collusion be facilitated?

To a greater degree by the strength of the ties between the firms in an industry

How can the set of tie characteristics be applied to explain industry profitability?

Across industries

What do the set of traditional strategy models recognize with regard to the intra-industry structure?

Industries are not homogeneous; rather within the same industry, some firms are more alike than others, and can be grouped together

On which bases can strategic groups be identified?

Similarities in firm scale
Similarity of products and services in terms of price, features, and quality
Similarity in technology
Similarity in customers served

How can strategic groups be identified?

Among firms that share common attributes, through the use of network methodologies

What would be a more interesting approach to use firm interactions and identify relationships?

Intra-industry grouping or cliques

What are cliques or blocks?

Groups of firms with alliances with each other but not to others in the industry.

What is another way to think about networks and intra-industry structure?

To recognize the potential of networks of relationships to create mobility barriers for firms trying to cross strategic groups, just as networks may serve as entry barriers for firms trying to enter the industry

Which may impede the movement of firms within an industry?

The network of ties among firms in the strategic group a firm is trying to leave, or in the group a firm is trying to enter, or both.

Thus, how can networks serve?

As a source of both opportunity and constraint

What does a network perspective highlight?

The idea that similarity in relational space is an important way to think about patterns of competition and differences in the profitability of firms within an industry

What has the resource-based view (RBV0 of the firm emphasized?

The notion that resources owned or controled by the firm have the potential to provide enduring competitive advantage when they are inimitabel and not readily substitutable.

Where can a firm's network be though of?

As an creating inimitable and non-substitutable value (and constraint!)
As an inimitable resource by itself
As a means to access inimitable resources and capabilities

Where does a firm's network allow access to?

To key resources from its environment, such as information, access, capital, goods, services and so on that have the potential to maintain or enhance a firm's competitive advantage

Why is it difficult for competitors to imitate or substitute?

By the virtue of such firm networks being indiosyncratic and created through a path dependent process

How are resources accessed by themselves?

Idiosyncratic, generated as they are through the combination of unique networks the firm possesses, they too are relatively inimitable and non-substitutable

What is the key idea of the network as a resource?

That the structural pattern of a firm's relationships is uniqe and has the potential to confer competitive advantage

What renders the network inimitable and thus too the information it provides?

The private and invisible nature of the ties

What are the other aspects of a focal firm's network of ties that can influence its behavior and performance?

The pattern of direct and indirect ties

What is network membership as a resource?

The existing choices partner firms (either as buyers, suppliers, or alliance partners) can both restrict and enlarge the opportunity set of future relationships available to the focal firm which provides potential for a competitive advantage.

What does network membership mean?

That for nonparticipants or new entrants the network provides no information at all, which may lock them out of new opportunities

In which way is tie modality seen as a resource?

The modality of the ties that a firm creates and maintains in its network, whether cooperative or opportunistic, strong or weak, multiplex or single, has clear implications for a firm's strategic behavior and performance

Why can network ties also have a dark side?

Too close ties with customers can casue performance disadvantages as well

What can be a source of strategic advantage?

Experience with alliances

What is alliance capability?

The ability to actually manage the firms’ network to create interfirm knowledge and make relation-specific investments which is unique to a company and provides potential for a competitive advantage.

What is an important implication of the embeddedness of firms in social networks?

The enhanced trust between firms that can in turn mitigate the moral hazards anticipated at the outset

Where does the trust between firms refer to?

To the confidence that a partner will not exploit the vulnerabilities of the other

In which ways do social networks promote trust and reduce transaction costs?

Networks enable firms to gather superior information on each other
Network ties are important sources of referrals that enable prospective partners to identify and learn about each other's capabilities
They can facilitate due diligence so that each partner has greater knowledge about the other's resources and capabilities and greater confidence in their mutual assessments.

How can social networks further mitigate transaction costs?

By making opportunisms more costly because of reputational effects

Why are the costs of opportunistic behavior in a network more costly?

Because the damage to one’s reputation can influence not just the specific alliance in which one behaved opportunistically, but all other current and potential alliance partners

In which two ways can strategic networks create trust?

Knowledge-based trust resulting from mutual awareness and equity norms
Deterrence-based trust arising from reputational concerns

Do networks need to be stable or dynamic?

Though some networks can be quite stable, changing very little over time, networks typically tend to be more dynamic.

What shaps how networks evolve over time?

Exogenous and endogenous forces

What do exogenous forces include?

Environmental jolts and changes

What happens when networks evolve endogenously?

The ties formed or disbanded by any actor influence not only their own behavior in subsequent periods but also those of others to whom the actor is connected. One actor forms an alliance. Others match this action. Before you know it, a dense network forms.

Which two ways in which a network dynamics can influence competitive advantage enjoyed by the firms in the network are discussed?

Lock-in effects and lock-out effects
Learning races

Why do lock-in and lock-out effects occur?

Because in many situations, ties formed with one actor place constraints on ties with others

Why may these constraints arise?

Resource constraints - any actor has limits on the resources it can devote to creating ties
The expectation the alliance partner may have for fidelity to the alliance - including the exclusion of other partners

At which two levels of analysis can the consequences of learning races be understood?

Dyad level
Portfolio level

Which kind of benefits influence the level of competition vs. cooperation in an alliance?

Private benefits
Common benefits

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