Networks vs. market methods in high-tech venture fundraising: the impact of institutional environment

This study examines how institutional environmental factors, including cultural norm, state regulatory system and venture capital market, influence the high-tech entrepreneur's choice for using network vs. market methods when approaching prospective investors at the early stage of their new venture creation. We collected comparative data through on-site interviews and questionnaire survey with 128 high-tech entrepreneurs in Singapore (a newly industrialised economy) and 250 in Beijing, China (an emerging economy). Our findings suggest that a culture emphasising the value of social obligation, the under-development of the legal/regulatory system and the immaturity of the venture capital market increased the proclivity of entrepreneurs to use network methods. Moreover, entrepreneurs who value networks higher in social obligation than in information transfer are more likely to choose personal ties instead of business ties. This study enhances our understanding of how high-tech entrepreneurs in emerging economies choose between networks and market methods in venture fundraising, and offers suggestions on how public policy makers in these economies can improve the institutional environment of their regions to promote high-tech new venture creation.     

Market novelty, competence-seeking and innovation networking

Studies of innovation networking have frequently been concerned with the occurrence of dyadic relationships and with their apparent impact on simple measures of firm-level innovation outputs. This paper takes a more detailed look by analyzing the connection between different types of innovation and forms of networking. Based on the market novelty of innovation outcomes and the extent to which innovation activities require new competences, four types of innovation are identified. It is proposed that these types correlate with various innovation network dimensions, including the volume of networks, the strength and content of ties, and the specificity of ties. Drawing on survey data of 594 innovations realized by Dutch small firms, it is observed that the requirement to access new competences for innovation correlates positively with the number of network partners involved. We also note more subtle connections between types of innovation and networking, including that novel innovation outputs correlate with using network partners as a source of inspiration, whilst new competences associate with networking for knowledge capital. In the latter case, these activities also draw on new and intended ties relatively often, i.e. network partners which are actively sought out for the specific contributions they may make to the innovation process. Finally, innovation which is simultaneously new-to-the market and requires new competences uses strong ties relatively often. Implications for innovation policy and practice are discussed.     

The influence of supply network structure on firm innovation

In this study, we examine the structural characteristics of supply networks and investigate the relationship between a firm's supply network accessibility and interconnectedness and its innovation output. We also examine potential moderating effects of absorptive capacity and supply network partner innovativeness on innovation output. We hypothesize that firms will experience greater innovation output from (1) higher levels of supply network accessibility and supply network interconnectedness, (2) the interaction between the levels of these two structural characteristics, (3) the moderating role of absorptive capacity on supply network accessibility and the moderating role of supply network partner innovativeness on supply network interconnectedness. Supply network partner relationships are drawn in the context of the electronics industry using data from multiple sources. We use social network analysis to create measures for each supply network structural characteristic. Using regression techniques to test the relationship between these structural characteristics and firm innovation for a sample of 390 firms, our findings suggest that supply network accessibility has a significant association with a firm's innovation output. The results also indicate that interconnected supply networks strengthen the association between supply network accessibility and innovation output. Moreover, the influence of the two structural characteristics on innovation output can be enhanced by a firm's absorptive capacity and level of supply network partner innovativeness. By addressing the need for deeper structural analysis, this study contributes to supply chain research by accounting for the embedded nature of ties in supply networks, and showing how these structural characteristics influence the knowledge and information flows residing within a firm's supply network.     

Toward a structural view of co-opetition in supply networks

Co-opetition, or simultaneous competition and cooperation, in the supply chain management literature has been treated as a dyadic relational phenomenon where the buyer's strategy is considered to be the primary driver. In this paper, we move beyond the dyadic view and propose a theory of co-opetition in supply networks. We argue that as firms within a supply network interact over time to access, share, and transform resources, new ties between firms are formed and existing ties dissolve, giving rise to co-opetition dynamics at the network level. Taking a configurational approach, we employ the inter-related dimensions of ties between firm, firm-level task, network-level objective, and governance to specify four practical supply network archetypes that cover a wide range of economic activities. We then explain how coopetitive relationships may evolve in these supply network archetypes. Specifically, we discuss how relationships form or dissolve in these archetypes and how local structural changes lead to co-opetition dynamics at the network level. We also discuss the implications of such dynamics from a managerial perspective.     

Communication channels,innovation tasks and NPD project outcomes in innovation-driven horizontal networks

Inter-organizational collaborations and horizontal networks are increasingly playing a pivotal role in innovations and new product development among firms. In this study, we investigate the link between the innovation task analyzability and the richness of communications channels used in network arrangements and the link between task analyzability and ties and project development time. We investigated the links based on the data collected from 372 respondents representing ninety three different innovation-driven horizontal networks. The results of structural equation modeling reveal a negative link from task analyzability to communication channel richness and a positive link from communication channel richness to ties. Communication channel richness was found to partially mediate the influence that task analyzability has on both NPD project outcomes of ties and development time. The implications of our results for theory and practice are discussed.     

Social Capital and Social Influence on the Board of Directors

It is often assumed that directors with human capital such as prior management experience or independence from the company are the most influential board members. By contrast, in a survey of all the board members in 14 companies we found that ties to others in a network of strong ties among those who meet outside of board meetings were more important predictors of social influence than human capital or ties across boards. These ties within the board represent the social capital of members in the form of prior relationships with other directors, ties to others on the board, and membership in cliques within the board's network of ties. These results support a social capital perspective on influence that emphasizes relationships with others on the board as important factors in the social dynamics of board decision-making.     

Structural embeddedness and organizational social outcomes in a centrally governed mental health services network

Abstract

This article is an examination of the effects of network involvement, or structural embeddedness, on three organizationally based social outcomes. Specifically, we argue that in centralized, publicly funded networks an organization's structural embeddedness will be related to its trustworthiness, reputation and influence, as rated by other network members. Results from a network survey of a publicly funded health and human service network generally confirm our hypotheses and suggest additional work on the topic.     

The dynamics of entrepreneurs’ networks in a transitioning economy: the case of Russia

Despite its theoretical and practical importance, the evolution and development of entrepreneurs’ networks has attracted a little attention of researchers. The emerging research literature on this topic found that the dynamics of entrepreneurial networks were contingent upon venture lifecycle, industry and region, and resource needs of the firm. In addition and contrast to the previous research, this article examines the effects of the initial network structure, and firm performance of previous years on the changes in entrepreneurs' network structure, relations, and resources over 4 years. The empirical data is composed of the face-to-face interviews with 75 Russian entrepreneurs in 1995, and the follow-up interviews with 56 original respondents in 1999. I found that the greater the initial network size, the less the increase in network size, strong and weak ties, and resources over time. Further, the findings indicate that revenue growth of previous years predicts the changes in networks in the reverse manner. Thus, I found that the greater the average revenue growth, the less the increase in network size, weak ties, and resources over time.     

Does having a strong commitment matter in building sustainable networks?

Unpredicted disasters obstruct the operation of a well-functioning network, but such a network should be resistant to the challenges of such disasters to provide successful responses. This study aims to investigate the effect of a strong commitment driven by drills on building sustainable emergency management networks during disasters. The logic of collaboration risk is embedded in the collective action dilemma; therefore, building a strong commitment is important. On the basis of an Emergency Medicine survey done in 2012 and 2013 in the Southeastern Economic Regions of Korea, the relation between strong commitment and network arrangements was examined using the Logistic Regression Quadratic Assignment Procedure analysis. The results of this study show that higher levels of strong commitment driven by exercises are more likely to result in sustainable ties. This implies that beyond the interest of creating planning networks, the means of reinforcing the degree of commitment among members of networks, such as drills, must be developed.     

The Role,Use and Activation of Strong and Weak Network Ties: A Qualitative Analysis*

abstract A characteristic of studies seeking to explain the structure and operation of networks is the use of Granovetter's strong and weak tie hypothesis. Whilst this hypothesis has become an established paradigm, questions and disagreements arise over its applicability at demonstrating the real use and value of each tie. This study extends the work of Granovetter. Using a qualitative ethnographic approach to explore in‐depth the networking activities of fourteen respondents, it aims to enhance understanding about the role of ties, how they are used and activated for business activity. Findings demonstrate that it is strong ties that are instrumental for business activity and used extensively to provide knowledge and information but also to maintain, extend and enhance business and personal reputations. Unless activities require their reactivation and manifestation, strong ties remain latent and dormant within the network. Strong ties also provide the mechanism to invoke ‘weak’ ties, represented by nodes operating in a wider social context.     

Social capital configuration, legal bonds and performance in buyer-supplier relationships

Academics have increasingly recognized the benefits derived from social networks embedded within companies’ buyer-supplier relationships. However, prior research has only examined the influence of social capital elements on performance, either individually or in part. We propose an integrative model examining the relationships among relational, structural and cognitive dimensions of social capital, and between these dimensions and the cost and innovation performance of the firm. A sample of 163 buyer-supplier relationships is used to test the model. Regression results indicate that the relational dimension of social capital fully or partially mediates the effect of the cognitive dimension on performance, and partially mediates the link between the structural dimension, operationalized as social interaction ties, and innovation performance. Further, high levels of legal bonds were found to moderate the relationship between the relational dimension of social capital and performance outcomes. Implications for theory and managers are discussed.     

An interaction approach to global sourcing: A case study of IKEA

This study explores the process of global sourcing through a case of the Swedish furnishing retailer IKEA from an interaction perspective. With a point of departure in the streams of existing research on global sourcing and the internationalization process of firms through networks, a research question is proposed concerning supply network interactions as an influence in the global sourcing process. The study uses an in-depth qualitative case study methodology, focusing on IKEA and its development of a supply network for the PAX wardrobe system during the years 2003–2009. The findings draw on 29 interviews in Sweden and China, ranging from interviews with the supply management function of IKEA to interviews with Swedish and Chinese suppliers and sub-suppliers. The findings show that the global sourcing process is influenced by interactions and network effects between supply network actors. In particular, we find that relationships between suppliers were identified and set up by IKEA, but cascaded into deeper interactions amongst suppliers at different supply network tiers. Our study contributes to global sourcing research in indicating the importance of interaction amongst supply network actors, showing how the global sourcing strategy of one actor may significantly influence the sourcing strategies of other actors. Global sourcing decisions therefore need to be understood and coordinated across global supply networks.     

From network ties to network structures: Exponential Random Graph Models of interorganizational relations

Theoretical accounts of network ties between organizations emphasize the interdependence of individual intentions, opportunities, and actions embedded in local configurations of network ties. These accounts are at odds with empirical models based on assumptions of independence between network ties. As a result, the relation between models for network ties and the observed network structure of interorganizational fields is problematic. Using original fieldwork and data that we have collected on collaborative network ties within a regional community of hospital organizations we estimate newly developed specifications of Exponential Random Graph Models (ERGM) that help to narrow the gap between theories and empirical models of interorganizational networks. After controlling for the main factors known to affect partner selection decisions, full models in which local dependencies between network ties are appropriately specified outperform restricted models in which such dependencies are left unspecified and only controlled for statistically. We use computational methods to show that networks based on empirical estimates produced by models accounting for local network dependencies reproduce with accuracy salient features of the global network structure that was actually observed. We show that models based on assumptions of independence between network ties do not. The results of the study suggest that mechanisms behind the formation of network ties between organizations are local, but their specification and identification depends on an accurate characterization of network structure. We discuss the implications of this view for current research on interorganizational networks, communities, and fields.     

Networks and leadership development: Building linkages for capacity acquisition and capital accrual

Social networks can aid the leadership development process through facilitating access to important developmental assignments and the acquisition of capabilities to handle associated challenges. Although much of the traditional focus of leadership development has been on building intrapersonal capabilities, functioning effectively as a leader necessitates the development of interpersonal capabilities associated with dyadic ties and relational capabilities associated with patterns of ties within networks. Such capabilities allow aspiring managers to accrue not only human capital, but social and system capital as well. Aspiring managers can tap task, career, and friendship/support networks to aid developmental and career success. Structure factors, including strategic choices, network characteristics, and the technological interface moderate the ability of managers to convert potential network contacts into significant leadership development and capital accrual. Personal factors also influence leadership development prospects. Overall, there are many ways in which network concepts associated with dyadic and relational levels of analysis can facilitate addressing the challenges that are key to leadership development.     

Networks to Nerdistan: The Role of Labor Market Intermediaries in the Entry‐level IT Labor Market

Although networks have long governed economic relations, they assume even more importance in a knowledge‐based economy. Yet, some argue that because of the lack of social networks and human capital, some groups are permanently ‘switched off’ the networks of the global economy. Evidence presented in this article suggests that instead there is latent potential for access to the network, due to the rise of networked community‐based organizations and the increasing accessibility of technology. Based on surveys and in‐depth interviews with almost 700 workers and training providers, I show how the switched off are entering jobs in information technology through network ties and the acquisition of soft skills, or communication and interaction skills. Although community‐based training providers are best positioned to help disadvantaged jobseekers enter the network society, changes in the US workforce development system are reinforcing network exclusivity, rather than facilitating this upward mobility.     

The Organizational Life of an Idea: Integrating Social Network,Creativity and Decision‐Making Perspectives*

abstract Existing theories on the influence of social networks on creativity focus on idea generation. Conversely, the new product development literature concentrates more on the selection of ideas and projects. In this paper we bridge this gap by developing a dynamic framework for the role of social networks from idea generation to selection. We apply findings from creativity and behavioural decision‐making literature and present an in‐depth understanding of the sociological processes in the front‐end of the new product development process. Our framework builds on the importance of mutual understanding, sensemaking and consensus formation. The propositions focus on both network structure and content and highlight the need to have strong ties and prior related knowledge, to incorporate decision makers, and to move over time from a large, non‐redundant and heterogeneous to a smaller and more cohesive network structure. We conclude with a discussion on empirical validation of the framework and possible extensions.     

Core self-evaluations and salary attainment: the moderating role of the developmental network

Core self-evaluation (CSE) has been shown to be robust as a predictor of employees' salary attainment. Although the developmental network is suggested to have a positive impact on salary, do all high-CSE individuals benefit from their developmental networks similarly? We incorporate both personality research and developmental network research to explore this question in two studies. In Study 1, we investigated whether developmental network size moderates the positive CSE–salary relationship. In Study 2, we explored whether the organizational status and the strength of ties of one's developers moderate the positive CSE–salary relationship. Results indicated that high-CSE individuals with developmental networks characterized by fewer developers and by strong ties reported higher salaries than others. Overall, our findings demonstrate that the positive CSE–salary link may vary depending on the structural characteristics of the developmental network.     

The relentless pursuit of construct validity in the design of employment interviews

The construct validity of employment interviews is the greatest challenge faced by employment interview researchers. In this paper, we discuss the theoretical and methodological issues which have an influence upon the construct validity of employment interviews. We pay special attention to issues that emerge at the conceptual development and design stage of interviews. So far, the structuring of employment interviews has been the primary method of improving construct validity. We argue that construct validity can be further improved by bringing theoretical rigor in the design of interviews. For this purpose, we propose steps to reframe the interview dimensions in theoretical frameworks of job performance, to explicate the nomological network of interview constructs, to clarify the validation strategy, and to improve the questions and assessment keys. In the end, we provide an example to illustrate the application of these steps.     

The relationship between brokers’ influence, strength of ties and NPD project outcomes in innovation-driven horizontal networks

This paper examines the impact of a broker's perceived use of power – position (i.e., coercive, reward and legitimate) and personal (i.e., expert, information and referent) – on strength of ties between network members and new product development (NPD) project outcomes. Our sample consists of 100 individuals drawn from 42 organizations that were involved in different innovation-driven horizontal networks. The results of structural equation modeling suggest that the perceived use of both personal power bases and position power bases by the broker are positively related to the strength of ties between members. Strength of ties, on the other hand, is positively related to NPD project outcomes of design performance and development time. Finally, results show that the relationships between a broker's use of different power bases and NPD project outcomes are fully mediated by the strength of ties between networks members. Implications for research, theory, and practice are discussed.     

The transformation between exploration and exploitation applied to inventors of packaging innovations

While the inventor is often the driver of an invention in the early stages, he/she needs to move between different social networks for knowledge in order to create and capture value. The main objective of this research is to propose a literature-based framework based on innovation network theory and complemented with C–K theory, in order to analyze the invention/innovation process of inventors and the product concepts in a packaging industry context. Empirical input from three case studies of packaging inventions and their inventors is used to elaborate the suggested framework.The article identifies important gaps in the literature of innovation networks. This is addressed through a theoretical framework based on network theories, complemented with C–K theory for the product design level. The strength-of-ties dimension of the theoretical framework suggests, in agreement with the mainstream literature and the cases presented, that weak ties are required to access the knowledge related to exploration networks and strong ties are required to utilize the knowledge in the exploitation network. The transformation network is an intermediate step acting as a bridge where entrepreneurs can find required knowledge. The transformation network is also an intermediate step where entrepreneurs find financing and companies interested in commercializing inventions.