How to influence the birth of new business fields — Network perspective

This article explores the management challenges of emerging new business fields by using a network perspective. We are interested in the extent to which individual firms, by mobilizing cooperative networks of actors, can influence the emergence of radically new business fields. A framework describing the environment and the phases of emergence is proposed. Then the activities within each phase are discussed. Finally, we identify and examine the company-level capabilities involved in the management of these core activities. The study contributes to the management of new business fields.     

The network mediation of an incubator: How does it enable or constrain the development of incubator firms' business networks?

Incubators are organisations or structures that usually offer five types of services in order to accelerate start-up development: access to physical resources, administrative services, access to financial resources, assistance with start-up procedures and access to networks. The aim of the present paper is to investigate the mediating role of the incubator. More specifically, it examines how the incubator's mediation is related to incubator firms' development of broader business networks. The primary data comprised 34 face-to-face interviews with 19 respondents from an incubator and its incubator firms and with other actors with which the incubator had a relationship. The paper offers three conclusions concerning how the network horizon influences the incubator's capacity to mediate relationships, the necessity for incubator firms to be proactive in order to utilise the mediation activities of the incubator and the influence of public-funding agencies in the development of incubator firms, which is based on their role as third actors in connected business relationships.     

The Formation of Managerial Networks of Foreign Firms in China: The Effects of Strategic Orientations

This study investigates how firms' strategic orientations (i.e., market, technology, and entrepreneurship orientations) influence the formation of two types of managerial networks (top managers' ties with the business community and with government officials), as well as the impact of managerial networking on firm performance. On the basis of a survey of 181 foreign-invested enterprises (FIEs) operating in China, we find that a market orientation fosters both types of network building. Technology-oriented firms are more likely to cultivate managerial ties with top managers at other firms but less likely to establish networks with government officials. In contrast, entrepreneurial firms tend to develop vertical networks with government officials but have no intention to deepen their horizontal networks with other firms. Competitive intensity moderates the relationships between strategic orientations and managerial ties. Finally, managerial networking has a positive impact on FIE performance.     

Network location and learning: the influence of network resources and firm capabilities on alliance formation

This paper presents a dynamic, firm‐level study of the role of network resources in determining alliance formation. Such resources inhere not so much within the firm but reside in the interfirm networks in which firms are placed. Data from extensive fieldwork show that by influencing the extent to which firms have access to information about potential partners, such resources are an important catalyst for new alliances, especially because alliances entail considerable hazards. This study also assesses the importance of firms’ capabilities with alliance formation and material resources as determinants of their alliance decisions. I test this dynamic framework and its hypotheses about the role of time‐varying network resources and firm capabilities with comprehensive longitudinal multi‐industry data on the formation of strategic alliances by a panel of firms between 1970 and 1989. The results confirm field observations that accumulated network resources arising from firm participation in the network of accumulated prior alliances are influential in firms’ decisions to enter into new alliances. This study highlights the importance of network resources that firms derive from their embeddedness in networks for explaining their strategic behavior. Copyright © 1999 John Wiley & Sons, Ltd.     

Role of quality management capabilities in developing market-based organisational learning capabilities: Case study evidence from four Indian business process outsourcing firms

Business-to-business marketing literature acknowledges the value firms, including business process outsourcing firms, realise through their supplier networks. Such value realisation is often possible through a dynamic exchange of complementary organisational capabilities between a firm and its network partners. However, little is known about how outsourcing firms develop these capabilities and thus realise value. This paper addresses an unexplored theoretical gap of developing market-based organisational learning capabilities in business process outsourcing firms. Using a capabilities lens, this study assesses the impact of quality management capabilities in developing market-based organisational learning capability. Findings from a case study of four business process outsourcing firms in India suggest that effective knowledge transfer, diffusion and the development of market-based organisational learning capabilities are contingent upon the strength of a firm's quality management capabilities. Implications for theory and practice are discussed.     

Managing strategic system-building networks in emerging business fields: A case study of the Dutch smart grid sector

Companies that wish to launch innovative sustainability technologies can collaborate in strategic networks of actors from industry, government and research institutes to pro-actively build a business ecosystem around their new technology. This is called collective system building. In this paper, we examine how to effectively manage networks for collective system building. Based on a review of the literature, we identify the key factors of effective network management and we propose a conceptual framework for network management at the network level. Subsequently, we conduct a multiple-case study in the Dutch smart grid sector to examine how these key factors are implemented by system-building networks. We find differences with the existing network management literature regarding network composition, network management structure, governance modes, decision-making processes, project management, the free-rider problem and trust-building mechanisms. Our study contributes to a better understanding of effective management of system-building networks, which in turn can lead to greater success in establishing new business fields. We contribute to the literature on strategic business networks, specifically on emerging business networks building new business fields.     

A process-based model of network capability development by a start-up firm

Start-up firms are notoriously resource and time poor. One way of addressing these deficits is to develop strategic capability to access, activate and co-shape resources with other firms in the start-up's network. The capability literature assumes such a development is inevitable, provided a start-up survives. But developing network capability depends on the managers of other firms, the deepening managerial understanding of business relationships, and the ability of the start-up managers to adjust to and understand interdependence in networks. We present a processual model of how managerial understanding of network capability develops, comprising of three parts each building on the earlier: (i) in relationships, (ii) through relationships and (iii) in the network. The model was inductively developed from a longitudinal study of a start-up firm. Also, two sensemaking processes were found to predominate – problem solving and social-cognitive processes. Our model highlights the role of the start-up manager in sensemaking with managers across a number of firms to resolve commercial problems. Thus, the independence many start-up managers seek must turn towards interdependence. Second, managers' temporal horizons and the specific temporal profile of events and activities inside the involved business relationships are important in understanding and developing, with other firms, network capability.     

Network process analysis: An event-based approach to study business network dynamics

To develop business, managers need to understand the dynamic nature of the business networks in which their company operates. Qualitative process research offers a promising methodology to deliver that understanding but does not yet provide elaborate analysis methods applicable to business network research. We therefore introduce an event based analysis strategy developed to study processes in business networks. Employing a longitudinal case on a paper trader's internationalization process in a network context as an experimental arena, we propose three tools for process analysis. First, a research steering wheel that combines both retrospective and real time event analysis; second, an analytical scheme comprising influencing factors, critical events and consequent change; and third, an event trajectory that unfolds process patterns. The proposed strategy offers a viable alternative to social network analysis, network pictures and narrative analysis with which to study network change and dynamics. Elaborating events from a moderate constructivist perspective, it enables the researcher to trace and understand processes beyond mere structural change, and to capture their evolution in a multilayered network context. We evaluate the strengths and weaknesses of the methodology and discuss its relevance for research and practice.     

The impact of network configurations on value constellations in business markets — The case of an innovation network

A growing body of scholars are advocating a better understanding of how value is created in business networks, rather than merely in business relationships or at the level of single actors. Among such networks, innovation networks, i.e. the configurations of strategic entrepreneurial nets aimed at improving the effectiveness of innovation performance, have come under scrutiny in the business marketing literature. However, research that explicitly connects value considerations with innovation network configurations is still in its infancy, with empirical evidence being notably scarce. This study is aimed at identifying if and how network configurations affect value constellation aspects in business networks, in terms of value recipients and value outcomes. We interviewed key informants representing 46 high-technology entrepreneurial firms co-located in an innovation network (Daresbury Science and Technology Park — UK). Our study identifies that different network configurations can co-exist in the same overall network; these, nevertheless, are not alternative independent structures, but rather they interact with each other through actors spanning their boundaries. Our study thus provides an understanding of network configurations relating to specific value consequences, but also provides evidence relating to the interactions between different configurations. By doing this, we establish a bridge between a business marketing and a strategy perspective on value in networks. Important managerial implications and implications for policy makers also emerge from our study.     

Learning: The interface of quality management and strategic alliances

In this paper, we investigate the practice of quality management in strategic alliances. By employing a relational view of inter-organizational competitive advantage, the paper addresses the concept of quality management in strategic alliances and networks. We argue that institutional/network relationships influence the practice of quality within a network. In that regard, firms that have adopted quality management practices are more effective in managing and coordinating their interactions with other firms in the network, which results in their enhanced learning capability within the alliance.The proposed framework recognizes the role of trust and cooperative learning as critical factors that affect the success of strategic alliances. It has been argued that firms within an alliance need to achieve the paradox of control and learning. We examine the role of trust as a control mechanism in strategic alliances and address the importance of cooperative learning within alliances. Several hypotheses have been proposed and future research has been outlined.     

An activities-based approach to network management: An explorative study

Over the last few decades, the industrial marketing literature and the business network literature have promoted a holistic approach to marketing and provided a framework for understanding interorganizational networks. However, our understanding of how interorganizational networks govern themselves when developing innovations is still limited. Most network management literature does not focus on the activities employed by network actors and/or does not recognize that there may be different modes of network management. This study explores how, why and in which combination network management activities are employed in a network and in doing so proposes a new conceptualization of network management. Using primary and secondary data pertaining to eleven innovation projects, this study reveals how network management consists of combinations of (rather than individual) management activities undertaken to manage a network. This study identifies three distinct modes of network management: basically coordinated, control-oriented and reward-oriented. Moreover, this study proposes that network actors try to match the management mode to their prevailing mental model as well as the type of network (e.g. in terms of project innovativeness).     

Application and performance impact of stage–gate systems – the role services in the firm’s business focus

Although service innovation is important, knowledge of new product and service development, including the positive effect of stage‐and‐gate‐type systems, has been derived almost exclusively from studies in the manufacturing sector. In the present paper, we address two important questions: How do differences in the firm’s business focus, which describes whether a firm puts more emphasis on products or services in its business activities, influence the usage of such formal innovation processes? Is stage‐and‐gate‐type systems’ impact on innovation program performance contingent on the firm’s business focus? Unlike previous studies, we not only differentiate service and manufacturing by industry classification codes but also apply a continuous measure to take into account the blurring of boundaries between the manufacturing and service businesses. Based on a comprehensive discussion of service‐specific characteristics and their implications for innovation management and using a cross‐industry, multi‐informant sample of innovation programs from 272 firms with 1,985 informants, we find empirical support for firms with a stronger focus on the service business being less likely to use stage‐and‐gate‐type systems. Furthermore, the use of stage‐and‐gate‐type systems fosters innovation program performance, and this effect becomes stronger as the business focus shifts toward services. This result implies that service‐based firms can benefit from stage‐and‐gate‐type systems to a greater extent than product‐based firms. Our research also demonstrates the gap between the desired level of innovation process formalization and its current usage in practice, especially for firms with a dominating service business.     

Market-facing innovation networks: How lead firms partition tasks, share resources and develop capabilities

We focus, in this paper, on ‘market-facing innovation networks’. Rooted in the modular and integrated nature of the products they develop, high levels of product innovation activity are occurring through the behaviours of firms, leading and developing such networks. These lead firms are small and medium enterprises, traditionally tasked with business to business distribution and commercialisation activities. This study enhances our understanding of how task partitioning and resource sharing practices, and their evolution over time, are related to the nature and scope of capabilities of lead firms within the context of market-facing innovation networks. Through a multiple case study methodology, our findings depict and characterise efficiency and relational approaches of lead firms. Outcomes, in terms of firm and network level innovativeness and commercialisation, are discussed. Findings are explained by the tension created by the need to manage on-going routine distribution activities and emergent networked product innovation activities.     

Crowdfunding networks: Structure,dynamics and critical capabilities

Crowdfunding platforms – bringing together entrepreneurs, investors and customers – have grown rapidly over recent years. Crowdfunding networks are open, multisided markets that match founders and funders on crowdfunding platforms. The unique structure of these networks blends social and business networks and comprises a complex array of closer and more distant network relationships. Research investigating the characteristics of these open and highly dynamic network structures is in its infancy and capabilities critical to operating in them are under-explored. Thus, this study follows an abductive reasoning process to understand critical capabilities for influencing and orchestrating crowdfunding networks. It draws on a thematic content analysis of 1484 blog entries written by crowdfunding experts and a comprehensive review of (i) literature on crowdfunding networks and (ii) five literature streams dealing with dynamic capabilities in evolving network structures. As a substantial contribution, this research delineates a portfolio of four collaborative capabilities – visioning, dynamic business modelling, engaging, and attaining social continuity – essential for operating successfully in crowdfunding networks. These new collaborative capability sets assume a new understanding of agency as a continuum of managerial and collective agency, an understanding that is novel within the network management and the capabilities literature.     

Small firms' interaction with political organizations in the European Union

About 99% of all firms in the European Union are small, and politicians are increasingly emphasizing their importance for job creation, technological development and prosperity. Consequently, the political focus is on these firms and a large number of decisions influencing their business activities are constantly taken by political actors at various levels. The aim of this article is to investigate small firms' interaction with political organizations in the EU. Previous studies have shown that these firms have been obliged to follow the coercive political decisions of the EU's political units. In this paper, however, we identify some changes which demonstrate political support and influence by small firms. Based on a case study approach as well as data from a Swedish survey, four propositions concerning small firms' interaction patterns within the political context of the EU will be highlighted and further discussed.     

The darker side of sustainability: Tensions from sustainable business practices in business networks

While the current literature generally assumes that implementing sustainable business practices (SBPs) will lead to improved wellbeing and positive outcomes, relatively little research has explored the potential tensions and conflicts that SBPs may cause in multi-actor networks. To address this issue, we conduct a qualitative multiple case study in a regional business network, including interviews with 43 managers in 17 firms in different industries. The findings of this study identify four types of tensions (economic, structural, psychological, and behavioral) that tend to emerge when firms implement SBPs in networks, and illustrate how different stakeholders (implementers, suppliers, customers, other network partners) perceive them. Overall, this study contributes to the current literature by highlighting the underexplored “dark side” of sustainability, and illuminating how organizational decisions aiming at improving collective wellbeing can also lead to tensions and conflicts. For managers, this study offers insights into how to anticipate, manage and mitigate potential tensions that might arise in business networks when one stakeholder decides to implement a SBP.     

A network perspective on idea and innovation crowdsourcing in industrial firms

Crowdsourcing has been attracting the attention of both academics and practitioners over recent years. The aim of this article is to contribute to the current body of knowledge on innovation in networked contexts by systematically analyzing various crowdsourcing configurations available to industrial firms. We first develop a categorization of crowdsourcing in industrial firms comprising four distinct configurations: internal crowdsourcing; community crowdsourcing; open crowdsourcing; and crowdsourcing via a broker. We then proceed to draw from the literature on industry networks to further deepen our understanding of how these four distinct configurations can contribute to business and innovation activities of a focal industrial firm. Specifically, we focus on the structural properties, nature of collaboration, and governance of crowdsourcing networks. This novel combination of crowdsourcing and network research delivers new insights that enrich current understanding on various options available to industrial firms operating in networked contexts to facilitate their innovation processes.     

Institutions and business networks: A comparative analysis of the Chinese, Russian, and West European markets

The paper analyses business networks originating from three markets: Chinese, Russian, and West European. So far, little attention has been given to the fact that business networks in particular markets may be dissimilar because of differences among institutions. The paper advances a model where institutions are assumed to influence five major characteristics of business; (1) the processual aspects of the network, (2) the structural aspects of the network, (3) the function of firms and relationships in the network, (4) the meaning of strategy and planning, and (5) social relationships in the context of inter-firm relationships. The analysis builds on three types of substances of institutions — cognitive, normative, and regulative, which in turn are specified according to different aspects. The cognitive substance of business networks is explored through the aspects of self, time, and causality. The normative substance is explored through the aspects of achieved versus ascribed status, inner versus outer direction, universalism versus particularism, and trust. The regulative substance is specified as an authority system and a sanction system. The analysis demonstrates that, as institutions differ in these three markets, the business among them also differs in terms of the five characteristics, and this variation calls for different strategies for firms operating in these markets.     

Do ongoing networks block out new friends? Reconciling the embeddedness constraint dilemma on new alliance partner addition

Research Summary: This study addresses a theoretical dilemma regarding how alliance network constraint (reflected by network cohesion) affects a firm’s alliance formation with new partners. Using a network pluralism approach, we separate a firm’s ego alliance network into two activity‐based networks—an exploratory network and an exploitative network—based on the primary value chain activity involved in each alliance. We argue that the cohesion of exploratory or exploitative networks has an inverted U‐shaped effect on the addition of new partners in the same activity‐based network, and a positive effect on the addition of new partners in the other network. Results based on data from the biotechnology industry largely support our predictions with one exception. Our study contributes to both scholarly understanding of network embeddedness and alliance practice. Managerial Summary: The structure of firms’ ongoing alliance networks may have paradoxical implications for their efforts to search for and form alliance with new partners. That is, when a firm’s alliance partners are tightly connected with each other, the cohesive network tends to both encourage and impede the focal firm to add new partners. We resolve this dilemma by showing that when a firm is deeply entrenched in a cohesive alliance network conducting a certain type of activities (e.g., R&D activities), it may not easily add new R&D alliance partners. However, it may still be able to escape from the cohesive R&D alliance network by seeking new partners conducting other activities (e.g., manufacturing activities).