A Review of Interfirm Networks: A Deeper Understanding of the Relationships Paradigm Jie G. Fowler Valdosta State University • Valdosta, Georgia Timothy H. Reisenwitz Valdosta State University • Valdosta, Georgia Abstract Interfirm relationships or networks take a variety of forms and can poten- tially provide significant synergy for the participants. Yet, most of research stud- ies, to date, have primarily analyzed interfirm networks based upon one paradigm/ perspective. This review aims to examine a complete theoretical basis of network research and looks for research gaps and practical implications for both researchers and practitioners. Specifically, it summarizes six conceptual perspectives regarding interfirm networks: motivational, relational, structural, evolutionary, interactional, and governance, in order to address similarities and differences among different perspectives. With this purpose in mind, the relevant literature is reviewed and, at the conclusion of each conceptual perspective, areas of research that require more development and investigation are identified. Finally, suggestions for managers con- templating or engaged in interfirm networks are presented. Introduction The network paradigm originally built upon the notion that economic ac- tions are embedded in a social network of relationships. In essence, organizations can be interconnected with other organizations through a wide array of social net- works in order to improve effectiveness and efficiency. For instance, through exam- ining a variety of forms of collaboration, ranging from consortia to joint venture, to franchising, to dealership, Fabrizio (2011) found collaboration among firms of different sizes helps to overcome weaknesses without increasing transitional costs. Other scholars found that firms organized in networks have higher survival chances and that prestigious partners help firms to go to IPO faster (Gulati, Dialdin & Wang, 2002). In addition, networks may also enable firms to gain access to capital in order to sustain operations and investment, while lower the transitional costs (Khanna & Rivkin, 2001). For instance, research findings show that network members in China reported higher financial performance and productivity (Keister, 1998). Further, net- works may reduce consumer uncertainty attitudes towards the brand. For instance, Volume 30, Number 1 53 Ingram and Baum’s (1997) study of chain affiliation of Manhattan hotels suggests that a hotel that joins a high status hotel chain signals its high status. Recent literature on networks attempted to examine the knowledge transfer among connected firms. For instance, the vertical networks between Toyota and its suppliers and among sup- pliers themselves facilitate knowledge learning and provide members learning and productivity advantages over non-members (Dyer & Nobeoka, 2000). Traditional economic literature identified that a firm has at least three alter- natives in order to maintain its strategies, such as searching for suppliers and new markets (Mariti & Smiley, 1983): the firms have options to develop a cooperative agreement with other firms, firms may make resources available to individual mar- ket transactions, and firms may organize themselves internationally. The last two alternatives can illustrated by the technological approach based upon economies and diseconomies of scale and Adam Smith’s principle of division of labor---refined and elaborated by Stigler (1951), Coase (1937), and Williamson (1975). However, re- cent empirical evidence shows that the maxim of “networks matter” may contradict the traditional economics of scope/scale and successful exploitation of personal or organizational relationships is essential for firms to gain and maintain competitive advantages (Khoja, 2010). As such, practitioners should be vigilant to develop rela- tionships in networks. By definition, a network describes a collection of actors (e.g., persons, di- visions, firms, countries) and their connections (Iacobucci, 1996; Thorelli, 1986). Brass, Galaskeiwica, Greve, and Tsai (2004) define a network as “a set of nodes and the set of ties representing some relationships, or lack of relationships, between the nodes” (p. 481). The ties that connect actors take many different forms. They can be directed (i.e., potentially unidirectional as in giving advice to someone) or undirected (e.g., being physically proximate), and they can be dichotomous (e.g., present or absent) or valued (e.g., the strength of a friendship) (Borgatti & Foster, 2003). An organizational network is defined as a collection of more than two firms that pursue repeated exchange relationships with one another but lack a legitimate organizational authority to manage the exchange process (Podolny & Page, 1998). This definition encompasses a wide range of interfirm relations, including alliances, joint ventures, business groups, franchises, and research consortia, while exclud- ing such market arrangements as short term contracts or spot-market transactions. Sydow and Windeler (1998) investigate the properties of interfirm networks, which they consider “as an institutional arrangement among distinct but related for-profit organizations which are characterized by a special kind of network relationship, a certain degree of flexibility, and a logic of exchange that operates differently from 54 Journal of Business Strategies that of markets and hierarchies” (p. 266). In essence, interfirm networks differ from any interorganizational arrangement of firms at least with respect to the three proper- ties above. Traditionally, networks have been investigated in connection with other topics, such as sociology. For instance, various sociologists have investigated such topics as embeddedness (Uzzi, 1997), social capital (Portes, 1998), social exchange (Cook, 1977), and structuration theory (Giddens, 1984) in an organizational net- work context. Increasingly, they have become interesting topics unto themselves in organizational research. Organizational scholars found that economic actions are embedded in social relations and interfirm relations generate and are generated by embedded relations that differ from traditional arm’s-length market ties. In market- ing and management, over the last three decades, this recognition is reflected in the increase in, and the character of, research on distribution channels, supply chain management, buyer-seller relationships, buying centers, diffusion of innovations, and new product alliances. As a result, recent expansion of research interest in management and mar- keting calls for a review and classification of work in interfirm networks. As such, the primary objective of this paper is to review, synthesize, and integrate empirical and conceptual articles on interfirm networks in management and marketing litera- ture and to offer suggestions and direction for researchers and practitioners in this area. We examine the articles in six groupings, based upon what we interpret as one of six primary conceptual perspectives that they reflect: motivation, relational, structural, evolutionalist, interactionalist, and governance. The following discussion begins with examinations of interfirm network research that reflects each of the previously noted six conceptual perspectives. For each perspective, the literature is reviewed and the research gap in each perspective is identified at the end of each section.1 The Motivation Perspective and Research Gaps The motivation perspective is concerned with why firms behave in cer- tain ways with respect to the networks. It focuses on two basic questions: why do firms enter into network entities such as alliances, joint ventures and other business groups such as buying groups and trade associations; and why do they make certain strategic choices about relations and interactions with other network members? In general, this body of work is based upon cost factors (transaction costs), internal factors (firm’s capabilities, resources-based view), and external influences (social Volume 30, Number 1 55 capital, institutional-based view) (e.g., Eisenhardt & Schoonhoven, 1996; William- son, 1985). Traditionally, the approach that has been used to understand how strate- gic alliances form is transaction cost economics (Williamson, 1985). Transaction cost economics emphasizes transaction cost efficiency as a motivation for the cor- poration to enter into a network (Eisenhardt & Schoonhoven, 1996). It has been effective in predicting vertical integration among suppliers and buyers in mature industries, such as automobile manufacturing (e.g., Osborn & Baughn, 1990). How- ever, the logic of transaction costs does not capture many strategic aspects of net- works, such as learning, creation of legitimacy, and fast market entry (Eisenhardt & Schoonhoven, 1996). In order to address the firm’s capabilities in forming strategic alliances, Eisenhardt and Schoonhoven began to examine strategic needs as motiva- tion for firms forming alliances and positioning themselves in a network. Such work begins to move beyond transaction costs and looks at logical resource needs and social resource opportunities. In comparison, the resource-based view of motivation in interfirm networks emphasizes strategic factors and characteristics of the firm rather than transaction costs. Furthermore, this view focuses on the logic of needs rather than efficiency. Many studies on firms’ motivations for entering into alliances take a resource-based view. Das and Teng (2000) attempt to relate different resource characteristics (i.e., property-based and knowledge-based resources) to alliance formation and structure. Lee, Lee, and Pennings (2001) further examine the influence of internal capabilities and external networks. Lavie (2006) borrows the notion of network resources (Gu- lati, 1999) to extend the resource-based view by incorporating network resources of interconnected firms. Lavie (2006) proposes a model that distinguishes shared resources from non-shared resources and reveals how interconnected firms can ex- tract value from resources that are not fully-owned or controlled by the organization. Another stream of research on firms’ motivations employs social capital theory. Scholars who have contributed to social capital theory include Bourdieu (1983, 1986), Burt (1997), Coleman (1988), Lin (1999), Portes (1998), and Putnam (2000). Specifically, social capital theory explains how organizations access and use resources embedded in a social network to gain returns (e.g., seeking economic help). Based upon this theory, organizations are motivated to engage in interaction and networking in order to enhance outcomes (Lin, 1999). Organizational scholars have utilized social capital theory for decades. For instance, Koka and Prescott (2002) suggest that social capital could yield informational benefits for the firm. Lee et al. (2001) argue that the firms’ capabilities and social capital interactively influ- 56 Journal of Business Strategies ence start-up firms’ performance in terms of sales growth but that social capital alone has weak main effects on firm performance. In recent years, due to the rising global marketplace, scholars have begun to apply social capital theory to cross-cultural research. For instance, Gu, Huang, and Tse (2008) draw upon social capital theory to examine how firms make strategic choices through guanxi networks in China. Additionally, a series of studies grounded in the institutional-based view can be used to explain the firm’s motivation to make strategic choices as well. In- stitutional theories (DiMaggio & Powell, 1983; Scott, 1987) believe that organi- zational actions are driven by social justification. From this perspective, strategic decisions are social and normatively defined because their motives derive from an actor’s propensity to legitimate cooperating activities. Participants in the network believe that their effectiveness is judged by other constituents (e.g., shareholders, customers, suppliers). According to the theory, organizations are motivated to seek legitimacy or approval from those potential constituents. So far, there are only a few scholars who have applied this theory in network research. For instance, Dacin, Oli- ver, and Roy (2007) examine the legitimating aspect of strategic alliances. Drawing upon an institutional-based view, they argue that the social symbolic and signaling characteristics of alliances serve as a source of legitimacy for partnering, and legiti- macy serves as a means to achieve competitive advantage. As previously mentioned, motivational studies in network research tend to explain why firms enter into networks and why they make certain strategic choices within those networks. The research reviewed thus far highlights many of the theo- ries (transaction cost economics, resource-based view, social capital theory, and the institutional-based view), and each of them emphasizes different aspects of what motivates firms to enter into networks. However, each also tends to ignore or trade- off other important factors that may lead firms to enter into networks. For instance, transaction cost economics theorists highlight the cost and efficiency but lack expla- nations of social legitimacy. The resource-based view theorists focus upon firms’ capabilities but ignore the cost factor. Additionally, social capital theorists concen- trate on social gain and membership but lose sight of stakeholders’ capabilities. Furthermore, while researchers have shown that different theories can ex- plain different kinds of motives, there are no clear boundaries among these theories. For instance, the institutional-based view, which concerns social norms, may poten- tially overlap with social capital theory in terms of social sanctions and expected rec- iprocity. The resource-based view may overlap with social capital theory in terms of instrumental return. In general, while a few scholars (e.g., Lee et al., 2001) often acknowledge that there is a need for combining theories when conducting research, Volume 30, Number 1 57 we believe that examining the commonality and difference between theories can create an outlet for future research. Finally, though much research has been done in terms of organizational motives to enter into a network, there is a lack of research concerning the retreat or exit from a network. There is a need to investigate the causes/motivations for exit- ing a strategic network. Factors such as relational conflicts, asymmetric exchange, new partnership formation, relationship maintenance costs, industrial environmental change, and network structure transition need to be examined as well. Such studies will not only inform us as to what motivates firms to exit networks but potentially what motivates firms to enter them. The Relational Perspective and Research Gaps Relational studies represent one of the earliest streams of research related to networks and continue to be of interest to network researchers. In general, the relational perspective is concerned with how aspects of the relationships among net- works members—including strength, distance, and other qualities of ties—affect and are affected by other factors, such as member firms’ strategic choices, perfor- mance, and knowledge creation. Specifically, relational network studies are based upon the relational tie literature, which is primarily concerned with the nature of the relational bond between two or more actors. Scholars in this domain typically classify the relationship between social actors as being linked by weak or strong, instrumental or expressive, and direct or indirect ties. For instance, Larson (1992) shows that strong ties promote or enhance trust, mutual gain, and reciprocity among firms from a long-term perspective. Consequently, partners are likely to form joint problem solving arrangements as well (Powell, 1990; Uzzi, 1996). Several important studies have clarified, and in some cases modified, the theory of relational ties by extending the research in new directions. Gulati and Westpal (1999) examine how interlocking ties have different effects on the forma- tion of joint ventures between firms. Based upon this finding, the content of ties (di- rect vs. indirect) can have a strong influence over corporate strategy decisions; some ties may promote the creation of a new alliance, while others could actually reduce the likelihood. In addition, Gulati, Nohria, and Zaheer (2000) argue that network ties are important sources of referrals that enable prospective partners to identify and learn about each other’s capabilities and reduce the informational asymmetries that increase contracting costs. In order to test the hypothesis, the authors define tie strength by the frequency of interaction between partners and their level of resource 58 Journal of Business Strategies commitment to the relationship. Further, Rowley, Behrens, and Krackhardt (2000) explore the conditions under which strong and weak ties are positively related to firm performance. Specifically, the authors argue that whether or not firms form their strategic alliances through strong or weak ties depends on how it is structurally embedded in the network. In essence, ties can act as a social control agent in terms of governing how alliance partners behave or cooperate in the marketplace. A few recent studies provide useful challenges and an extension to the tradi- tional relational-based view of interfirm networks. Rindfleisch and Moorman (2001) examine the acquisition and utilization of information in new product alliances from a strength-of-ties perspective. Drawing upon network theory (Granovetter, 1973, 1983), the authors suggest that horizontal alliances have a lower level of relational embeddedness and a higher level of knowledge redundancy than do vertical allianc- es. The results also question the key underlying assumptions of the strength-of-ties literature. For instance, strong ties are typically assumed to share both high levels of embeddedness and high levels of redundancy; however, the findings of Rindfleisch and Moorman (2001) indicate that this assumption does not hold for organizational contexts. In an organizational context, strong ties are more likely to act as “bridges” than weak ties. Additionally, Khanna and Rivkin (2006) extend interfirm ties beyond the strength-of-ties literature and define ties by their content. Based upon a survey in Chile, the findings suggest that the content of ties (e.g., family connections, common owners) play a role in determining the boundary of a business group. Mariotti (2011) investigated how firms gather and combine knowledge through strengthened bridg- ing ties and high quality relationships. Most recently, Lee, Kroll and Walters (2011) developed a model of corporate governance stages and suggested that, in transitional economics, corporate governance is likely to shift from a bureaucratic control-based structure to a more relational governance structure. Although few studies have provided challenges and extensions to the relational-based view, a large amount of research is grounded in network theory (Granovetter, 1973, 1983). However, we should also realize that network theory originally examined individuals within those networks and not organizations. We should further investigate the theoretical boundaries of organizational network re- search. In other words, we are not clear as to whether or not individual ties can be fully applied to organizational research. Additionally, we have to acknowledge that organizations do not build ties, people build ties. If this is true, how managers trans- fer their personal ties to the organization becomes an interesting research question which has yet to be studied in detail. Lastly, there is no clear definition of the quali- ties of interorganizational ties, and other qualities of ties besides tie strength (i.e., Volume 30, Number 1 59 distance, symmetry, etc.) have not been fully examined as well. The Structural Perspective and Research Gaps Despite the value and quality of work conducted under the relational per- spective, many recent studies have moved from the relational perspective to a net- work structure perspective. For instance, Liao (2010) studies the firm’s ability to process and create knowledge in interfirm networks from a structural perspective. Westbrock (2010) found that an efficient network typically has a dominant group in the structure of oligopolistic markets. The structural perspective is concerned with how the overall structure of networks and structural factors within networks affect and are affected by other factors such as member firms’ strategic choices, performance, knowledge creation, and knowledge transfer. Overall, the structure of networks refers to vertical networks (e.g., vertical alliances or marketing chan- nel networks that typically include suppliers, manufacturers, distributors, and/or re- tailers), horizontal networks (e.g., horizontal alliances and buying groups that are typically composed of competitors in the same industry and that share the same market), mixed networks that include both horizontal and vertical networks (e.g., multichannel networks), and intermarket or concentric networks (e.g., Japanese Kei- retsu). Structural factors within networks refer to factors such as size, density, ac- tors’ positions (centrality), network composition, interlocking board memberships, and structural holes (e.g., Achrol & Kotler, 1999; Fombrun, 1982; Gulati, Nohria, & Zaheer, 2000; Provan & Kenis, 2007; Sydow & Windeler, 1998). Early research in the structural perspective has attempted to understand and define interorganizational relations within marketing channels (Reve & Stern, 1979), leaving little question as to why marketing has a long tradition of examining vertical relationships between firms. In the past, many authors conceive of networks in this sense (Snow et al., 1992). By definition, the vertical network is the organiza- tional set of firms comprising vertical exchange relations (Achrol, 1997). Scholars have brought together a variety of research arenas relating to vertical networks such as interdependency, contracting, and relational behavior in marketing channels (e.g., Kumar, Heide, & Wathne, 2011; Lusch & Brown, 1996) and power (Walker, 1972). Achrol and Kotler (1999) argue that marketing can be a network integrator in verti- cal channels because the network members are highly specialized and the burden rests on marketing managers to organize information and resource flow. In marketing, Ganesan et al. (2009) further brought vertical network re- search into a retailing context, finding that retailers are looking beyond their or- 60 Journal of Business Strategies ganizational boundaries to develop and leverage the resources and capabilities of their supply chain partners to create superior value and competitive advantage in the marketplace. The authors also discuss how global sourcing, multichannel routes, and relationship-based innovation lead to performance improvements with regard to brand image, reputation, sales, profits, innovation, and relationships. Additionally, a recent study conducted by Zaheer and Bell (2005) concludes that firms with superior network structure may be better able to exploit their internal capabilities and thus enhance performance. Horizontal networks have also been examined in recent literature (e.g., Frels, Shervani, & Sriastava, 2003; Provan & Sebastian, 1998; Rindfleisch & Moor- man, 2009; Rowley, Behrens, & Krackhardt, 2000; Swaminathan & Moorman, 2009; Zaheer & Bell, 2005). For instance, Nygaard and Dahlstrom (2002) state that horizontal arrangements are increasingly deployed in organizational networks. In order to address the lack of horizontal alliances in the marketing literature, the authors examine the distribution system of two oil companies that operate through a horizontal alliance at the retail level in order to address the role of stress in hori- zontal alliances, the influence of role stress on organizational outcomes, and the organizational and communicative processes that influence the level of stress in al- liances. Additionally, Rindfliesch and Moorman (2001) suggest that horizontal alli- ances have lower levels of relational embeddedness and higher levels of knowledge redundancy than vertical alliances. Aside from vertical and horizontal networks, the concentric network is also a network form that marketers are becoming more and more aware of. The concen- tric network, also known as an intermarket network, is defined as an enterprise group consisting of affiliations that operate in several related and unrelated industries and center around a major corporation (Achrol & Kotler, 1999) The concentric network, at this point, is largely a phenomenon of the Japanese and Korean business environ- ment (Achrol, 1997). Normally, the enterprise group is organized around one or more major financial institutions in the financial market. However, we believe that concentric networks not only exist in the Japanese and Korean environments but also in the Western marketplace. A possible example is in Uzzi’s (1997) study of structural embeddedness. Uzzi did not identify his research context as a concentric network. However, his study involves a major manufacturer surrounded by an inter- firm network (e.g., design studio, warehouse, showroom, and retailer), which can be considered a concentric network. Mixed networks, a fourth network structure, have rarely been examined, much less defined, in past literature. McGuire and Dow (2009) reviewed the major Volume 30, Number 1 61 theoretical and empirical work of Japanese Keiretsu, dividing the keiretsu structure into vertical and horizontal networks and claiming that the distinction between the two is often blurred. Often, there is an overlap between the two. For instance, the overlap between the Mitsubishi horizontal and production centered grouping and the overlap between Toyota (vertical) and Mitsui (horizontal) groups are classic ex- amples. It seems that researchers have made considerable efforts to study vertical or horizontal networks. However, we take note that any discussion of vertical or hori- zontal network structures is likely to be oversimplified. Networks are characterized by permeable and evolving ties. For instance, each of the ties could move from hori- zontal to vertical structures and vice versa. Practically, simply examining horizontal networks may neglect the other vertical relationships the firms may have established that have an impact on the horizontal networks at play. Possibly, the combination of ties leads to superior performance instead of any one single vertical or horizontal tie. In other words, simply looking at vertical or horizontal networks separately may lead to inaccurate research results. As such, we believe that investigating the mixed network could possibly provide a new research arena. The Evolutionary Perspective and Research Gaps An already large and still growing body of literature concerning organiza- tional networks draws attention to the importance of network evolution. The evo- lutionist perspective focuses on how and why changes in networks affect and/or are affected by firms’ strategic choices, industry events, and institutional factors (i.e., changing social norms, laws, or regulations) within a network. For example, how do the changing size, density, and positions of new or existing firms in a network, joint venture, and alliance formation impact the relationships within those networks? Additionally, research has focused on the stages of relationship development among existing and potential network members. Specifically, the majority of the body of work concerning the evolutionist perspective focuses on network formation and network dissolution. In the view of network formation, organizations build ties based upon theories of social and socioeconomic exchange (Larson & Starr, 1993), social capital (Walker, Kogut, & Shan, 1997), and structure roles. For instance, Larson and Starr (1993) detail the three stages of network building, focusing on dyads and converting dyadic ties to socioeconomic exchanges while layering the exchanges with multiple exchange pro- cesses. During the three stages, organizations selectively use the network dyads 62 Journal of Business Strategies to match their business decision making. Further, Gulati (1993) investigates how social structure affects interfirm alliance formation patterns through a longitudinal study in which he proposes that the social context emerging from prior alliances and consideration of strategic interdependence influences partnership decisions between firms. The social network then facilitates new alliances by providing information to firms about the capabilities and reliability of the potential partners. As such, orga- nizations create ties to manage uncertain environments and to satisfy their resource needs (Gulati & Gargiulo, 1999). In addition, organizational scholars investigate network evolution from oth- er social theories other than social exchange which, to some extent, overlap with the motivational perspective. However, evolutionists focus upon the stage and process of building networks. For instance, changes in political and economic power can affect channel structure and firms’ decisions in terms of social network formation (Dahab, Gentry, & Sohi, 1996). Resource dependence theorists have argued that the formation of interorganizational ties, such as strategic alliances, is a result of underlying resource dependence (Pfeffer & Nowak, 1976). In addition, Madhavan, Koka, and Prescott (1998) draw upon the structural perspective to theorize about how and why interfirm networks change over time. They argue that interfirm net- works evolve in response to key industry events. Scholars of corporate strategy have suggested that firms form or change alliances to improve their strategic position in the network and in the marketplace (Contractor & Lorange, 1988; Kogut, 1988; Porter & Fuller, 1986). Interestingly, Gulati and Garguilo (1999) argue that the new alliance modifies the existing network, prompting a dynamic between organizational action and network structure. Through testing the ideas over a nine-year period, the study shows a new alliance may increase with their interdependence and also with their prior mutual alliances, common third parties, and joint centrality in the alliance networks. In recent years, scholars have begun to investigate network dissolution. Due to the complexity of collecting data, the research is mostly theoretical. Baker, Faulkner, and Fisher (1998) analyzed the dissolution of interorganizational ties be- tween advertising agencies and their clients as a function of competition, power, and institutional forces. Specifically, they find that most exchange relationships between advertising agencies and their clients are exclusive, and most last for several years; but competition, power, and institutional forces support or undermine these relation- ships. Powerful advertising agencies use resources to increase stability, but their clients mobilize resources to increase or decrease stability. Competition has an ef- fect on tie dissolution, and institutional forces, such as changing norms, destabilize Volume 30, Number 1 63 relationships. Although researchers have made significant strides in understanding how networks evolve through joining new networks, modifying existing networks, and natural evolution within current networks, they have left a few questions relatively unexplored. Some scholars, for example, assume that exchange relationships be- tween two firms exist as a given and seek to explain how those relations are formal- ized (c.f. Pisano, 1989). This assumption that exchange relations may guide tie formation between firms may actually lead to false conclusions. Some scholars, de- spite an understanding that other reasons may guide tie formation, may not account for network formation and change. For instance, little research has been conducted that explains if marketing capabilities are a resource that firms do not rely upon when entering a new network. Interestingly enough, though resource factors have been specified in the past, the question remains whether or not these resources are tangible (e.g., financial or human resources) or intangible (e.g., accessibility to other networks, capabilities in managing partnerships). Further, a large body of studies in this domain focuses upon the formation of alliances instead of the formation and change of networks. Although the forma- tion of alliances can provide insights into network formation, it is hard to know how other business networks (e.g., buying groups or business associations) form through this conceptual perspective. As such, research on informal business groups could be a possible future research arena. Lastly, arguably, institutional forces, such as cul- tural norms, play an important role in network formation. Although a few scholars (c.f. Peng, 2003; Peng & Zhou, 2005) investigate how firms use network-centered strategies and how networks evolve in a transitional economy, little work has been done to compare network evolution in different cultures or to analyze network evo- lution that involves firms from more than one culture. The Interactionist Perspective and Research Gaps Much network research draws attention to the importance of interaction among firms (e.g., Belle, Katsikeas, & Robson, 2010). The interactionist perspec- tive focuses on the types, conditions, and consequences of interaction among firms in networks. As such, informational exchange, knowledge transfer, organizational learning, contractual and informal exchange, and reciprocity are important transac- tions that concern the interactionists. This perspective can be traced back to the 1970s. In general, early research simply focused on exchange interactions between entities in a network, and scholars agreed that conditions such as power, exchange 64 Journal of Business Strategies behavior, and environmental forces served as important factors influencing and facilitating interactions among firms. For instance, Bensen (1975) proposes that resource concentration, power network dependence, resource abundance, and en- vironmental control mechanisms are dimensions for firms to build networks and make interactive strategic decisions. Cook (1977) borrowed an exchange model for analysis of interorganizational relations and defines interorganizational linkages as networks of exchange interaction. Organizational activities are viewed as networks of exchange network relations. In order to develop his exchange model, Cook pro- poses that building interorganizational relationships such as alliance formation are correlated with power and position in the network. In addition to these early conceptual articles, Larson (1992) further con- ducted a field study through a sample of dyadic relationships established by high growth entrepreneurial firms and finds that a process model of network formation, which emphasizes reciprocity and mutual interdependence. Jones, Hesterly, and Borgatti (1997) further combine network theory and transaction cost economics to assert that the interaction among firms are based upon asset specificity, demand un- certainty, task complexity, and frequency. These conditions drive firms to use their social mechanisms for exchange interaction. Although early research focuses on the exchange interaction aspect of net- works, little has been done to investigate alliance constellations in recent years. Das and Teng (2002) were the first scholars to propose that social interaction should be applied to alliance constellations. Alliance constellations are strategic alliances formed by multiple partner firms. Popular constellation types include R&D con- sortia, joint bidding, and code-sharing among airlines and other industries. In the process of exchange among firms, reciprocity plays an important function for sub- sequent transactions. While the early work with an interactional perspective is dominated by ex- change theorists, researchers have focused on learning aspects of interaction in the past two decades. Scholars generally agree that economic exchanges among firms may involve both more obvious and less obvious tangible and intangible resources (such as market information). For instance, Uzzi (1997) finds that information ex- change is very proprietary in arm’s length ties and that learning synergies can arise from sharing insights within a network (Morgan, 2004). In addition, Bell and Zaheer (2007) examine the geographic impact on knowledge flow among networked firms. They acknowledge that knowledge—which is closely linked to a firm’s innovative- ness—is accessed across interorganizational boundaries and geographic space via networks. Using a combination of primary and secondary data on mutual fund firms, Volume 30, Number 1 65 they find that institutional level ties (ties formed by the industry trade association structure arising incidentally to the firms involved rather than purposefully by the firms or their executives) are valuable in knowledge transmission only when such ties are geographically proximate. Organizational ties fail to act as transmitters of knowledge transference regardless of the location while, on the other hand, indi- vidual ties are superior for knowledge flow. In general, past research has focused on common themes, such as exchange behavior among firms and organizational learning. However, there is much left to be done in terms of the interactivity among firms. Peters, Gassenheimer, and Johnston (2009) call for a more explicit connection to the interactivity and network litera- ture. The nature of interactions, as a dynamic phenomenon, has presented research- ers with challenges that are both conceptual and empirical. For instance, although scholars focus upon interfirm interaction, we still lack an understanding of how in- dividual ties serve as transmitters of knowledge flow among or within firms. We do not yet know much about how specific knowledge links to a specific tie or resource. We also do not know how different ties influence the levels or amount of knowledge or information flow. In addition, we may need to seek a better understanding of how the types of interaction (e.g., frequency, the length of the relationship, etc.) impact organizational learning. The Governance Perspective and Research Gaps In recent years, scholars have recognized that the forms of governance may serve as key factors affecting research results. The governance perspective focuses on the locus of control within networks. Major examples of governance include net- work administrative organizations (NAO) networks that govern by an overarching entity that is separate from the firms within the network (i.e., a trade association), lead organizational governed networks (LOG) that are governed by a lead or domi- nant organization within the network, and participant governed networks (PGN) that are jointly governed by the many firms in the network. Provan and Kenis (2007) propose that the simplest and most common form of network governance is the PGN, which is governed by the network members themselves with no separation of the governance entity. In health and human ser- vices, shared governance networks are common, in part because networks are often considered to be an important way of building community (Chaskin et al., 2001). In such a context, network members will only be likely to be committed to the goals of the network if they all participate on an equal basis. In business, shared governance 66 Journal of Business Strategies may be used in small, multi-firm strategic alliances and partnerships to develop new products or attract new businesses, which could not be easily done through the in- dependent efforts of network members (Venkatraman & Lee, 2004). Shared gover- nance may also be used in multilateral relations among banking firms to assemble financial investment (Eccles & Crane, 1988). At another extreme, LOG governance can occur in horizontal networks, most often when one organization has sufficient resources to play a lead role (Provan & Kenis, 2007). It can also occur in vertical, buyer-supplier relationships, especially when there is a single, powerful buyer/supplier/funder and several weak and small suppliers or buyers. The most classic example can be found in the Japanese Kei- retsu model (Gerlach, 1992) and other similar models of cooperative buyer-supplier models in the U.S. (Uzzi, 1999) and Europe (Inzerilli, 1990; Lazerson, 1995). Ad- ditionally, lead organizations play important roles across different industries. For instance, in the entertainment industry, the LOG may be a major firm’s studio (Jones & DeFillippi, 1996). The LOG can also occur in health and human services; in community health, it may be a hospital or health clinic (Weiner & Alexander, 1998). Teisman and Klijn (2002) also argue that a government agency can act as a lead organization in networks. Graddy and Chen (2006) focus on the role of the lead organization in governing child welfare in Los Angeles. A third form of network governance is the NAO in which the basic gover- nance model is a separate administrative entity set up to govern the network. Al- though the network members still interact with one another, the NAO model is high- ly centralized (Provan & Kennis, 2007). For example, Human and Provan (2000) describe two networks in the wood processing industry that are both guided by an NAO. All the firms were for-profit, but the NAOs were non-profit. However, the NAO can be for a for-profit organization as in the case of Nexial International, the global accounting network discussed by Koza and Lewin (1999). Other scholars (e.g., McEvily & Zaheer, 2004; Provan, Isett, & Milward, 2004) argue that the NAO can also be used as a mechanism to enhance network legitimacy, to deal with unique and complex network level problems and issues, and to reduce the complexity of shared governance. In recent years, scholars (e.g., Provan et al., 2004) find that a more formalized NAO typically have board structures that include all or a subset of network members. The board addresses strategic concerns, leaving operational decisions to the NAO. Organizations join or form networks for a variety of reasons, including the need to gain legitimacy, serve clients efficiently, gain resources, and solve operational problems; and due to the different needs of the network, gover- nance may vary. Volume 30, Number 1 67 In the past, although marketing scholars have made significant efforts to address the impact of networks, few of them clearly distinguish the type of network governance examined. Of the existing literature, only that within the health and hu- man service sector has even attempted to distinguish the type of governance exam- ined. Even so, a clear identification of governance within those studies in health and human services was far from universal. Most articles lack a specific explanation of the governance structure. As such, there is also a need to classify the network gover- nance structure and discuss the basic characteristics of each form of governance. In marketing, we suspect that each form of governance may have a different impact on marketing variables (e.g., new product development, increasing market share). On the other hand, positive marketing outcomes may require different forms of network governance. Last, firms may interact or be embedded within several different types of network governance. From a micro-level, how firms manage their position in a specific or multiple network governance is unknown, providing fuel for additional research in the area. Discussion Research scholars have conducted interfirm network research for a few de- cades. However, much research was built upon one paradigm/perspective and lacked a complete theoretical view. For instance, research built upon the relational perspec- tive was only concerned about the strength or quality of ties and ignored the poten- tial network effects of network structure or network density. Research on network governance, however, put little emphasis on personal relationships. In other words, there is a need to combine different perspectives in order to have a complete under- standing of how networks play roles in terms of gaining and maintaining competitive advantages in different areas such as, facilitating knowledge transfer and innovation, seeking financial support, and reducing consumer uncertainty towards a brand. In addition, research on each of the paradigms was incomplete and may need to be developed further. For instance, the network evolutionists may conduct more longitudinal studies to examine the change of the relationships over time. Rela- tional researchers may investigate the quality or characteristics of personal relation- ships besides the tie strength. For instance, the ties may be built upon reciprocity, and others may be built upon shared objectives. Relational ties may also involve emotions. According to past research, emotions play important roles in strategic de- cision making (Flint & Fleet, 2011; Holmes et al., 2011). As such, studying the emo- tion elements in tie building can be meaningful. 68 Journal of Business Strategies Further, this review provides researchers opportunities to engage in empiri- cal network research. As Khoka (2010) suggested, for example, many antecedents have been left out of network research. For instance, resource and financial require- ments and organizational structure should be studied as antecedents for organiza- tional network research. In addition, a more balanced view of network performance and network costs needs to be researched. Also, a study of comparing formal and in- formal networks can be valuable. For instance, Chinese guanxi, which is considered as an informal relationship, can be a valuable resource to form formal relationships, perhaps because in high context cultures like China, networks are essential in busi- ness strategies (Liu, Atinc, & Kroll, 2011). Much network research has been done on a theoretical level, which per- haps is due to the difficulties of data collection. Though network structuralists, for example, may believe it is feasible to design simulations to calculate network inten- sity/density or distance between the nodes, it can be out of reach for managers to envision the structure of the network they embedded within. That is to say, there is a deep gap between theoretical network research and its practical value. This may explain why conceptual work tends to focus upon the network level of analysis, but empirical research on networks tends to examine alliances at the firm or relational level (See Table 1 and Table 2). The conceptual perspectives have implications for managers representing organizations that are contemplating interfirm relationships, managing interfirm re- lationships, and/or considering expanding or exiting interfirm relationships. Thus, for managers, it is also important to understand different network perspectives, such as relational and structure perspectives. This is because network structure/density and other network characteristics in which the relationship is embedded may have effects on the quality of personal ties and such an impact may, as a result, influence the outcome of the relationships, such as sharing information or knowledge. Firms also need to evaluate and balance resources, e.g, financial costs, knowledge, social capital/social ties before entering into a network. Additionally, the capability of managing interpersonal ties may determine the firm’s potential ca- pability of entering and maintaining its interfirm networks. Managers should also give attention to the structure of the network that the firm adopts because the struc- ture may have potential impact on the amount of benefit the firm may obtain from its networks. Moreover, as networks change, the benefits that the firm may gain from such a network may decline/increase. As other firms enter or withdraw from the network, managers need to design flexible strategies to react such a change. As a Volume 30, Number 1 69 result, managers should be aware of both positive (e.g., share resources) and nega- tive consequences (e.g., being dominated by another organization) of a network. Last, managers may need to be aware that network structure is culturally-based. For instance, the participant governed networks (PNG) may not apply to cultures which are rather hierarchical, e.g., India. Thus, managers can be cognizant that there are multiple motivations for engaging in interfirm networks and be informed about the possible relational and structural composition of networks. Furthermore, there are consequences of the interactions between and/or among network firms and that there will be effects of network change over time (evolutionary). Finally, managers can note that there are several ways in which networks are controlled or governed. This paper reviewed the research regarding interfirm networks, and as such, the purpose of this paper has been to provide an overview of the existing research into the phenomenon as well as directions for future research. As with any such re- view, there are limitations due to the conceptual nature of the paper. Unlike a meta- analysis, this paper does not provide a systematic statistical analysis of the interfirm network research findings. Also, we approached this review from a managerial mar- keting perspective as opposed to an economic perspective. In this review, we have outlined the conceptual perspectives and methodological foundations of organizational networks. Organizations engaged in and/or consider- ing developing an organizational network need to be aware of the various conceptual perspectives of interfirm networks so that the relationship potential is maximized. A better understanding of organizational network perspectives may not only poten- tially enhance existing relationships, paving the way for their further development and expansion, but also foster new relationships. In today’s increasingly complex marketplace, successful organizations may no longer be huge, vertically-integrated firms. In many cases, they may be lean, specialized organizations that are part of a network of firms. Arguably, these developments signal the need for added and con- ceptually richer investigations of interfirm networks. Intuitively, there are varying levels of synergy as a result of interfirm collaboration. A clear understanding of the way in which these relationships are facilitated may maximize this synergy. Note 1 The research gap for each perspective is identified at the end of each sec- tion. The overall discussion of research gaps is summarized in the end of the paper. 70 Journal of Business Strategies A ut ho r( s) / y ea r L ar so n (1 99 2) G ul at i ( 19 95 ) E is en ha rd t & Sc ho on ho ve n (1 99 6) W al ke r, K og ut & S ha n (1 99 7) C on ce pt ua l pe rs pe ct iv e E vo lu tio na l M ot iv at io na l E vo lu tio na l M ot iv at io na l E vo lu tio na l M ot iv at io na l E vo lu tio na l M ot iv at io na l T he or y ba se (s ) So ci al c on tr ol So ci al e xc ha ng e So ci al n et w or k R B V St ru ct ur at io n (i m pl ic it) R B V So ci al c ap ita l So ci al n et w or k Ty pe s of ne tw or ks A lli an ce PG N A lli an ce PG N A lli an ce PG N U nc le ar L ev el o f an al ys is R el at io na l R el at io na l R el at io na l N et w or k K ey fi nd in gs / t he or et ic al c on tr ib ut io ns T hr ee p ha se s of e nt re pr en eu ri al d ya d fo rm at io n (p re co nd iti on s, c on di tio ns to b ui ld e xc ha ng e st ru ct ur e, a nd in te gr at io n an d co nt ro l) ; fi rm s ar e go ve rn ed b y so ci al n or m s of tr us t a nd re ci pr oc ity . In si gh ts o n: p ro ce ss es a nd s tr uc tu re o f s us ta in ed d ya di c in te rfi rm ex ch an ge , n et w or k as a lte rn at iv e to v er tic al in te gr at io n fo r e nt re pr en eu ri al fir m s, a nd n et w or ks a s ba se s fo r fi rm g ro w th . C on si st en t w ith s tr at eg ic in te rd ep en de nc e an d so ci al s tr uc tu ra l t he or ie s, so ci al n et w or k af fe ct s ne w a lli an ce s by g iv in g in fo rm at io n to fi rm s on ca pa bi lit ie s an d re lia bi lit y of p ot en tia l p ar tn er s. Sh ow s im po rt an ce o f s oc ia l n et w or k in a lli an ce fo rm at io n, w hi ch p ro vi de s br id ge b et w ee n ne tw or k an d re so ur ce in te rd ep en de nc e th eo ri es . D if fic ul t m ar ke t c on di tio ns a nd ri sk y fir m s tr at eg ie s in cr ea se ra te o f al lia nc e fo rm at io n. T op m an ag em en t’s c ha ra ct er is tic s af fe ct a lli an ce fo rm at io n. E xt en ds re so ur ce -b as ed v ie w to is su e of a lli an ce fo rm at io n. N et w or k fo rm at io n an d in du st ry g ro w th a re im pa ct ed b y de ve lo pm en t a nd nu rt ur -i ng s oc ia l c ap ita l. C on tr ib ut es to c om pa ri so n of s oc ia l c ap ita l a nd s oc ia l n et w or k th eo ri es in e xp la in -i ng n et w or k fo rm at io n. S tr uc tu re h ol es s ho ul d be g iv en m or e at te nt io n in m ar ke t t ra ns ac tio ns ra th er th an fi rm s’ c oo pe ra tiv e re la tio ns hi ps . A ls o in di ca te s in te rfi rm c ol la bo ra tio n re qu ir es a na ly si s of ne tw or k as a w ho le . Ta bl e 1: S um m ar y of S el ec te d E m pi ri ca l I nt er fir m N et w or k St ud ie s Volume 30, Number 1 71 A ut ho r( s) / y ea r U zz i ( 19 97 ) M ad ha va n, K ok a, & Pr es co tt (1 99 8) Pr ov an & Se ba st ia n (1 99 8) W al ke r, K og ut & S ha n (1 99 7) C on ce pt ua l pe rs pe ct iv e St ru ct ur al E vo lu tio na l St ru ct ur al E vo lu tio na l M ot iv at io na l T he or y ba se (s ) E m be dd ed ne ss U nc le ar N et w or k So ci al c ap ita l So ci al n et w or k Ty pe s of ne tw or ks L O G A lli an ce PG N PG N (i m pl ic it) H or iz on ta l U nc le ar L ev el o f an al ys is N et w or k R el at io na l N et w or k N et w or k K ey fi nd in gs / t he or et ic al c on tr ib ut io ns E m be dd ed ne ss is lo gi c of e xc ha ng e th at a id s ec on om ie s of ti m e, in te gr at iv e ag re em en t, Pa re to im pr ov em en t i n al lo ca tiv e ef fic ie nc y, a nd co m pl ex a da pt at io n, b ut a ls o ha s ne ga tiv e ef fe ct s. O ff er s ex pl an at io n of li nk s be tw ee n so ci al s tr uc tu re , d ec is io n m ak in g, a nd ec on om ic o ut co m es in a o rg an iz at io na l n et w or k. P ro po se s fr am ew or k to ex pl ai n ho w p ro pe rt ie s of e m be dd ed ne ss v ar y w ith q ua lit y of s oc ia l t ie s, st ru ct ur e of o rg an iz at io na l n et w or k, a nd fi rm ’s p os iti on in n et w or k. Sh ow s in du st ry e ve nt s m ay b e cl as si fie d as re in fo rc in g or lo os en in g th e st ru ct ur e of th e ne tw or k. D ev el op s a m od el to e xp la in h ow in du st ry n et w or ks e vo lv e ov er ti m e in re sp on se to s pe ci fic e ve nt s. N et w or k ef fe ct iv en es s is n eg at iv el y re la te d to in te gr at io n of fu ll ne tw or ks . It is p os iti ve ly re la te d to in te gr at io n am on g sm al l c liq ue s of a ge nc ie s w he n cl iq ue s ha d ov er la pp in g lin ks th ro ug h re ci pr oc at ed re fe rr al s an d ca se co or di na tio n. Sh ow s va lu e of s tu dy in g ne tw or k cl iq ue s tr uc tu re , e xp la in s ou tc om es (s uc h as n et w or k ef fe ct iv en es s) , a nd p oi nt s to n ee d to c on si de r n et w or ks an d ne tw or k st ru ct ur e in m ic ro an al yt ic w ay . N et w or k fo rm at io n an d in du st ry g ro w th a re im pa ct ed b y de ve lo pm en t a nd nu rt ur -i ng s oc ia l c ap ita l. C on tr ib ut es to c om pa ri so n of s oc ia l c ap ita l a nd s oc ia l n et w or k th eo ri es in e xp la in in g ne tw or k fo rm at io n. S tr uc tu re h ol es s ho ul d be g iv en m or e at te nt io n in m ar ke t t ra ns ac tio ns ra th er th an fi rm s’ c oo pe ra tiv e re la tio ns hi ps . A ls o in di ca te s in te rfi rm c ol la bo ra tio n re qu ir es a na ly si s of ne tw or k as a w ho le . Ta bl e 1: S um m ar y of S el ec te d E m pi ri ca l I nt er fir m N et w or k St ud ie s 72 Journal of Business Strategies A ut ho r( s) / y ea r G ul at i & W es tp ha l (1 99 9) G ul at i & G ar gi ul o (1 99 9) B au m , C al ab re se , & S ilv er m an (2 00 0) R ow le y, B eh re ns , & K ra ck ha rd t (2 00 0) C on ce pt ua l pe rs pe ct iv e E vo lu tio na l St ru ct ru al E vo lu tio na l R el at io na l St ru ct ur al R el at io na l T he or y ba se (s ) U nc le ar E m be dd ed ne ss St ru ct ur at io n (i m pl ic it) U nc le ar E m be dd ed ne ss So ci al c ap ita l Ty pe s of ne tw or ks B oa rd in te rl oc k Jo in t ve nt ur es A lli an ce s PG N s A lli an ce A lli an ce H or iz on ta l V er tic al A lli an ce L ev el o f an al ys is R el at io na l R el at io na l N et w or k N et w or k R el at io na l K ey fi nd in gs / t he or et ic al c on tr ib ut io ns C E O -b oa rd re la tio ns hi ps w ith in de pe nd en t b oa rd c on tr ol re du ce li ke lih oo d of a lli -a nc e fo rm at io n by p ro m ot in g di st ru st b et w ee n fir m le ad er s, w hi le C E O -b oa rd c oo pe ra tio n pr om ot es a lli an ce fo rm at io n by e nh an ci ng tr us t. A ls o, d ir ec t i nt er lo ck ti e ef fe ct s ar e am pl ifi ed b y ne tw or k tie s an d in di re ct tie s im pa ct fi rm a ct io n. G oe s be yo nd fo cu s on c on te nt a nd e ff ec ts o f d ya di c tie s. S ug ge st s in di re ct tie s, in w hi ch p ar tn er s to a n in te rl oc k tie a re e m be dd ed , m ay p os iti ve ly a nd ne ga tiv el y im pa ct in te ro rg an iz at io na l a ct io n. Pr ob ab ili ty o f n ew a lli an ce b et w ee n or ga ni za tio ns in cr ea se s w ith th ei r in te rd ep en de nc e, p ri or m ut ua l a lli an ce s, a nd c om m on th ir d pa rt ie s, a nd th e jo in t c en tr al ity in th e al lia nc e ne tw or k. D iff er en tia tio n of e m er gi ng ne tw or k st ru ct ur e lim its e ff ec ts o f i nt er de pe nd en ce a nd e nh an ce s ef fe ct o f jo in t c en tr al ity o n ne w a lli an ce fo rm at io n. So ci al s tr uc tu re s ha pe s or ga ni za tio na l a ct io n, w hi ch s ub se qu en tly a ff ec ts so ci al s tr uc tu re . A lli an ce c om po si tio n im pa ct s fir m p er fo rm an ce . E nr ic he s lit er at ur e, b y ex am in in g ve rt ic al , h or iz on ta l, up st re am a nd do w ns tr ea m a lli an ce a nd e ff ec ts o f n et w or k co m po si tio n (e .g ., si ze , ef fic ie nc y, a lli an ce w ith ri va ls , a nd fi rm a ge s) . In g en er al , w ea k tie s an d st ro ng ti es p os iti ve ly a ff ec t fi rm s’ p er fo rm an ce an d ef fe ct s of re la tio na l e m be dd ed ne ss d ep en d on s tr uc tu ra l e m be dd ed ne ss an d en vi ro nm en ta l c on te xt . St ro ng a nd w ea k tie s ar e im po rt an t t o fir m s fo r d iff er en t p ur po se s, in di ff er en t c on di tio ns , i nd us tr ia l c on te xt s, a nd ti m es . A ls o, re la tio na l a nd st ru ct ur al e m be d- de dn es s ca n on ly b e un de rs to od w ith re fe re nc e to e ac h ot he r. Ta bl e 1: S um m ar y of S el ec te d E m pi ri ca l I nt er fir m N et w or k St ud ie s Volume 30, Number 1 73 A ut ho r( s) / y ea r St ev en so n & G re en be rg (2 00 0) K ha nn a & R iv ki n (2 00 1) L ee , L ee , & Pe nn in gs (2 00 1) C on ce pt ua l pe rs pe ct iv e E vo lu tio na l In te ra ct io na l M ot iv at io na l M ot iv at io na l T he or y ba se (s ) So ci al m ov em en t Tr an sa ct io n co st ec on om ic s (T C E ) R B V So ci al c ap ita l Ty pe s of ne tw or ks U nc le ar B us in es s gr ou p U nc le ar L ev el o f an al ys is Fi rm N et w or k Fi rm K ey fi nd in gs / t he or et ic al c on tr ib ut io ns St ra te gi es fi rm s us e to im pa ct g ov er nm en t p ol ic y, u se a b ro ke r t o re ac h ag re em en t, or fo rm a c oa lit io n w ith o th er o rg an iz at io ns to s ha pe go ve rn m en t d ec is io ns d ep en d on s oc ia l c on te xt . E ve n pe ri ph er al a ct or s ca n af fe ct p ol ic y if th ey u se a d ir ec tc on ta ct s tr at eg y an d th e po lit ic al op po rt un ity s tr uc tu re is fa vo ra bl e. A pp lie s so ci al m ov em en t t he or y, w hi ch , u nl ik e so ci al n et w or k th eo ry , m ak es a llo w an ce fo r a ct or m ov em en ts . A ls o, s yn th es iz es m or e m ac ro so ci al le ve ls o f o rg an iz at io na l a na ly si s w ith m or e m ic ro le ve l a ct io ns o f in di vi du al s. Fo cu se s on th e ec on om ie s of th ir te en c ou nt ri es : A rg en tin a, B ra zi l, C hi le , In di a, In do ne si a, Is ra el , M ex ic o, P er u, th e Ph ili pp in es , S ou th K or ea , Ta iw an , T ha ila nd , a nd T ur ke y. B us in es s gr ou ps a ff ec t t he e co no m ic pe rf or m an ce in 1 2 of th e m ar ke ts . I n ot he r w or ds , t he g ro up a ffi lia tio n im pa ct p er fo rm an ce . I n ad di -t io n, th e an al ys is p ro vi de s no s up po rt fo r t he vi ew th at g ro up s ar e pr im ar ily re sp on se s to c ap ita l m ar ke t i m pe rf ec tio ns , no r f or th e vi ew fo r r en t- se ek in g be ha vi or . In di ca te s th at g ro up s ex is t f or d if fe re nt re as on s an d pe rf or m d if fe re nt fu nc tio ns in e ac h in di vi du al in st itu tio na l s et tin g. In te rn al c ap ab ili tie s ar e im po rt an t p re di ct or s of fi rm p er fo rm an ce . N ot a ll in di ct or s of e xt er na l n et w or k pr ed ic t s ta rt -u p fir m s’ p er fo rm an ce . S ev er al in te ra ct io ns b e- tw ee n in te rn al c ap ab ili tie s an d ex te rn al n et w or ks a ls o em er ge . Su gg es ts in te gr at in g vi ew s of R B V (o n fir m c ap ab ili tie s) a nd s oc ia l c ap ita l (o n ex te rn al n et w or ks ) t o pr ed ic t fi rm s’ p er fo rm an ce . Ta bl e 1: S um m ar y of S el ec te d E m pi ri ca l I nt er fir m N et w or k St ud ie s 74 Journal of Business Strategies R in dfl ei sc h & M oo rm an (2 00 1) St ru ct ur al In te ra ct io na l So ci al n et w or k N ew pr od uc t al lia nc e H or iz on ta l V er tic al R el at io na l H or iz on ta l a lli an ce s te nd to h av e lo w er le ve ls o f r el at io na l e m be dd ed ne ss an d hi gh er le ve l o f k no w le dg e re du nd an cy th an v er tic al a lli an ce s. E m be dd ed ne ss e le va te s ac qu is iti on a nd u til iz at io n of in fo rm at io n. R ed un da nc y re du ce s ac qu is iti on b ut e nh an ce s ut ili za tio n of in fo rm at io n. C ha lle ng es v ie w o n so ci al n et w or ks b as ed o n G ra no ve tte r’ s w or k. F or ex am pl e, in di vi du al s w ith c lo se ti es a re a ss um ed to s ha re b ot h hi gh le ve ls of re la tio na l e m be dd ed ne ss a nd in fo rm at io n re du nd an cy . F in di ng s su gg es t as su m pt io n do es n ot h ol d fo r i nt er or ga ni za tio na l r el at io ns hi ps . A ut ho r( s) / y ea r C on ce pt ua l pe rs pe ct iv e T he or y ba se (s ) Ty pe s of ne tw or ks L ev el o f an al ys is K ey fi nd in gs / t he or et ic al c on tr ib ut io ns K ok a & Pr es co tt (2 00 2) Fr el s, S he rv an i, & S ri as ta va (2 00 3) B ra df or d, St ri ng fe llo w , & W ei tz (2 00 4) M ot iv at io na l St ru ct ur al In te ra ct io na l So ci al c ap ita l U nc le ar U nc le ar A lli an ce H or iz on ta l U nc le ar Fi rm N et w or ks R el at io na l Su pp or ts h yp ot he se s th at s oc ia l c ap ita l i s a th re e di m en si on al c on st ru ct . C on si de rs th e co ns tr uc t v al id ity a nd c on tin ge nt n at ur e of s oc ia l c ap ita l. Su gg es ts th at s oc ia l c ap ita l s ho ul d be v ie w ed te rm s of th e di ff er en t in fo rm at io n vo lu m e, in fo rm at io n di ve rs ity , a nd in fo rm at io n ri ch ne ss av ai la bl e to fi rm s. V al ue a dd ed b y th e th re e ne tw or ks is p os iti ve ly re la te d w ith re so ur ce s al lo ca te d to c om pe tin g pr od uc t b y bu si ne ss c us to m er s. T he th re e ne tw or ks m ed ia te th e re la tio ns hi p be tw ee n pr od uc t p er fo rm an ce a nd re so ur ce al lo ca tio n. R efi ne th e no tio n of m ar ke t b as ed a ss et s. P ro po se in te gr at ed n et w or k m od el of d iff er en t t yp es o f n et w or ks , E xt en d co nc ep tu al iz at io ns o f i nn ov at io n di ff us io n, c od iff us io n, a do pt io n, a nd in tr ao rg an iz at io n ad op tio n. N eg at iv e ef fe ct s of in te rp er so na l a nd ta sk c on fli ct o n ne tw or k ou tc om es ca n be re du ce d by c on fli ct m an ag em en t. H ow ev er , e ff ec tiv en es s of u si ng di ff er en t c on fli ct m an ag em en t a pp ro ac h di ff er s. E xt en ds id ea s on c on fli ct in c ha nn el re la tio ns hi ps b y co ns id er in g ef fe ct iv en es s of c on fli ct m an ag em en t. A ls o ex pl ai n ho w ty pe s of c on fli ct an d co nfl ic t m an ag em en t a ff ec t n et w or k ou tc om es . Ta bl e 1: S um m ar y of S el ec te d E m pi ri ca l I nt er fir m N et w or k St ud ie s Volume 30, Number 1 75 Po w el l e t a l. (2 00 5) E vo lu tio na l U nc le ar H or iz on ta l N et w or k A s or ga ni za tio ns in cr ea se th ei r c ol la bo ra tio n an d di ve rs if y th ei r n ew tie s to o th er s, s ub -n et w or ks (c ha ra ct er iz ed b y m ul tip le , i nd ep en de nt pa th w ay s) fo rm . S uc h st ru c- tu ra l c ha ng es , i n tu rn , m ay c ha ng e ch oi ce s an d op po rt un iti es a va ila bl e fo r t he fi rm a nd , t hu s, re in fo rc e an a tta ch m en t. Su gg es ts th at n ei th er m on ey n or m ar ke t c an d om in at e a fie ld ’s n et w or k ev ol ut io n. In st ea d, o rg an iz at io ns w ith d iv er se p or tf ol io s of w el l- co nn ec te d co lla bo ra to rs a re in th e m os t c oh es iv e an d ce nt ra l p os iti on s an d ha ve th e po w er to s ha pe th e fie ld ’s e vo lu tio n. A ut ho r( s) / y ea r C on ce pt ua l pe rs pe ct iv e T he or y ba se (s ) Ty pe s of ne tw or ks L ev el o f an al ys is K ey fi nd in gs / t he or et ic al c on tr ib ut io ns Z ah ee r & B el l (2 00 5) K ha nn a & R iv ki n (2 00 6) St ru ct ur al R el at io na l St ru ct ur al R B V So ci al c ap ita l So ci al n et w or k PG N In dir ec t a nd dir ec t e qu ity ho ldi ng s D ire cto r int erl oc ks F am ily co nn ec tio ns Fi rm N et w or ks Fi rm s’ in no va tiv e ca pa bi lit ie s an d ne tw or k st ru ct ur es e nh an ce p er fo rm an ce , bu t e ff ec t o f s tr uc tu ra l h ol es o n pe rf or m an ce is g re at er fo r i nn ov at iv e fir m s. Fi rm s w ith s up er io r n et w or ks c an e xp lo it th ei r c ap ab ili tie s to im pr ov e pe rf or m an ce . C ha lle ng es n et w or k st ud y vi ew th at fi rm s au to m at ic al ly b en efi t f ro m po si tio ns th ey o cc up y. S ho w s fir m s w el l- en do w ed w ith in te rn al c ap ab ili tie s ar e be tte r a bl e to e xp lo it fa vo ra bl e ne tw or k st ru ct ur e an d ne tw or k cl os ur e do es n ot a lw ay s im pa ct fi rm p er fo rm an ce (a s C ol em an a rg ue d) . O ve rl ap in o w ne rs , i nd ir ec t e qu ity h ol di ng s an d di re ct or in te rl oc ks a re st ro ng g ro up b ou nd ar y de lin ea to rs , w hi ch is n ot th e ca se fo r f am ily co nn ec tio ns a nd d ir ec t e qu ity h ol di ng s. D is tin gu is h di ff er en t t ie s an d th ei r u se in te rm s of d efi ni ng g ro up bo un da ri es . Ta bl e 1: S um m ar y of S el ec te d E m pi ri ca l I nt er fir m N et w or k St ud ie s 76 Journal of Business Strategies B el l & Z ah ee r (2 00 7) L uo & H as sa n (2 00 9) Sw am in at ha n & M or rm an (2 00 9) In te ra ct io na l In te ra ct io na l St ru ct ur al O rg an iz at io na l le ar ni ng K no w le dg e m an ag em en t N et w or k (i m pl ic it) So ci al n et w or k So ci al n et w or k NA O go ve rn an ce ne tw or k (im pli cit ) PG N (e. g., eq uit y ho ldi ng al lia nc e; im pli cit ) U nc le ar A lli an ce PG N R el at io na l Fi rm R el at io na l N et w or k In st itu tio na l l ev el ti es a re v al ua bl e in k no w le dg e tr an sf er , i f t he y ar e ge og ra ph ic al ly p ro xi m at e. O rg an iz at io na l l ev el ti es fa il to tr an sf er kn ow le dg e, re ga rd le ss o f g eo gr ap hi c lo ca tio n. In di vi du al le ve l f ri en ds hi p tie s ar e su pe ri or c on du its fo r k no w le dg e flo w a nd s pa n ge og ra ph ic h ol es . Sh ow s di ff er en t t yp es o f t ie s ac ro ss o rg an iz at io ns d if fe r i n pr op en si ty to tr an sm it kn ow le dg e w he n th ey a re g eo gr ap hi ca lly p ro xi m at e or d is ta nt . N et w or ki ng p ro m ot es k no w le dg e cr ea tio n bu t t oo m uc h ne tw or ki ng em be dd ed ne ss le ad s to d im in is he d re tu rn s. N et w or ki ng d is pa ri ty a ls o ha s ne ga tiv e im pa ct . C om pe tit iv e en vi ro nm en t a nd te ch no lo gi ca l t ur bu le nc e im pa ct n et w or ki ng d is pa ri ty a nd m ar ke tin g kn ow le dg e le ar ni ng . T hi s is be ca us e in m or e co m pe tit iv e an d tu r- bu le nt m ar ke ts , b ro ke ra ge o pp or tu ni tie s of fe re d by c om pl em en ta ry k no w le dg e ba se s w ou ld b e ev en g re at er . O ff er s in si gh ts o n in flu en ce o f i nt er na l s oc ia l a ct or s (t op m an ag em en t) a nd de ba te o n re la tiv e be ne fit s of w ea k so ci al n et w or ks . A rg ue th at n et w or ki ng st re ng th m ay h av e m or e co m pl ic at ed e ff ec ts th an u su al ly e xp ec te d. R el at io ns hi p is in ve rt ed U -s ha pe (n ei th er to o st ro ng n or to o w ea k tie s ar e op tim al ). A ls o, n ot e ne tw or k ef -f ec ts m ay d ep en d on m ar ke t c on di tio ns . M ar ke tin g al lia nc es c re at e va lu e fo r fi rm in a nn ou nc em en t p er io d ev en t w in do w . N et w or k ef fic ie nc y an d ne tw or k de ns ity h av e st ro ng es t p os iti ve im pa ct w he n th ey a re m od er at e. N et w or k re pu ta tio n an d ne tw or k ce nt ra lit y ha ve n o ef fe ct . I n ad di tio n, re la tio na l n et w or k ch ar ac te ri st ic s ha ve g re at er ro le th an s iz e or s ta tu s be ne fit s. M ar ke tin g al lia nc e ca pa bi lit y, w hi ch re fle ct s a fir m ’s a bi lit y to m an ag e a ne tw or k of p re vi ou s m ar ke tin g al lia nc es , h as a po si tiv e im pa ct o n va lu e cr ea tio n. In di ca te s th e ro le o f r el at io na l n et w or k ch ar ac te ri st ic s. A ut ho r( s) / y ea r C on ce pt ua l pe rs pe ct iv e T he or y ba se (s ) Ty pe s of ne tw or ks L ev el o f an al ys is K ey fi nd in gs / t he or et ic al c on tr ib ut io ns Ta bl e 1: S um m ar y of S el ec te d E m pi ri ca l I nt er fir m N et w or k St ud ie s Volume 30, Number 1 77 B el lo , K at si ke as , & R ob so n (2 01 0) K um ar , H ei de , & W at hn e (2 01 1) In te ra ct io na l St ru ct ur al A cc om m od at iv e re sp on se b eh av io rs U nc le ar A lli an ce V er tic al ne tw or ks Fi rm R el at io na l Fi rm R el at io na l E xa m in es a fi rm ’s p er fo rm an ce in a n in te rn at io na l m ar ke tin g al lia nc e w he n it re sp on ds to a s el f- se rv in g pa rt ne r’ s ex pl oi tiv e be ha vi or . T he au th or s fo un d th at a fi rm ’s p ay of f f ro m a cc om m od at io n de pe nd s on it s ap pr oa ch to m on ito ri ng , e ith er e m pl oy in g ov er t s ur ve ill an ce o r r el yi ng o n its p ar tn er ’s s el f- co nt ro l. Fo r i ns ta nc e, o ve rt s ur ve ill an ce c an u nd er m in e ac co m m od at io ns ’ a bi lit y to c on vi nc e a se lfi sh p ar tn er th at c oo pe ra tio n is be ne fic ia l a nd n ot in co ns is te nt w ith it s se lf -i nt er es t. E xa m in es h ow m an uf ac tu re ’s g ov er na nc e of a n ex te rn al s up pl ie r r el at io ns hi p af fe ct s its p er fo rm an ce to w ar ds a d ow ns tr ea m re ta il cu st om er . F or in st an ce , th e au th or s fo un d th at a m an uf ac tu re ’s re lia nc e on s up pl ie r n or m s an d in ce nt iv es p ro m ot es p er fo rm an ce . H ow ev er , i nt er na l i nc en tiv es w ea ke n th e ef fe ct o f e xt er na l n or m s, a nd in te rn al n or m s w ea ke n th e ef fe ct o f e xt er na l in ce nt iv es . A ut ho r( s) / y ea r C on ce pt ua l pe rs pe ct iv e T he or y ba se (s ) Ty pe s of ne tw or ks L ev el o f an al ys is K ey fi nd in gs / t he or et ic al c on tr ib ut io ns Ta bl e 1: S um m ar y of S el ec te d E m pi ri ca l I nt er fir m N et w or k St ud ie s 78 Journal of Business Strategies B en so n (1 97 5) C oo k (1 97 7) Fo m br un (1 98 2) In te ra ct io na l In te ra ct io na l St ru ct ur al is t In st itu tio na l E xc ha ng e th eo ry U nc le ar R el at io na l R el at io na l M ul ti- le ve l Fo cu se s on e nv ir on m en ta l f or ce s an d co nd iti on s th at im pa ct n et w or k re la tio ns . E nv ir on m en ta l d im en si on s in cl ud e re so ur ce c on ce nt ra tio n, p ow er c on ce nt ra tio n, n et w or k au to no m y, e nv ir on m en ta l d om in an ce , r es ou rc e ab un da nc e, a nd e nv ir on m en t n et w or k co nt ro l m ec ha ni sm s. P ro po se s fo ur g en er al s tr at eg ie s fo r c ha ng in g ne tw or k re la tio ns : co op er at iv e, d is ru pt iv e, m an ip ul at iv e, a nd a ut ho ri ta tiv e st ra te gi es . A ls o id en tifi es fo ur di m en si on s of in te ro rg an iz at io na l e qu ili br iu m : d om ai n co ns en su s, id eo lo gi ca l c on se ns us , po si tiv e ev al ua tio n, a nd w or k co or di na tio n. A rg ue s no o ne th eo re tic al p er sp ec tiv e w ill e na bl e sc ho la rs to c om pl et el y ex pl ai n or ga ni za tio n in te ra ct io n (n et w or ks ). E ve ry th eo ry h as s co pe re st ri ct io ns . M aj or c on tr ib ut io n is to p re se nt a n ex te ns io n of e xc ha ng e th eo ry fo r a na ly si s of in te ro rg an iz at io na l r el at io ns . I n do in g so , t he or et ic al fr am ew or k fo cu se s on e ff ec ts o f p ow er o n ex ch an ge re la tio ns a m on g or ga ni za tio ns . A ls o of fe rs d efi ni tio ns a nd p ro po si tio ns a nd d is cu ss es li nk ag e be tw ee n di ff er en t t yp es o f e xc ha ng e ne tw or ks a nd m ar ke t s tr uc tu re . Fi na lly , r ev ie w s cr iti ci sm s of e xc ha ng e an al ys is o f i nt er or ga ni za tio na l r el at io ns a nd d is cu ss es fu tu re d ir ec tio ns fo r re se ar ch . A rg ue s re se ar ch er s sh ou ld id en tif y ty pe s of n et w or ks (e .g ., at tr ib ut e ne tw or ks a nd tr an sa ct io na l n et w or ks ). Id en tifi es th re e ki nd s of s tr at eg ie s fo r n et w or k re se ar ch (n od al , dy ad ic , a nd tr ia di c) . N od al a pp ro ac he s ar e gr ou nd ed in c ro ss -s ec tio na l c om pa ri so n of a s et of in di vi du al a ct or s. D ya di c ap pr oa ch es fo cu s on re la tio ns hi p am on g pa ir s an d ar e gr ou nd ed in in fo rm at io n ab ou t t he w ho le n et w or k in te rm s of p ai r d is ta nc e. T ri ad ic a pp ro ac he s ex pl or e al l p os si bl e tr ia ds in th e ne tw or k an d re ly o n th e de gr ee o f b al an ce in th e ne tw or k. A ls o di sc us se s st re ng th a nd w ea kn es s of n et w or k re se ar ch a nd a pp lic at io n of th re e re se ar ch ap pr oa ch es . M aj or c on tr ib ut io n is to la y ou t k ey m et ho do lo gi ca l i ss ue s av ai la bl e fo r re se ar ch er s w ho w is h to u se a n et w or k ap pr oa ch to o rg an iz at io na l a na ly si s. A ut ho r( s) / y ea r R es ea rc h pe rs pe ct iv e T he or et ic al b as e L ev el o f an al ys is K ey c on tr ib ut io ns Ta bl e 2: S um m ar y of S el ec te d E xa m pl es o f C on ce pt ua l R es ea rc h on I nt er fir m N et w or ks Volume 30, Number 1 79 T ho re lli (1 98 6) Po w el l (1 99 0) Ia co bu cc i & H op ki ns (1 99 2) A nd er so n, H ak an ss on & J oh an so n (1 99 4) U nc le ar U nc le ar U nc le ar In te ra ct io na l N et w or k th eo ry E m be dd ed ne ss (i m pl ic it) U nc le ar E m be dd ed ne ss & so ci al e xc ha ng e N et w or k N et w or k R el at io na l & n et w or k R el at io na l & O rg an i- za tio na l Su m m ar iz es s tr at eg ic is su es in vo lv in g ne tw or ks : ( 1) tu rn ke y co nt ra ct s an d “s ys te m se lli ng ”, (2 ) b ar te r a nd re ci pr oc al tr ad in g, (3 ) m ak e- le as e or b uy d ec is io n, (4 ) s pl it or un if y so ur ci ng , ( 5) tr an sa ct io ns b et w ee n fir m ’s d iv is io ns , ( 6) c ar te ls , ( 7) i nt er lo ck in g di re ct or at es , ( 8) jo in t v en tu re s, m er ge rs , a nd a cq ui si tio ns , ( 9) d iv er si fic at io n, (1 0) in te rn at io na liz at io n, a nd (1 1) v er tic al in te gr at io n. N ot es s tr at eg ic im pl ic at io ns o f n et w or k pa ra di gm in m ar ke tin g (d is tr ib ut io n ch an ne ls ) a nd o th er fi el ds . A rg ue s th at re la tio na l o r n et w or k fo rm s of o rg an iz at io n ar e an id en tifi ab le fo rm o f e co no m ic ch an ge u nd er c er ta in c ir cu m st an ce s. T he s al ie nt fe at ur es o f t hr ee m od es o f o rg an iz at io n (m ar ke t, hi er ar ch y, a nd n et w or ks ) a re id en tifi ed a nd c om pa re d. T he lo gi c of n et w or k fo rm s is e xp lo re d sy st em at ic al ly . E m ph as iz es th e im po rt an ce o f s oc ia l r el at io ns a nd e xp la in s th e tr an sf or m at io n of an e xc ha ng e dy ad ic re la tio ns hi p to a s et o f s ta bl e, m ul tid im en si on al , m ul til ay er ed in te ro rg an iz at io na l n et w or ks . T he a ut ho r p ro po se s th re e st ag es o f e nt re pr en eu ri al n et w or ki ng ac tiv ity w hi ch a re u se d to s ec ur e th e cr iti ca l e co no m ic a nd n on -e co no m ic re so ur ce s ne ed ed to s ta rt a b us in es s. 1 . F oc us o n es se nt ia l d ya ds , 2 . T ra ns fe r d ya di c tie s to s oc io ec on om ic ex ch an ge ti es a nd 3 . L ay er th e in iti al e xc ha ng e re la tio ns hi p w ith a dd iti on al b us in es s fu nc tio ns , a ct iv iti es , a nd le ve ls o f e xc ha ng e (f ro m p er so na l e xc ha ng e to o rg an iz at io na l ex ch an ge ). Pr ov id es c on ce pt ua l d ev el op m en t o f d ya di c bu si ne ss re la tio ns hi ps th at c ap tu re s th e em be dd ed c on te xt a nd fo rm ul at es b us in es s ne tw or k co ns tr uc ts fr om fo ca l fi rm ’s p er sp ec tiv e an d its p ar tn er s’ p er sp ec tiv e. In th e ar tic le , t he a ut ho rs ’ c on ce pt ua liz e th e bu si ne ss n et w or k as s et s of c on ne ct ed re la tio ns hi ps . A ut ho r( s) / y ea r R es ea rc h pe rs pe ct iv e T he or et ic al b as e L ev el o f an al ys is K ey c on tr ib ut io ns Ta bl e 2: S um m ar y of S el ec te d E xa m pl es o f C on ce pt ua l R es ea rc h on I nt er fir m N et w or ks 80 Journal of Business Strategies Jo ne s, H es te rl y & B or ga tti (1 99 7) A ch ro l (1 99 7) D ah ab , G en tr y & S oh i (1 99 7) Po do ln y & Pa ge (1 99 8) Sy do w & W in de le r (1 99 8) In te ra ct io na l & m ot iv at io na l St ru ct ur al St ru ct ur al E vo lu tio na l St ru ct ur al Tr an sa ct io n co st ec on om ic s & so ci al n et w or k th eo ri es U nc le ar In st itu tio na l U nc le ar St ru ct ur at io n th eo ry N et w or k O rg an iz a- tio na l N et w or k N et w or k N et w or k & or ga ni za - tio na l In te gr at es tr an sa ct io n co st th eo ry a nd s oc ia l n et w or k th eo ri es . C la im s ne tw or k fo rm o f go ve rn an ce is a re sp on se to e xc ha ng e co nd iti on s of a ss et s pe ci fic ity , d em an d un ce rt ai nt y, ta sk c om pl ex ity , a nd fr eq ue nc y. T he se e xc ha ng e co nd iti on s dr iv e fir m s to w ar d em be dd in g th ei r t ra ns ac tio ns a nd le t t he m u se s oc ia l m ec ha ni sm s to c oo rd in at e an d sa fe gu ar d ex ch an ge s. W he n al l o f t he se c on di tio ns a re in p la ce , n et w or k go ve rn an ce fo rm h as ad va nt ag es o ve r b ot h hi er ar ch y an d m ar ke t s ol ut io ns . S ho w s ho w e m be dd ed ne ss p ro vi de s fo un da tio n fo r fi rm s to c oo rd in at e an d sa fe gu ar d ex ch an ge in n et w or k go ve rn an ce . A na ly ze s th e ev ol ut io n of th e ne tw or k or ga ni za tio n an d ex pl or es th e ch ar ac te ri st ic s of fo ur ty pe s of n et w or k or ga ni za tio ns , i nc lu di ng th e in te rn al m ar ke t n et w or k, th e ve rt ic al m ar ke t ne tw or k, th e in te r- m ar ke t n et w or k, a nd th e op po rt un ity n et w or k. Su gg es ts c ha nn el s in tr an si tio na l e co no m ie s m ay b e co nt ro lle d by g ro up s or n et w or ks of p eo pl e w ith m ut ua l i nt er es t ( in te re st d om in at io n) . E xa m in es in te re st d om in at io n by m an ag er s, c om m un is t c ad re s, a nd o th er p ar ty e lit e in tw o tr an sf or m in g ec on om ie s an d de sc ri be s ho w c om m an d ec on om ie s m ig ht b e co nd uc tiv e to in te re st d om in at io n fo r m ar ke tin g ch an ne ls . P re se nt s pr op os iti on s of h ow p ol iti ca l, so ci al , a nd e co no m ic fa ct or s th at s us ta in in te re st d om in at io n. E xa m pl es fr om H un gr y an d Ta jik is ta n ar e us ed to p ro vi de co nt ex t f or th e di sc us si on . R ev ie w s lit er at ur e of n et w or k or ga ni za tio ns a nd fo cu se s on v ar ia tio n cr os s- in du st ry a nd cr os s- po pu la tio n. E xp la in s w hy o rg an iz at io ns d o no t a do pt n et w or k ap pr oa ch es . F in al ly , ca lls fo r a tte nt io n to s uc ce ss a nd fa ilu re o f n et w or k fo rm o f o rg an iz at io n. A pp lie s G id de n’ s st ru ct ur at io n th eo ry to a na ly ze n et w or k pr oc es se s. D efi ne s in te r- fir m ne tw or k an d th en m ov es to o rg an iz at io na l n et w or k pr ac tic es . S tr es se s ho w s tr uc tu re o f si gn ifi ca tio n, d om in at io n, a nd le gi tim at io n sh ap e ne tw or k pr oc es se s an d ho w s tr uc tu re is cr ea te d un de r a us pi ce s of n et w or k ef fe ct iv en es s. A ut ho r( s) / y ea r R es ea rc h pe rs pe ct iv e T he or et ic al b as e L ev el o f an al ys is K ey c on tr ib ut io ns Ta bl e 2: S um m ar y of S el ec te d E xa m pl es o f C on ce pt ua l R es ea rc h on I nt er fir m N et w or ks Volume 30, Number 1 81 A ch ro l & K ot le r ( 19 99 ) L in (1 99 9) D ac in , V en tr es ca & B ea l (1 99 9) G ul at i, N oh ri a & Z ah ee r (2 00 0) St ru ct ur al M ot iv at io na l U nc le ar St ru ct ur al E m be dd ed ne ss & th eo ry o f n et w or ks (i m -p lic it) So ci al c ap ita l E m be dd ed ne ss So ci al c ap ita l (i m pl ic it) N et w or k R el at io na l & n et w or k U nc le ar / or ga ni za - tio na l, re la tio na l, & n et w or k O rg an iz a- tio na l, re la tio na l, & n et w or k D efi ne s an d di st in gu is he s fo ur ty pe s of n et w or k or ga ni za tio ns , i nc lu di ng in te rn al ne tw or ks , v er tic al n et w or ks , i nt er -m ar ke t n et w or ks , a nd o pp or tu ni ty n et w or ks . M os t im po rt an tly , e xp la in s ro le o f m ar ke tin g in d iff er en t t yp es o f n et w or k or ga ni za tio ns a nd th e lim ita tio ns o f n et w or k or ga ni za tio ns . A na ly ze s th e ev ol ut io n of th e ne tw or k or ga ni za tio n an d ex pl or es th e ch ar ac te ri st ic s of fo ur ty pe s of n et w or k or ga ni za tio ns , i nc lu di ng th e in te rn al m ar ke t n et w or k, th e ve rt ic al m ar ke t ne tw or k, th e in te r- m ar ke t n et w or k, a nd th e op po rt un ity n et w or k. R ev ie w s re se ar ch o n em be dd ed ne ss a nd c on tr ib ut e to u nd er st an di ng e m be dd ed ne ss o f or ga ni za tio ns . C ov er s re se ar ch o n ec on om ic s oc io lo gy , n et w or k th eo ri es o f a lli an ce , or ga ni za tio ns a nd s tr at eg y, s oc ia l c ap ita l, an d ne tw or k th eo ry a nd o rg an iz at io ns , a nd n et w or k th eo ry a nd c ul tu ra l s oc io lo gy . M ai nl y fo cu se s on c on ce pt ua liz at io n of e m be dd ed ne ss . Pr es en ts in te gr at ed fr am ew or k th at c on si de rs s ou rc es , m ec ha ni sm s, o ut co m es , a nd s tr at eg ic im pl ic at io ns o f e m be dd ed ne ss . A ls o, c om m en ts o n fu tu re re se ar ch a nd is su es re la te d to ne tw or ks a nd m et ho do lo gy . N ot es th at s tr at eg ic n et w or ks e nc om pa ss in te ro rg an iz at io na l t ie s (e .g ., st ra te gi c al lia nc es , jo in t v en tu re s, lo ng -t er m , b uy er -s up pl ie r p ar tn er sh ip s, a nd m an y ot he r t ie s. A rg ue s th at re la tio ns hi ps in w hi ch fi rm s ar e em be dd ed s ha pe th ei r c on du ct a nd p er fo rm an ce . Id en tifi es fiv e ar ea s of s tr at eg y re se ar ch th at m ay in vo lv e st ra te gi c ne tw or ks : ( 1) in du st ry s tr uc tu re , (2 ) p os iti on in g in a n in du st ry , ( 3) in im ita bl e fir m re so ur ce s an d ca pa bi lit ie s, (4 ) c on tr ac tin g an d co or di na tio n co st , a nd (5 ) d yn am ic n et w or k co ns tr ai nt s an d be ne fit s. D is cu ss es s tr at eg ic ne tw or ks ’ p ot en tia l p os iti ve (e .g ., in fo rm at io n ac ce ss , r es ou rc es , m ar ke ts , t ec hn ol og ie s, a nd sc op e ec on om ic s po si tiv e, r is k sh ar in g, a nd o ut so ur ci ng ) a nd n eg at iv e ef fe ct s. A ut ho r( s) / y ea r R es ea rc h pe rs pe ct iv e T he or et ic al b as e L ev el o f an al ys is K ey c on tr ib ut io ns Ta bl e 2: S um m ar y of S el ec te d E xa m pl es o f C on ce pt ua l R es ea rc h on I nt er fir m N et w or ks 82 Journal of Business Strategies D as & T en g (2 00 0) D as & T en g (2 00 2) B or ga tii & Fo st er (2 00 3) Pe ng (2 00 3) M ot iv at io na l & ev ol ut io na l In te ra ct io na l U nc le ar E vo lu tio na l R es ou rc e- ba se d th eo ry So ci al e xc ha ng e So ci al c ap ita l, ne tw or k, & di ff us io n th eo ri es In st itu tio na l, re so ur ce -b as ed , & ne tw or k th eo ri es O rg an iz a- tio na l R el at io na l A ll, b ut pr im ar -i ly or ga ni za - tio na l & re la tio na l Fi rm R ev ie w re so ur ce -b as ed th eo ry o f s tr at eg ic a lli an ce li te ra tu re , a nd s yn th es iz es th e fin di ng s. Pr op os es fo ur m aj or a sp ec ts o f s tr at eg ic a lli an ce s: ra tio na le , f or m at io n, s tr uc tu ra l pr ef er en ce s, a nd p er fo rm an ce . N ot es re so ur ce -b as ed v ie w s ug ge st s th at th e ra tio na le fo r al lia nc es is th e va lu e cr ea tio n an d re so ur ce s ch ar ac te ri st ic s, s uc h as im pe rf ec t m ob ili ty , fa ci lit at e al lia nc e fo rm at io n. Id en tifi es re so ur ce c ha ra ct er is tic s, d is cu ss es a ty po lo gy o f al lia nc e an d st ru ct ur e pr ef er en ce s fo r a lli an ce s tr uc tu re s, a nd u se s a se t o f p ro po si tio ns to in di ca te fu tu re re se ar ch d ir ec tio ns . D ev el op s a so ci al e xc ha ng e pe rs pe ct iv e of a lli an ce c on st el la tio ns (m ul ti- fir m a lli an ce s) , w hi ch e m ph as iz es ro le o f e xc ha ng e. A ls o, d is cu ss es th re e so ci al c on tr ol m ec ha ni sm s, (e .g ., re ci pr oc ity , s oc ia l s an ct io ns , m ac ro cu ltu re ) fo r m iti ga tin g di ffi cu lti es o f m an ag in g co ns te lla tio ns . P ro po se s ty po lo gy o f c on st el la tio ns b as ed o n di m en si on s of e xc ha ng e. C on tr ib ut es to a lli an ce li te ra tu re th at is la rg el y ba se d on a n ex ch an ge p ro ce ss , b ut w hi ch h as be en c en te re d on in te rp er so na l r el at io ns . R ev ie w s an d de ve lo ps ty po lo gy a nd d im en si on s of n et w or k st ud ie s in o rg an iz at io na l re se ar ch . E xt en ds li te ra tu re o n ho w o rg an iz at io ns m ak e st ra te gi c ch oi ce s du ri ng in st itu tio na l tr an si tio ns . I ts th re e pr im ar y co nt ri bu tio ns a re to (1 ) h ig hl ig ht in st itu tio na l c ha ng e, (2 ) de ve lo p tw o- ph as e m od el , f oc us in g on l on gi tu di na l p ro ce ss to m ov e fr om re la tio ns hi p- ba se d, p er so na liz ed tr an sa ct io n st ru ct ur e re qu ir in g ne tw or k ce nt er ed s tr at eg ie s to a ru le - ba se d, im pe rs on al e xc ha ng e m od el th at e m ph as iz es m ar ke t- ce nt er ed s tr at eg y, a nd (3 ) e xt en d w or k of in st itu tio na l b as ed v ie w o f s tr at eg y ch oi ce . C au tio ns th at n ot a ll ne tw or ks a re th e sa m e an d fir m s ca n pr ac tic e bo th n et w or k- a nd m ar ke t- ba se d st ra te gi es , w hi ch a re n ot m ut ua lly e xc lu si ve . C ul tu ra l d iff er en ce m ay a ls o in te ra ct w ith in st itu tio na l c ha ng e. A ut ho r( s) / y ea r R es ea rc h pe rs pe ct iv e T he or et ic al b as e L ev el o f an al ys is K ey c on tr ib ut io ns Ta bl e 2: S um m ar y of S el ec te d E xa m pl es o f C on ce pt ua l R es ea rc h on I nt er fir m N et w or ks Volume 30, Number 1 83 B ra ss e t a l. (2 00 4) B et ts & S to ud er (2 00 4) C ur ra h & W ri gl ey (2 00 4) U nc le ar U nc le ar In te ra ct io na l U nc le ar U nc le ar O rg an iz at io na l le ar ni ng / kn ow le dg e m an ag em en t Fi rm & re la tio na l O rg an i- za tio na l, re la tio na l, & n et w or k R el at io na l & o rg an i- za tio na l R ev ie w s an te ce de nt s an d co ns eq ue nc es o f n et w or ks b y le ve ls o f a na ly si s (i nt er pe rs on al le ve l, gr ou p le ve l, in te ro rg an iz at io na l l ev el ) a nd , o n ea ch le ve l, su gg es ts a re as th at h av e be en o ve rl oo ke d by re se ar ch er s. R ev ie w s m aj or n et w or k or ga ni za tio n re se ar ch a nd n ot es th at a lth ou gh m uc h is w ri tte n on n ot io n of “ ne tw or k or ga ni za tio ns ,” m os t a rt ic le s ar e th eo re tic al a nd ra re ly u se w el l- es ta bl is he d ne tw or k an al yt ic al te ch ni qu es . S ug ge st s th at n ot io n of n et w or k or ga ni za tio n is st ill d ev el op in g an d do es n ot h av e a cl ea r m ea ni ng . C ri tiq ue s us e of n et w or k an al ys is a nd co nc ep t o f n et w or k or ga ni za tio n, w hi ch h av e lit tle o ve rl ap in th e lit er at ur e. A pp lie s “c om pe te nc e ba se d” v ie w o f t he fi rm to e m er gi ng tr an sn at io na l c or po ra te (T N C ) re ta ili ng in du st ry . A na ly ze s ge og ra ph ic im pa ct o f o rg an iz at io na l l ea rn in g an d in ve st ig at es ad ap ta tio n am on g re ta il T N C s, to ra is e aw ar en es s of th ei r c on ce pt ua l i m po rt an ce . U se s co nc ep t o f i nt er -fi rm , i nt ra -fi rm , a nd e xt ra -fi rm re la tio na l n et w or k to s he d lig ht o n na tu re of e m be dd ed ne ss . O ff er s m or e de ta il by fo cu si ng o n in te rp la y be tw ee n ex tr a- fir m n et w or ks of s to re -b as ed le ar ni ng a nd in tr a- fir m n et w or ks o f k no w le dg e ex ch an ge a nd o rg an iz at io na l ad ap ta tio n. A ut ho r( s) / y ea r R es ea rc h pe rs pe ct iv e T he or et ic al b as e L ev el o f an al ys is K ey c on tr ib ut io ns Ta bl e 2: S um m ar y of S el ec te d E xa m pl es o f C on ce pt ua l R es ea rc h on I nt er fir m N et w or ks 84 Journal of Business Strategies Pe ng & Z ho u (2 00 5) E vo lu tio na l N et w or k th eo ry R el at io na l E xa m in es h ow n et w or k st ra te gi es e vo lv e w ith in st itu tio na l t ra ns iti on s. A rg ue s th at w hi le ce rt ai n ne tw or k st ra te gi es a re b ec om in g le ss im po rt an t, ot he r n et w or k st ra te gi es m ay b ec om e m or e cr uc ia l. Sp ec ifi ca lly , w ea k tie s tr at eg ie s m ay d om in at e ne tw or k st ra te gy c ho ic es a s tr an si tio n ev ol ve s. In st ea d of b ei ng p ha se d ou t, st ro ng ti es m ay b e tr an sf or m ed in to w ea k tie s. A rg ue th at p ol iti ca l a nd le ga l f or ce s m ay s ha pe th e co nt en t o f d iff er en t n et w or ks th at fo cu s on b us in es s- to -g ov er nm en t a nd b us in es s- to -b us in es s tie s. S up po rt s id ea th at b us in es s ne tw or ks in A si a dr iv en b y im pa ct o f i ns tit ut io na l c ha ng e. N ot es th at th e di ff er en ce s be tw ee n fir m s in d ev el op ed a nd e m er gi ng e co no m ie s is n ot th at fo rm al , d o no t u se n et w or k st ra te gi es an d th e la tte r o nl y us e ne tw or k st ra te gi es . A ut ho r( s) / y ea r R es ea rc h pe rs pe ct iv e T he or et ic al b as e L ev el o f an al ys is K ey c on tr ib ut io ns L av ie (2 00 6) Pr ov an & K en is (2 00 7) E vo lu tio na l St ru ct ur al E m be dd ed ne ss N et w or k th eo ry O rg an iz a- tio na l, re la tio na l, & n et w or k N et w or k St re ss es th eo ry d ev el op m en t r at he r t ha n lo gi ca l p os iti vi sm . C on tr ib ut es to a d eb at e fr om di ff er en t t he or et ic al v ie w s. F in al ly , i t o ff er s a dy na m ic s ta bi lit y ap pr oa ch to a na ly ze n et w or k re se ar ch . A ut ho rs s ee o rg an iz at io na l n et w or ks a s co m pl ex a da pt iv e sy st em th at e xh ib its b ot h pe rs is te nc e an d ch an ge . Pr ov id es ra tio na le fo r s tu dy in g ne tw or k go ve rn an ce , i ts ro le , a nd it s im pa ct o n ne tw or k ef fe ct iv en es s. P ro po se s th re e ba si c fo rm s of n et w or k go ve rn an ce (N A O m od el , l ea d or ga ni za tio na l g ov er ne d ne tw or ks , a nd p ar tic ip an t g ov er ne d ne tw or ks ). A ls o di sc us se s te ns io ns in e ac h go ve rn an ce fo rm a nd h ow to m an ag e th em . L av ie (2 00 6) M ot iv at io na l R es ou rc e- ba se d vi ew Fi rm & re la tio na l O ff er s sy st em at ic th eo re tic al a na ly si s of c om pe tit iv e ad va nt ag e of fi rm a lli an ce s an d in te gr at es a nd e xt en ds re la tio na l v ie w /s oc ia l n et w or k th eo ri es w ith tr ad iti on al re so ur ce - ba se d vi ew (R B V ) w ith a re fo rm ul at ed v er si on th at s ho ul d be ta ke n in to a cc ou nt in n et w or k lit er at ur e. C on tr ib ut es to e xt en si on o f R B V a nd fi rm s’ c om pe tit iv e ad va nt ag e in n et w or ke d en vi ro nm en ts . A ut ho r r ev ea ls h ow a fi rm c an e xt ra ct v al ue fr om re so ur ce s th at a re n ot fu lly ow ne d or c on tr ol le d by it s in te rn al o rg an iz at io n. T o do s o, h e de ve lo ps m od el th at a llo w s fo r es tim at in g di ff er en t t yp es o f e co no m ic re nt th at fi rm c an g en er at e by re ly in g on re so ur ce s ac ro ss it s ne tw or k of a lli an ce s. It id en tifi es fi rm -s pe ci fic , r el at io n- sp ec ifi c an d pa rt ne r- sp ec ifi c fa ct or s. F in al ly , i t c al ls fo r i nt eg ra tio n of R B V a nd n et w or k th eo ri es . Ta bl e 2: S um m ar y of S el ec te d E xa m pl es o f C on ce pt ua l R es ea rc h on I nt er fir m N et w or ks Volume 30, Number 1 85 Pr ov an , F is h, & S yd ow (2 00 7) D ac in , O liv er , & R oy (2 00 7) Pe te rs , G as se nh ei m er & J oh ns to n (2 00 9) St ru ct ur al M ot iv at io na l In te ra ct io na l N et w or k th eo ri es In st itu tio na l O rg an iz at io na l le ar ni ng & st ru ct ur at io n th eo ry N et w or k Fi rm O rg an iz a- tio na l & re la tio na l M ai nl y fo cu se s on in te ro rg an iz at io na l n et w or ks a t t he n et w or k le ve l r at he r t ha n at or ga ni za tio na l o r r el at io na l l ev el o f a na ly si s. A rg ue s th at w e ne ed to e xa m in e w ho le ne tw or k, to fu rt he r u nd er st an d is su es s uc h as h ow n et w or ks e vo lv e, a re g ov er ne d, a nd h ow ne tw or k ou tc om es m ig ht b e ge ne ra te d. F or in st an ce , s tu dy in g th e w ho le n et w or k w ou ld h el p sh ed li gh t o n ho w m ul til at er al c ol la bo ra tio n im pa ct s ov er al l b us in es s cl im at e in a n in du st ry or re gi on . S ug ge st s re se ar ch er s an d pr ac tit io ne rs s ho ul d ha ve p er sp ec tiv es th at g o be yo nd pe rf or m an ce o f i nd iv id ua l o rg an iz at io ns . A ls o no te s th at s tu dy in g w ho le n et w or k m ay re ve al im pl ic at io ns fo r i ts m em be rs , e .g ., st ag e of n et w or k ev ol ut io n m ay e xp la in h ow in di vi du al s re ac h th ei r g oa ls . A gu es le gi tim ac y ga in ed v ia p ar tic ip at io n in s tr at eg ic a lli an ce c an h av e a m aj or im pa ct o n fir m p er fo rm an ce . S ug ge st s al lia nc es s er ve im po rt an t f un ct io ns fo r fi rm s. P ro po se s fiv e ty pe s of le gi tim ac y as so ci at ed w ith a lli an ce s (m ar ke t, re la tio na l, so ci al , i nv es tm en t, an d le gi tim ac y) . O ff er s pr op os iti on s to e xp la in w he n fir m s ar e m os t l ik el y to e nt er in to a lli an ce s fo r l eg iti m ac y pu rp os es a nd h ow le gi tim at in g ro le o f a lli an ce s co nt ri bu te s to fi rm a nd al lia nc e pe rf or m an ce . M os t i m po rt an tly , s up po rt s id ea th at le gi tim at io n m ay b e an im po rt an t ro le fo r a lli an ce s an d ex te nd s al lia nc e lit er at ur e fr om in st itu tio na l p er sp ec tiv e. A rg ue s th at th e ne w m ar ke tin g lo gi c re qu ir es m or e re fin em en t a nd e xp lic itn es s in ne tw or ki ng li te ra tu re . A dd re ss es th is n ee d by e xp lo ri ng h ow v al ue c re at io n in m ar ke tin g re lie s on o rg an iz at io na l l ea rn in g. U se s st ru ct ur at io n th eo ry to e xp la in re la tio ns hi p be tw ee n or ga ni za tio na l a nd in di vi du al le ar ni ng . E xp lo re s th re e fa ce ts o f s tr uc tu ra tio na l p ro ce ss o f or ga ni za tio na l l ea rn in g: (1 ) s tr uc tu ra l p ro pe rt ie s th at e na bl e an d co ns tr ai n le ar ni ng p ro ce ss es , (2 ) w ay s th at in di vi du al s ca rr y ou t l ea rn in g pr ac tic e, (3 ) s oc ia l p ro ce ss in w hi ch le ar ni ng pr ac tic es a re e m be dd ed . I llu st ra te s pr oc es s w ith e xa m pl es o f t yp ic al n et w or k re la tio ns hi p in co ns tr uc tio n in du st ry a nd h ig hl ig ht s ro le o f m ar ke tin g in e nh an ci ng k no w le dg e m an ag em en t, or ga ni za tio na l l ea rn in g, a nd v al ue c re at io n. A ut ho r( s) / y ea r R es ea rc h pe rs pe ct iv e T he or et ic al b as e L ev el o f an al ys is K ey c on tr ib ut io ns Ta bl e 2: S um m ar y of S el ec te d E xa m pl es o f C on ce pt ua l R es ea rc h on I nt er fir m N et w or ks 86 Journal of Business Strategies G an es an , G eo rg e, J ap , Pa lm at ie r, & W ei tz (2 00 9) M cG ui re & D ow (2 00 9) St ru ct ur al St ru ct ur al K no w le dg e m an ag em en t & ne tw or k th eo ri es (I m pl ic it) U nc le ar Fi rm & re la tio na l N et w or k D is cu ss es h ow re ce nt tr en ds a nd c ha ng es in re ta ile r s up pl y ch ai n m an ag em en t i m pa ct fir m p er fo rm an ce . P ro po se th re e di re ct io ns in w hi ch re ta ile rs le ve ra ge u ps tr ea m a nd do w ns tr ea m re la tio ns hi ps in s up pl y ch ai n to c re at e pe rf or m an ce o ut co m es fo r b ra nd s, re pu ta tio n, re ve nu es , i nn ov at io n, a nd lo ng te rm p ro sp ec ts (s ou rc in g pr ac tic es o n w or ld w id e, m ul tic ha nn el , a nd n at ur e of in te rfi rm ti es b as es ). R ev ie w s m aj or th eo re tic al a nd e m pi ri ca l w or k on v er tic al a nd h or iz on ta l J ap an es e K ei re ts u. D is cu ss es h is to ry , c ha ra ct er s, a nd c ha ng es fo r e ac h ty pe o f K ei re ts u in p os t- 19 92 p er io d. Su gg es ts fu tu re re se ar ch a nd im pl ic at io ns . A ut ho r( s) / y ea r R es ea rc h pe rs pe ct iv e T he or et ic al b as e L ev el o f an al ys is K ey c on tr ib ut io ns Ta bl e 2: S um m ar y of S el ec te d E xa m pl es o f C on ce pt ua l R es ea rc h on I nt er fir m N et w or ks Volume 30, Number 1 87 References Achrol, R. S. (1997). 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Biographical Sketch of Authors Dr. Jie G. Fowler is Assistant Professor of Marketing at Valdosta State Uni- versity. She received her Ph.D in Marketing from the University of Nebraska-Lin- coln. Her recent work focuses on social networks, beauty appeals in advertising, and family dynamics/relationships in the marketplace. Her research appears in Journal of Macromarketing and Advances in Consumer Research. Dr. Timothy H. Reisenwitz is Professor of Marketing at Valdosta State Uni- versity. He received his DBA in Marketing from Cleveland State University. His work examines social media, generational cohorts, and academic dishonesty. His research appears in The International Journal of Internet Marketing and Advertis- ing, Journal of Consumer Marketing, Marketing Management Journal, Journal of College Teaching & Learning, and Academy of Educational Leadership Journal.