Redundant governance structures: an analysis of structural and relational embeddedness in the steel and semiconductor industries

TLDR

Network research shows that both relational and structural embeddedness influence firm behavior and performance. The study examines how relational and structural embeddedness jointly affect firm performance, contingent on industry context, using strategic alliance networks in the semiconductor and steel sectors. The authors analyze strategic alliance networks in the semiconductor and steel industries to assess the interaction of relational and structural embeddedness. Empirical results show that strong ties in highly interconnected alliance networks hurt performance, especially in semiconductor firms, while strong ties benefit steel firms and weak ties benefit semiconductor firms. © 2000 John Wiley & Sons, Ltd.

Abstract

Network researchers have argued that both relational embeddedness—characteristics of relationships—and structural embeddedness—characteristics of the relational structure—influence firm behavior and performance. Using strategic alliance networks in the semiconductor and steel industries, we build on past embeddedness research by examining the interaction of these factors. We argue that the roles relational and structural embeddedness play in firm performance can only be understood with reference to the other. Moreover, we argue that the influence of these factors on firm performance is contingent on industry context. More specifically, our empirical analysis suggests that strong ties in a highly interconnected strategic alliance network negatively impact firm performance. This network configuration is especially suboptimal for firms in the semiconductor industry. Furthermore, strong and weak ties are positively related to firm performance in the steel and semiconductor industries, respectively. Copyright © 2000 John Wiley & Sons, Ltd.