Strategic networks

TLDR

Prior research treated firms as autonomous entities seeking competitive advantage, but the networks in which they are embedded profoundly shape their conduct and performance. This paper argues that networks of interfirm ties are crucial for strategy research and identifies five key areas—industry structure, positioning, resources, contracting costs, and dynamic network constraints—where they can be incorporated. The authors outline insights for each of these five areas, showing how strategic networks affect industry structure, positioning, resources, contracting costs, and dynamic network constraints. © 2000 John Wiley & Sons, Ltd.

Abstract

This paper introduces the important role of networks of interfirm ties in examining fundamental issues in strategy research. Prior research has primarily viewed firms as autonomous entities striving for competitive advantage from either external industry sources or from internal resources and capabilities. However, the networks of relationships in which firms are embedded profoundly influence their conduct and performance. We identify five key areas of strategy research in which there is potential for incorporating strategic networks: (1) industry structure, (2) positioning within an industry, (3) inimitable firm resources and capabilities, (4) contracting and coordination costs, and (5) dynamic network constraints and benefits. For each of these issues, the paper outlines some important insights that result from considering the role of strategic networks. Copyright © 2000 John Wiley & Sons, Ltd.