Organizations enter alliances with each other to access critical resources, but they rely on information from the network of prior alliances to determine with whom to cooperate. These new alliances modify the existing network, prompting an endogenous dynamic between organizational action and network structure that drives the emergence of interorganizational networks. Testing these ideas on alliances formed in three industries over nine years, the authors show that the probability of a new alliance between specific organizations increases with their interdependence, but also with their prior mutual alliances, common third parties, and joint centrality in the alliance network. The differentiation of the emerging network structure, however, mitigates the effect of interdependence and enhances the effect of joint centrality on new alliance formation. 3

Abstract not found

We investigate whether firms learn to manage interfirm alliances as experience accumulates. We use contract-specific experience measures in a data set of over 2000 joint ventures and licensing agreements, and value creation measures derived from the abnormal stock returns surrounding alliance announcements. Learning effects are identified from the effects of unobserved heterogeneity in alliance capabilities. We find evidence of large learning effects in managing joint ventures, but no such evidence for licensing contracts. The effects of learning on value creation are strongest for research joint ventures, and weakest for marketing joint ventures. These results are consistent with the view that learning effects are more important in situations characterized by greater contractual ambiguity. Copyright © 2000 John Wiley & Sons, Ltd.

Despite the inherent risk arising from separating buyers and sellers, networked online marketplaces are proliferating. We describe how online auction marketplaces take advantage of institutional structures to build buyer trust in auction sellers, mitigate risk, increase satisfaction, and promote transaction intentions. It is hypothesized, based on institutional trust (Zucker 1986), that buyer trust in auction sellers can be increased, beyond past experience with sellers, through structural assurances, such as buyer-driven certification, auction house escrows, and credit card guarantees. We examined buyer transaction intentions, mediated by trusting beliefs, risk reduction, and satisfaction. The model is tested with 274 buyers in Amazon’s online auction marketplace. The results support the hypotheses, highlighting the importance of institution-based trust in online networks. Implications are discussed. Keywords: Institution-based trust, online auctions, institutional structures, certification, escrows, third-party guarantees

In this paper, we review and analyze the emerging network paradigm in organizational research. We begin with a conventional review of recent research organized around recognized research streams. Next, we analyze this research, developing a set of dimensions along which network studies vary, including direction of causality, levels of analysis, explanatory goals, and explanatory mechanisms. We use the latter two dimensions to construct a 2-by-2 table cross-classifying studies of network consequences into four canonical types: structural social capital, social access to resources, contagion, and environmental shaping. We note the rise in popularity of studies with a greater sense of agency than was traditional in network research.

Relational exchange arrangements supported by trust are commonly viewed as substitutes for complex contracts in interorganizational exchanges. Many argue that formal contracts actually undermine trust and thereby encourage the opportunistic behavior they are designed to discourage. In this paper, we develop and test an alternative perspective: that formal contracts and relational governance function as complements. Using data from a sample of information service exchanges, we find empirical support for this proposition of complementarity. Managers appear to couple their increasingly customized contracts with high levels of relational governance (and vice versa). Moreover, this interdependence underlies their ability to generate improvements in exchange performance. Our results concerning the determinants of these governance choices show their distinct origins, which further augments their complementarity in practice. Copyright © 2002 John Wiley & Sons, Ltd. Transaction cost economics (TCE) has emerged as a common framework for understanding how managers craft governance arrangements. The general proposition of this literature is that managers

Recent research suggests that people obtain useful knowledge from others with whom they work closely and frequently (i.e., strong ties). Yet there has been limited empirical work examining why this is so. Moreover, other research suggests that weak ties provide useful knowledge. To help integrate these multiple findings, we propose and test a model of two-party (dyadic) knowledge exchange, with strong support in each of the three companies surveyed. First, the link between strong ties and receipt of useful knowledge (as reported by the knowledge seeker) was mediated by competence- and benevolence-based trust. Second, once we controlled for these two trust dimensions, the structural benefit of weak ties became visible. This latter finding is consistent with prior research suggesting that weak ties provide access to non-redundant information. Third, we found that competence-based trust was especially important for the receipt of tacit knowledge. We discuss implications for theory and practice. 2

What explains differences in firms' abilities to acquire competitive capabilities? In this paper we propose that embeddedness, in terms of firms' network of bridging ties and linkages to regional institutions, are important sources of variation in firms' acquisition of competitive capabilities. We argue that firm networks rich in bridging ties and firms' participation in regional institutions are critical vehicles for accessing new information, ideas, and opportunities leading to the acquisition of competitive capabilities in geographical clusters. Hypotheses are tested on a stratified random sample of 227 job shop manufacturers located in several regions of the US Midwest using data gathered from a mailed questionnaire. Results from structural equation modeling broadly support the embeddedness hypotheses and suggest a number of novel insights about the link between firms' networks and competitive capabilities.

Powell and K.W. Koput, Co-PIs). We appreciate the helpful comments of Gernot

The tacit assumption that increased product modularity is associated with advantageous increases in organizational modularity underlies much of the literature on modularity. Previous empirical investigations of this assumption, few in number, have faced numerous confounding factors and generated conflicting results. I build a causal model for the relationship between product and organizational modularity, which I test using a distinctive empirical setting that controls for confounding factors present in previous studies. I find support for only part of the assumed relationship, showing that modularity is a more multi−faceted concept than previously recognized. In particular, increased product modularity enhances reconfigurability of organizations more quickly than it allows firms to move activities out of hierarchy. The paper contributes to the emerging stream of research that focuses on the previously under−appreciated costs of designing and maintaining a modular organization.