Embeddedness Paradox Revisited: Motives for Partner Selection and Opportunity Costs
Speaker
Abstract
| Network embeddedness theory states that firms are interconnected within a social structure of ongoing relationships. This theory recommends that firms should have a mix of arm’s length and embedded relationships in their network structure. The present study extends the structuralist view of networks and considers firms’ behavioral characteristics of motives for choosing network partners. Evidence from national data on firm-bank lending relationships shows that the common strategy recommendation of network embeddedness theory is valid only if firms choose their network partners with calculative motives. More importantly, such a mix of ties is detrimental for firms choosing their partners with relational motives. Furthermore, these relationally motivated firms experience lower opportunity costs from their network relationships compared to the firms with calculative motives. |
| Contact information: |
| Dr. C. Lioukas |
