Year of Publication

2009

Degree Name

Doctor of Philosophy (PhD)

Document Type

Dissertation

College

Business and Economics

Department

Business Administration

First Advisor

Dr. Walter J. Ferrier

Second Advisor

Dr. Daniel J. Brass

Abstract

This dissertation explores the interplay between competitive strategy and alliance network structure in explaining firm performance in highly volatile environments (e.g., personal computers or consumer electronics). In particular, I examine the following three questions: (1) Which competitive strategies enable firms to gain superior performance? (2) How do these strategies affect the firm‘s networking behavior and lead to the formation of particular network positions? (3) What optimal combinations of competitive strategies and network structures maximize firm performance?

Firms can outperform rivals by pursuing two types of competitive strategies: advantage-creating and advantage-enhancing. Each of these strategies creates different needs, motivations, and opportunities for collaborative activity. Therefore, certain regularities in the firms‘ strategic behavior in the previous period can lead to distinctive and recognizable patterns of networking behavior in the future period, which in turn leads to predictable types of network structure. This study shows that firms with superior advantage-creating strategies become embedded in sparse network structures and are more likely to form non-equity alliances in the future period, whereas firms with strong advantage-enhancing tendencies become embedded in dense network structures with many equity-based alliances in the future period. However, if different strategies lead to formation of different types of network structure, are these tendencies beneficial for firm performance? If not, what is the optimal combination of competitive strategy and network structure that maximizes firm performance? I argue that network structure provides advantageous access to external resources that can both complement (enhance) the internal capabilities of the firm and substitute for the capabilities that a firm is lacking. I find that network structure plays both complementary and substitutive roles. However, my findings suggest dense network structure is more beneficial for firms that have superior either advantage-creating or advantage-enhancing capabilities, whereas firms with inferior internal capabilities can benefit more from a sparse network structure. I tested the proposed dynamic model on a sample of the largest 125 firms from computers and electronics industries that initiated 11,075 competitive actions and were embedded in a larger network of 36,766 alliances over 7 years.

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