Tutorial 3: Network Advantage 2

Question 1

Determine weather your firm is appealing enough to partner with other firms

Answer 1

• Autonomy

- Attractiveness

Question 2

Definition: autonomy

Answer 2

Refers to how much independence a firm has to make its own decisions about how to configure exchange flows within the industry.

• uniqueness
• brokerage position

Question 3

Definition: attractiveness

Answer 3

Refers to how sought after the firm is as a partner based on its overall status, its clearly formulated vision for an alliance portfolio or its established track record as a good partner.

• high status
• clear vision

Question 4

Trigger events to agree on:

Answer 4

1- alliance completion: reached objectives
2- alliance performance failure: do not reach objectives
3- collaborative deadlock: exit clauses if partner cannot agree in important decisions
4- mechanism of property split after termination: ownership of physical and intellectual assets

Question 5

Structural embeddedness

Answer 5

Characteristics of the relational structure (dense/sparse networks)

Ties between actors facilitating the diffusion of Norms across the network.
(Norm at network level)

Question 6

Relational embeddedness

Answer 6

Characteristics of relationships (weak or strong ties)

Tie strength based on a combination of the amount of time, the emotional intensity, the intimacy and the reciprocal services which characterise a tie. (Trust at dyadic level)

Question 7

Strong ties advantages

Answer 7

• high quality information
• tacit knowledge
• social control mechanism (trust, mutual gain and reciprocity)

Question 8

Weak ties advantage

Answer 8

• novel information

Question 9

Redundant governance mechanism

Answer 9

Structural embeddedness such as dense network as well as strong ties (relational embeddedness) serve as a trust-based governance mechanism in inter firm alliance. Both are substitutes for one another.

Question 10

Structural holes

Answer 10

Position between other actors who are not directly linked together.
-> enjoy efficiency and control benefits

Question 11

Dense networks

Answer 11

Develop trust and cooperation through collective monitoring and sanctioning but often provide redundant information from multiple sources.

Question 12

Sparse networks

Answer 12

Provide a firm with the ability to efficiently obtain and broker information.

• > are strategies designed to explore or exploit ?
• > diverging information requirements for each strategy

Question 13

Dynamic environment

Answer 13

• exploitation
• sparse networks (dense ones are a liability)
• weak ties

Question 14

Stable environments

Answer 14

• exploitation
• dense networks
• strong ties

Question 15

Value creation mechanism

Answer 15

Enhance the focal firm’s ability to generate value from its relationship with partners. Produce relational rents that cannot be generated independently by individual participants.

Question 16

Value appropriation mechanism

Answer 16

Do not create new value but determine the relative share of relational rents that the focal firm can appropriate.

Question 17

Bargaining power

Answer 17

The ability to favourably change the terms of agreements, to obtain accommodations from partners and to influence the outcome of négociations.

Question 18

Bilateral competition

Answer 18

The extent to which partners can be considered as competitors of the focal firm.

Question 19

Multilateral competition

Answer 19

The extent to which partners are considered direct competitors of each other.

Question 20

Appropriation vs creation (prominent partners)

Answer 20

Dominant partners that contribute to joint value creation may also be well positioned to appropriate a larger share of this value at the focal firm’s expense

Question 21

Goodwill

Answer 21

Willingness to consider a partners interests