MORSe (Management and Organization Research Seminars): "Prescriptions for Network Strategy: Does evidence of network effects in cross-section support them?"
Institute of Management and Organisation
Start date: 16 March 2011
End date: 17 March 2011
by Joel Baum (University of Toronto)
Wednesday, March 16th, 14:30, room A23
Abstract
While intuitively appealing (and common), drawing network strategy implications from empirical evidence of network performance effects in pooled cross-section is not necessarily warranted. This is because network positions can influence both the mean and variance of firm performance. Strategic prescriptions are warranted if empirically observed network effects reflect increases in mean firm performance. If network effects reflect increases in firm performance variance, however, such rescriptions are warranted only if the increase in the odds of achieving high performance are sufficient to compensate for the concomitant increase in the odds of realizing poor performance.
Our simulation study, designed to examine network effects in both pooled cross-section and within-firm over time under a wide range of conditions, counsels caution in drawing implications for network strategies.
