Network position and related power: how they affect and are affected by network management and outcomes
Tamara Oukes is a PhD-student in the University of Twente’s department for Entrepreneurship, strategy & Innovation Management (NIKOS-ESIM). Her supervisor is Professor Aard Groen from the Faculty of Behavioural, Management and Social sciences (BMS).
In this dissertation, I researched how network position, network management and network outcomes interrelate. My focus was on two aspects that, in my view, deserved more scholarly attention: 1) how startups in a fragile network position initiate, maintain and develop business relationships in interaction; and 2) how network position and related power influence network outcomes in multipartner relationships compared to other power sources. Thus, this dissertation’s main research question was: How do network position and related power affect and are they affected by business relationships management and outcomes in networks? To address this question, I presented the five studies in this dissertation.
In study 1, we explored how third actors influence a startup’s relationship initiation process and subsequently its network embedding and its business development. We analysed the relationship initiations of a startup and its eight partners in a longitudinal case study. Our analysis was based on four models grounded in the industrial marketing and purchasing as well as entrepreneurship literatures. We found that third actors stimulated the startup’s relationship initiation process by connecting it to potential valuable partners. In turn, the new business relationships advanced the startup’s network embedding and business development. Further, we showed that third actors strengthened the startup’s network embedding if they built strong relationships with both parties. These findings led us to conclude that third actors are crucial in a startup’s relationship initiation process, network embedding and business development.
In study 2, we investigated how a startup interacts with its partners over time. We created an interaction model based on two action typologies developed in the strategic management literature. We used this model to analyse 18 interaction episodes between a startup and its partners in a case study. We showed that the relationships between the startup and its partners were interactive because the startup and its partners reacted to one another in an interaction episode by reciprocating one another’s interaction modes. Further, they were dynamic because: 1) previous interaction episodes affected subsequent ones; and 2) a trigger prompted the startup and its partner to act, causing an interaction process that determined the eventual outcomes for the startup, its partner and their relationship. Based on these findings, we concluded that a startup’s relationships with its partners are interactive and dynamic.
In study 3, we researched how structural and behavioural power interact in business relationships between a startup and its well-established partners. We applied a dynamic two-sided model of power in interpersonal negotiations to nine power episodes between a startup and its established partners in a longitudinal case study. We found that: on the one hand, the startup and its partners decided to apply power tactics based on their perception of one another’s power rather than their de facto structural power; on the other hand, they changed their structural power or their partner’s perception via power change tactics and coalition-building. Thus, we concluded that a startup’s and its well-established partner’s structural and behavioural power interact via their perceived power.
In study 4, we examined how power asymmetry affects multipartner relationship effectiveness. Based on decision-making theory, we proposed that power asymmetry influences effectiveness differently, depending on the power source (i.e. size, age or network centrality) and effectiveness type (value creation or appropriation) considered. We tested our hypotheses in a database of 409 multipartner alliances granted governmental funding between 2000 and 2004. We showed that the positive direct effect of centrality asymmetry on value creation was weakened when size asymmetry was high. Further, centrality asymmetry’s negative direct effect on value appropriation was weakened when age asymmetry was high. These findings led us to conclude that power asymmetry derived from the same source can have a different effect on value creation vs. appropriation; the reverse also applies.
In study 5, we studied how power asymmetry influences the relationship between variety and new product development in multipartner relationships. We hypothesised that power asymmetry positively moderates the relationship between variety (i.e. functional, organisational and industry variety) and new product development based on theories from the interpersonal power literature. We tested the hypotheses in a database of 409 multipartner alliances subsidised between 2000 and 2004. We found that functional and organisational variety’s effects on new product development success were amplified if power asymmetry is high. Also, we showed that the odds of new product development success were usually higher when power asymmetry was high, regardless of the industry variety level. Based on these findings, we concluded that how power asymmetry affects the relationship between variety and new product development depends on the variety type under consideration.
Taken together, the studies’ findings expand our present understanding of how startups in a fragile network position initiate, maintain and develop business relationships by taking an interactive perspective rather than an organisational one. Further, they extend our current knowledge of power as a single dimensional concept in dyadic relationships towards a multidimensional concept in multipartner relationships. The studies’ findings also inform startups, startups’ partners, businesses involved in multipartner relationships and policy-makers about how they can improve network management and therefore network outcomes. Finally, the studies’ conceptual and methodological limitations open avenues for further intensive and extensive research into the interplay among additional business attributes and alternative relational elements, and its impacts on network management and outcomes