Handbook of Organizational Learning and Knowledge Management, Second Edition

Networks: Integrative Perspectives

Given that every organization or set of organizations is essentially a social network (Lincoln, 1982), concepts of social network methods especially have been applied to understand how alliance and organizational networks emerge, function, and perform. Most notably, social network analysis has been deployed to increase our understanding of how firms obtain and use information about partner needs, knowledge, competencies, and reliabilities in their search for potential alliance partners (Gulati, 1995). Firms searching for partners are more likely to resort to their networks and choose their past partners or their partners’ partners if they are faced with high levels of partnering uncertainty (Rowley and Baum, 2008). Information about partner reliability and competencies received increases trust, reduces the likelihood of opportunistic behavior, and influences the choice for governance structure. However, information about the capabilities and willingness of partners to cooperate may be more or less imperfect, which raises search costs. Reliable information may be difficult to obtain before an alliance is initiated, and thus firms face concerns of adverse selection and moral hazard. One way firms can overcome the possibility of opportunism occurring and obtain reliable information is to capitalize on the personal social ties between members of an alliance through which they obtain information about the reputation of a partner (Gulati, 1998; Ring ...