Chapter 2: Innovation Networks in Industry
Nicholas S. Vonortas INTRODUCTION It has become almost a cliché to argue that the behavior and performance of firms can only be understood fully by examining their social, technological, and exchange relationships with other economic agents. The image of atomistic agents competing for profits in impersonal markets has become increasingly inadequate in view of the explosion of inter-firm collaboration the past two to three decades, as well as the growing empirical evidence formally substantiating the influence of the social context in which firms are embedded on their conduct and performance (Gulati, 1998; Gulati et al., 2000). Perhaps the most important aspect of the social context of an organization’s environment is its social network of external contacts. A social network can be defined as a set of nodes linked by a set of social relationships of a specified type (Gulati, 1998). It is argued that the kind of networks in which the firm is embedded and its position in these networks affect the firm’s behavior and performance. Reminiscent of the resourcebased view of the firm – which emphasized the potential for enduring benefits to an organization from a collection of resources that is inimitable and not readily substitutable (Peteraf, 1993) – network scholars now argue that a firm’s network relationships can themselves create unique and non-substitutable value and allow access to the inimitable resources and capabilities of other firms. In other words, networks bestow the firm with “network resources,” which are equivalent to the idea of “social capital” in an organizational setting (Gulati,...
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