Corporate Governance, Organization and the Firm

Corporate Governance, Organization and the Firm

Co-operation and Outsourcing in the Global Economy

New Perspectives on the Modern Corporation series

Edited by Mario Morroni

In recent years, applied studies have shown widespread, profound and increasing heterogeneity across firms in terms of their strategy, organization arrangement and performance. This book investigates the diversity of business firms, offering a picture of the different organizational settings they adopt in their endeavour to cope with increasing competitive pressure.

Chapter 9: Technical Capital and Social Capital in Outsourcing Networks: Complements or Substitutes?

Rafael Pardo and Ruth Rama

Subjects: business and management, corporate governance, economics and finance, corporate governance, industrial organisation


1 Rafael Pardo and Ruth Rama INTRODUCTION 9.1 Research founded on the resource-based view (RBV) of companies is beginning to investigate whether the establishment of inter-company linkages (Lavie 2006) is one method that firms use to obtain the resources they require. Given that participation in inter-firm linkages is often considered as an indication of the social capital available to companies (Gulati et al. 2000; Vanhaverbeke et al. 2001), this question can be formulated, from a theoretical approach, in the following way: Do the social capital and the technical capital available to firms substitute or complement each other? The issue is also important from a practical point of view, since the academic and policy literature sometimes argues that promoting entrepreneurial linkages (such as outsourcing networks) between companies may improve company competitiveness. If firms lack specific competitive resources, it is claimed, they may compensate for this deficiency by forming external networks with other companies. This viewpoint assumes that the social and technical capital available to businesses can be mutual substitutes. However, sharing knowledge with partners may produce heavy risks for companies, such as involuntary spillovers of knowledge (de Laat 1999); technologically advanced firms might be reluctant to network with other enterprises, meaning that potential sources of knowledge within an industry remain isolated. On the other hand, firms lacking technical capital may also find themselves isolated, and consequently deprived of the spillovers and transfers of technology which networking with more advanced businesses could provide. Previous research suggests that firms engaging...

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