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Chapter 8: The Management of Growth Strategies in Firm Networks: A Stylized Model of Opportunity Discovery via Network Ties
8 The management of growth strategies in firm networks: a stylized model of opportunity discovery via network ties Simone Ferriani and Antonio Giuliani INTRODUCTION The model hereafter proposed elaborates on the informational value of network ties to set the stage for a network-based approach to firm growth. Drawing on Austrian economics, growth is modeled as the outcome of an opportunity discovery-recognition process, which in turn is molded by the availability of information to the firm. Asymmetries in growth potential arise because firms engage in multirelational networks that imply heterogeneous access to information and, consequently, a different positioning within the space of opportunities. This process is moderated by the firm’s ultimate ability to recognize and absorb the commercial value of the information conveyed by its ties (i.e. the firm’s absorptive capacity). Although abundant empirical evidence already exists that points to the important role of networks as drivers of firm growth (Zaho and Aram, 1995; Powell et al., 1996; Lee and Tsang, 2001), the literature is less clear in elucidating the theoretical mechanisms that govern this effect. Either because the ‘networking metaphor’ is endorsed with a taken-for-granted facilitator role (Burt, 2000), or because it is credited with a multiplicity of overlapping benefits (resource, power, status, information, legitimacy, etc.), with no explanation of the basic underlying mechanisms linking networks and firm growth. To address this shortcoming we suggest an original framework where network ties can be understood as enablers of firm growth via informationbased processes of opportunity discovery and recognition. In essence, we...
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