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The Liability of strangers: performance consequences of non-local partnering

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This paper examines the performance consequences of non-local partnering - the formation of new ties between organizations that have neither prior direct nor indirect connections. Although non-local ties provide organizations with potential benefits including enhanced opportunities to broker resource and information flows across unconnected partners, they also entail risks associated with the absence of collaborative routines and limited information regarding non-local partners' capabilities and cooperativeness. Our analysis of Canadian investment banks' underwriting syndicate ties confirms that while, initially, non-local partnering is detrimental to performance, with repetition these ties begin to enhance performance. The ability to extract performance benefits from non-local ties also depends on organizations' network positions - closed ego networks and high status enable banks to benefit from forming new non-local ties as well as from subsequently repeating them.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2007/2007-65.pdf

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Copyright INSEAD. All rights reserved