Niche and performance: the moderating role of network embeddedness
Article first published online: 22 DEC 2004
Copyright © 2004 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 26, Issue 3, pages 219–238, March 2005
How to Cite
Echols, A. and Tsai, W. (2005), Niche and performance: the moderating role of network embeddedness. Strat. Mgmt. J., 26: 219–238. doi: 10.1002/smj.443
- Issue published online: 27 JAN 2005
- Article first published online: 22 DEC 2004
- Manuscript Revised: 23 JUL 2004
- Manuscript Received: 30 JUL 2001
- network embeddedness;
- product niche;
- process niche;
- venture capital
What is the relationship between niche and performance? We identify two types of niche positions—product niche and process niche—defined by the extent to which a firm offers distinctive products and has distinctive operational processes, respectively. We argue that the effect of each niche on firm performance is contingent upon network embeddedness—the extent to which a firm is involved in a network of interconnected inter-firm relationships. Using data covering the period 1995–98 pertaining to venture capital firms and their holdings in initial public offerings (IPOs), we show that both product niche and process niche interact with network embeddedness to determine firm performance. Our findings suggest that the extent to which a firm offers distinctive products or processes will be more positively associated with firm performance when network embeddedness is high. Copyright © 2004 John Wiley & Sons, Ltd.