Network patterns and competitive advantage before the emergence of a dominant design

Authors

  • Pek-Hooi Soh

    Corresponding author
    1. Segal Graduate School of Business, Simon Fraser University, Vancouver, B.C., Canada
    • Segal Graduate School of Business, Simon Fraser University, 500 Granville Street, Vancouver, B.C., Canada V6C 1W6.
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Abstract

This study examines the performance implications of the alliance networks of 49 firms that competed for two technology standards in the U.S. local area network industry from 1989 to 1996. During the race to define a dominant design, individual firms attract the suppliers of complements by building alliance networks to favor the firms' preferred technology standard. Controlling for the number of suppliers in each technology standard community and the extent of technical progress achieved by individual firms, the panel data analysis shows that central firms with high ego network density, coupled with a strategic intent to acquire and share knowledge broadly within the technological community, achieve better innovation performance. The size of the technological community and some random events in the early formation of the industry do not provide a sufficient explanation of how these firms gain the diverse support of suppliers or enhance their competitive advantage. By demonstrating the independent and contingent effects of alliance network properties, this study explains how network patterns might enhance or limit the benefits of alliance networks when focal firms embrace different innovation strategies. Copyright © 2009 John Wiley & Sons, Ltd.

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