Multiplex Business Networks. The Many-Faced Relationship


Research Paper (postgraduate), 2019
40 Pages, Grade: 1,3

Excerpt

Table of contents

Table of contents

List of Figures

List of Tables

List of Abbreviations

1 Introduction

2 Theoretical Foundation
2.1 Types of Business Networks
2.2 Establishment and Development of Business Networks
2.3 Small and Medium-sized Enterprises and Start-Ups

3 Overview of the state-of-the-art
3.1 Product or Service Exchange
3.2 Information Exchange
3.3 Financial Exchange
3.4 Social Exchange
3.5 Multiplex Interaction of the Exchange Types

4 Discussion

5 Limitatioand Future Research

6 Conclusion

Appendix

References

List of Figures

Figure 1: Methodology of the conducted literature review

Figure 2: Direct and indirect ties in a business network (based on Ahuja 2000)

Figure 3: Structural holes (based on Ahuja 2000)

Figure 4: The Compound Relationship and its Component Relationships by Ross Jr. and Robertson (2007)

Figure 5: The Relationship Development Process by Dwyer, Schurr, and Oh (1987)

List of Tables

Table 1: Summary of propositions

Table 2: Concept Matrix

Table 3: Literature Table

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1 Introduction

“Somewhat paradoxically, to be an effective competitor in today's global marketplace requires one to be an effective cooperator in some network of organizations.”

Morgan and Hunt (1994) came to this conclusion quite a while ago, but its truth is today more important than ever. This seminar thesis will shed light on an essential factor of long-term success for every firm – the phenomenon of multiplex business networks. Since the globalized business world requires more value-chain optimization for firms to sustain their competitive advantages, strategic management demands governing a portfolio of partnerships and multiplex relationships to all firms involved in the value-adding process. These different types of relations form a closed business network around each firm. The latest example of such intertwined relations comes from Apple’s cooperation with Goldman Sachs and Mastercard in the development of the Apple Card, a credit card for Apple Pay users. Here, the firms are intertwined in production and service expansion. Goldman Sachs provides a banking service, executed by Mastercard as a financial services corporation via Apple’s mobile payment software. The companies are further financially tied together in this project through shared risks and investment costs while benefitting from each other’s professional expertise in their respective fields. Apple contributes with their broad customer base, Mastercard with a wide range of cooperating merchants and Goldman Sachs, though a newcomer to private consumer banking, acts as the financial lending institution (Apple Inc. 2019; Mastercard Inc. 2019).

The outcomes of the different types of relations in a network are not only a critical variable for knowledge attainment but also help especially small and young businesses in the process of business survival, establishment, and further growth. Therefore, the focus of this paper lies on small and medium-sized enterprises (SMEs) and start-ups, rather than on big corporations as the ones mentioned earlier. Furthermore, the paper specifically does not cover the impact of the private environment such as friends, family, and former colleagues, even though such influences play a significant role in the development of a young firm. This can be seen, e.g., in Amazon’s history, when founder Jeff Bezos started the company with $300,000 from his parents (Entrepreneur Media 2008) or in the early years of Apple, which founders were friends and profited from interaction and communication with other members from a computer hobbyist group at the time (Rawlinson 2017). This type of private network is obviously very important for the entrepreneurial process and should not be underestimated, as several scholars have identified them to be of promising nature for the entrepreneur’s success; however, the scope of this paper is narrowed to a B2B-context.

The goal of this paper is to identify, review, and systemize relevant academic literature on multiplex business networks and thereby determine the degree of relevance of different types of business-to-business (B2B) relationships with respect to size and age of the involved firms. On the basis of today’s findings, the research question arises what types of ties and networks are important for SMEs and start-ups to obtain relevant knowledge, accelerate growth, and constitute long-term success.

The paper at first provides a conceptual background about business networks and the most important theories established in business network lecture. It then further presents an overview of the state-of-the-art literature and research with particular focus on the insights about SMEs and start-ups. The presented findings lead to a discussion about practical implications and theoretical avenues. After pointing out limitations of this review as well as implications for further research in this field, the paper terminates with a conclusion. The overall methodology of this literature review is depicted in figure 1:

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Methodology of the conducted literature review

A detailed description of the conduction of the literature search is provided in Appendix B.

2 Theoretical Foundation

2.1 Types of Business Networks

The avenue of this research paper is based on the two main hypotheses of the relationship between business networks and business performance by Brüderl and Preisendörfer (1998): (1) the network founding hypothesis and (2) the network success hypothesis. The analysis of the literature as well as its findings and insights will be based and structured on their implications.

The network founding hypothesis explores the influence of networks on entrepreneurial businesses. Brüderl and Preisendörfer discovered and exploited opportunities for newly founded business resulting from their respective networks. Their hypothesis assumes that network resources, networking activities, and network support have a positive impact on the development of a start-up (see also Hite 2005).

The network success hypothesis states an even more direct positive relation between entrepreneurs’ networking efforts and their respective business success. The rationale is based on the suggestion that socially embedded ties provide start-ups with network relations to organizations and people who then can further provide resources and information that support the entrepreneurs’ efforts towards business survival and growth (Brüderl and Preisendörfer 1998; Witt 2004)

In order to gain a deeper understanding of these hypotheses, the general terms of the literature are defined in this section. As multiple scholars from the marketing as well as the strategic management area have shown deeper interest in the emergence, development, usage, and profitability of different types of business networks, several distinctions with respect to their objective and degree of involvement can be categorized, while some differing terms can be summarized.

The overall term business network can be defined as two or more firms that combine material or immaterial resources, knowledge or value-streams to a type of multi-business firm (Mahmood, Zhu, and Zajac 2011; Podolny and Page 1998). The involved actors are not necessarily fully aware about the networks they are engaged in; hence, networks are not always actively developed (Anderson, Håkansson, and Johanson 1994). Inside such networks, the literature differentiates between dyadic or inter-firm business relationships and business ties. The former describes the collaboration between two firms in furtherance of developing joint resources to accomplish each individual goals (Lui and Ngo 2005); the latter refers to informal personal ties such as CEO-relationships or sympathy (Khanna and Rivkin 2006) as well as to formal economic business ties such as buyer-supplier relations, reciprocal equity stakes or intertwined managerial and supervisory boards (Mahmood, Zhu, and Zajac 2011). Such business ties can be differentiated as direct and indirect ties. Direct ties describe an immediate connection between two firms, whereas indirect ties refer to a connection via a third party. Figure 2 illustrates this concept. In this network, Firm A has direct ties to firms B, C, and D, which themselves have direct ties to each other. Firm A also has indirect ties to firms E to M, which are part of the network.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Direct and indirect ties in a business network (based on Ahuja 2000)

Granovetter (1973) laid the groundwork for the differentiation of the strength of ties in networks. He measured the intensity and therefore the quality of a business tie by the frequency of interaction. Today’s scholars commonly use this definition (see Jack 2005), although the form of interaction has changed.

Based on these types of ties, scholars identified the emergence of structural holes (e.g., Burt 1992). Structural holes describe the gaps inside a network that would be closed if two or more firms would be connected (Zaheer and Bell 2005). Figure 3 summarizes the dimension of structural holes in an open network. Due to the missing ties between firms 2, 3, and 4 – the direct ties of firm 1 – and the in part missing direct ties to firms 5 to 8, there are structural holes from the perspective of firm 1. Firms that are able to “bridge” these holes, i.e., creating a closed network, have been proven to outperform their peers in terms of overall performance, specifically in resource acquisition, impending threats and opportunities and potential new partnerships (e.g., Burt 1992; McEvily and Zaheer 1999; Uzzi 1996).

Abbildung in dieser Leseprobe nicht enthalten

Figure 3: Structural holes (based on Ahuja 2000)

Part of the business network literature also refers to the term compound relationship which defines the several complex relationships between two firms (Ross Jr. and Robertson 2007). Hence, a compound relationship can be interpreted as a multiplex business network. Figure 4 illustrates this multiplexity which derives from several simple relationships on the respective levels of firm collaboration.

Abbildung in dieser Leseprobe nicht enthalten

Figure 4: The Compound Relationship and its Component Relationships by Ross Jr. and Robertson (2007)

Unlike networks, a lliances develop as a voluntary agreement between two firms in pursuance of (co-)developing, expanding or broadening a value-adding product or service (Gulati 1998). They are mostly established between firms that offer complementary goods and thus, the purpose is to strengthen the customers’ consciousness of the individual and interdependent benefits of each product (Bucklin and Sengupta 1993). Some scholars use the term alliance to describe a business relationship as well, though. These cases were acknowledged for and used in the specific context of each research.

Nevertheless, all these types have in common that they enable firms to acquire crucial resources and benefiting knowledge. Thus, marketing and management research has devoted substantial efforts to gain knowledge about the form of interaction and the capabilities of firms to successfully manage their positioning and outside ties in a business network (Forkman, Henneberg, and Mitrega 2018).

2.2 Establishment and Development of Business Networks

After clarifying the important terms and definitions commonly used in business network theory, it is important to understand the process of how a business network is established and developed. This is crucial knowledge for further analyzing and recognizing the different types of exchange types inside business networks and their implications on the outcome of firm performance. For that purpose, the following section briefly describes two in today’s literature generally accepted standard works:

The first general framework on how buyer-seller-relationships are developed identified four key phases: (1) awareness, (2) exploration, (3) expansion, and (4) commitment, in each of which the involved parties experience major changes in their respective views about the growing relationship (Dwyer, Schurr, and Oh 1987). Appendix A illustrates this process, in which the growing dependence on each other leads buyers and sellers to a commitment on cooperative investments.

A more general approach with a marketing-focus classifies the (1) initiation process, (2) implementation process, and (3) review process as well as their respective outcomes (Frazier 1983). It frames the behavior of organizations in each process as an aftermath of the expected outcome of such actions. If the established interdependency and ambidexterity lead to continued success and satisfaction, a business network is developed. In both cases, business networks are generally developed over time, actively pursued and encouraged and of high relevance in terms of performance impact and competitive environment for the involved firm.

2.3 Small and Medium-sized Enterprises and Start-Ups

With respect to the scope and length of this paper, all following findings of state-of-the-art literature will be structured with a focus on small and medium-sized enterprises and start-ups. For general clarification and rational classifications of this work, those specific types of firms shall be defined briefly in this section.

In the European Union, all firms with (1) a staff headcount lower than 250 and (2) a yearly turnover of less than 50M EUR or a balance sheet total of less than 32M EUR is considered a small or medium-sized enterprise (The Commission of the European Communities 2003). It should be noted though that other markets use different definitions for SMEs which may depend on industries, service or manufacturing orientation or simply other ranges of annual sales, assets and number of employees. For the sake of generalization and considering the very specific definition provided only by the EU, this review focuses on firms that comply with the given characteristics, independently of their geographical origin.

Start-ups are generally considered newly established companies, founded by entrepreneurs, with the objective to fulfill a need or problem in a certain marketplace. An entrepreneur as such is one who owns, launches, and manages the business as well as bearing the economic risks (Gartner et al. 1994). As there are no generally accepted classification criteria, the findings of this paper aim to include all firms that are included in the respective studies of the mentioned literature.

3 Overview of the state-of-the-art

In order to exemplify and examine the multiplexity of business interaction forms, the interaction process introduced by Håkansson (1982, pp. 24–27) shall be considered. It defines a B2B-interaction as an evolution of relations consisting of (1) Product or Service Exchange, (2) Information Exchange, (3) Financial Exchange, and (4) Social Exchange. In the following section, these types of exchanges are introduced and relevant findings from the business network literature regarding their influence on firm performance variables with respect to SMEs and start-ups presented. Further, the multiplexity of these exchange types is evaluated and scrutinized and their importance contextualized. Each section ends with a specified research proposition regarding the relevance of every type of interaction type inside the determined scope of firms.

3.1 Product or Service Exchange

An exchange of products or services captures all inter-firm activities that involve the physical flow of goods or services between business partners inside a network, e.g., firm A produces a good and sells it to firm B. The exchange of a product or service is usually the core activity of business interactions. Therefore, the fulfillment of the buyer’s needs is likely the main driver in how the relationship is defined by both parties involved (Håkansson 1982). The question arises how the wide range of direct exchanges affects firm performance variables and what insights the latest research provides for firms regarding strategical implications for their network behavior, decision-making process, and forms of investment into network development.

In general support of the network success hypothesis, several scholars argue that a more central position in a network – which leads to a higher number of direct and indirect ties – results in faster growth rates, e.g., in terms of number of employees (Powell, Koput, and Smith-Doerr 1996), growing sales and decreasing sales volatility (Tuli, Bharadwaj, and Kohli 2010), and profitability (Chen 1999; Kai Ming Au and Enderwick 1994; Zaheer and Bell 2005). These findings all in all suggest an enlarged growth of the business caused by an increased number of ties. Firms thus can infer that it is possible to enhance their product or service exchanges by repositioning inside their network, i.e., bring into focus a central network location.

Especially entrepreneurs have a great ability of shaping and changing the network structure of their firm in the young age of its lifecycle (Engel, Kaandorp, and Elfring 2017). It is also known that a growing number of firms is actively seeking product and/or service exchanges through business networks, mainly because of rising research and development costs and intensified and improved competition on more markets (Homburg, Faßnacht, and Schneider 2002; Mazzola, Perrone, and Handfield 2018; Rindfleisch and Moorman 2001). Thus, it can be inferred that the here targeted firms not only should devote efforts to their networking structure but also find several options to do so.

Former reasoning is further supported with respect to the relevant firm group of this paper by the discovery that start-ups and small and medium-sized firms gain their competitive advantages over early competitors in particular from their entrepreneurial networks (Capó-Vicedo, Expósito-Langa, and Molina-Morales 2008), a finding consistent with the network founding hypothesis. The size and intensity of such networks thus can be regarded as a key factor in the development of sustainable market positioning. Furthermore, specific factors such as innovation performance and productivity are affected by a firm’s network relationships with suppliers, customers, and intermediaries (Ahuja 2000; Pittaway et al. 2004), which is in particular important to be acknowledged for by entrepreneurial firms (Stam, Arzlanian, and Elfring 2013). In this context, examples for types of ties enhancing exchanges of products or services are professional and trade associations (Pittaway et al. 2004). All this leads to the conclusion that peculiarly for SMEs and start-ups, devoting time, money, and energy into their ties with partners of physical product exchanges inside a network is beneficial. Gulati (1995) supports this claim even further, arguing that repeated transactions between partners in a network enlarges their level of trust and thereby reduces transaction costs. This argument is though contradicted by the suggestion that such repetition can also increase redundancies and lower each other’s performance level generated by that partnership (Goerzen 2007). In a summarizing discovery, citing support for both positions, Thomaz and Swaminathan (2015) claim that Gulati’s assertions can be acknowledged with a limitation that such effects are temporary, i.e., the benefits for firms are limited to newly entered ties.

Another notable viewpoint to be considered is the firms’ perspectives when pursuing strategic alliances. With respect to knowledge generation and innovation measures, the level of redundancy is certainly higher for partners that operate in the same industry. Leaving cost-related benefits aside, firms that venture a strategic alliance outside their industry introduce significantly more innovative products than their peers (Kotabe and Swan 1995). This is supported by further studies (e.g., Ahuja 2000) and also leads to the inference that firms should not only invest in their networks inside their respective environment but will also benefit from a broader scope of strategic partnerships and ties.

In conclusion of the presented insights, it can be inferred that specifically for small and medium-sized and entrepreneurial firms, the width and depth of their business network has significant impact on their short-term development in the early business life cycle. Since start-up networks are of crucial importance for the development of competitive advantages, entrepreneurs should pursue a central positioning with multiple product and service exchange ties while maintaining a strategic overview. These inferences suggest the following research proposition:

Proposition 1: Entrepreneurial businesses and SMEs with a focal network position and thus, more product or service exchange ties, develop competitive advantages over their peers located in an outer network area.

3.2 Information Exchange

Information exchange between firms describes all forms of personal and impersonal communication to transfer data and knowledge about technical or commercial know-how. This could be, e.g., an informal conversation between two executives at a conference or a more detailed collaboration between technical departments of firms from different industries. The exchange of information is especially defined by the quality of its content for each party involved. Nevertheless, width and depth of the information as well as the degree of personality and formality can affect the development of the exchange (Håkansson 1982). This type of interaction is of particular interest for scholars in the field of SMEs and start-ups because information has such a defining and crucial importance for the development of the respective firms. However, firms do not have a clear structure or guideline on how to make use of this insight. Thus, the research question arises, what implications information exchange has for SMEs and start-ups and how these firms can govern the respective relationship intensity in order to benefit from the opportunities that emerge.

In general, much of the literature agrees with the network founding hypothesis. It is found, e.g., that the main advantage for small businesses as part of a business network is the opportunity to gain access to new and unknown resources (Dyer and Singh 1998; Stuart 2000). Street and Cameron (2007) argue that such external relationships and external resources are of decisive value for small businesses and their objective of long-term and sustainable profitability. In this context, resources are to be understood not only as physical goods traded on markets but also as non-market resources such as reputation or customer contacts (Witt 2004). These findings elucidate the importance of information exchange for such firms because it is obviously of particular interest for smaller and younger enterprises to keep up to the overall industry speed they are competing in and to maintain firm knowledge and capabilities to the highest levels of development at time. Therefore, they are dependent on a high degree of information acquisition. But obtaining such information and knowledge can be particular expensive for small firms as well as difficult for young firms without the needed networks. Thus, for innovation, development, and acquisition of expertise, they rely and depend on ties to their partners in alliances and networks (e.g., Lowik et al. 2012).

Again in support of the network founding hypothesis, this is strengthened by the findings of other scholars, such as evidence of corroborated theories that firms acquire a significant part of their capabilities via networks and partners (McEvily and Marcus 2005) and that central positioning in a network promotes obtaining access to external knowledge (Powell, Koput, and Smith-Doerr 1996) and thereby overall proficiency improvement. With a focus on entrepreneurial firms, Greve and Salaff (2003) claim that the access to business networks helps entrepreneurs to gain complementary information and knowledge, which then alleviates building and establishing a firm. This all leads to the further conclusion that the here considered firms should not only deepen their efforts regarding substantial information exchange, but that the success of such efforts is dependent on the centrality and thereby the number of ties inside their network. Hence, to be in a central positioning inside such networks should be of special interest.

As for the network founding hypothesis, scholars also find support for the network success hypothesis. An underlining discovery concerning the importance of information inter-dependency between firms is that two parties in a committed relationship, e.g., manufactures and distributors, gain greater access to relevant information about their respective markets which leads to an overall performance improvement for both firms compared to their relative independent performances (Stern and El-Ansary 1990). This can be interpreted as another implication for intensified relations and deepened information exchange. A hindering finding to this conclusion is the fact that in alliances, members of both involved firms tend to withhold the most essential information from their partners because of fear of exploitation and resulting economic harm (Rindfleisch and Moorman 2001). However, exchanging such knowledge, even between firms of the same industry, leads to more than a simple two-sided exchange but to rater a sophisticated generation of new knowledge that benefits both partners (Nahapiet and Ghoshal 1998), which again exhibits support for the network success hypothesis. As mentioned before, these findings call for deepened embeddedness of partner affiliation inside networks as well as a broader perspective in firms’ strategic development of business cooperation.

In summary, it can be argued that the degree and intensity of information exchange inside their business networks is of uttermost importance for start-ups to develop relevant skills and knowledge in a considerably short amount of time. It is also decisive for SMEs in order to ensure their current market position, develop growth possibilities, and sustain or evolve competitive advantages. From these findings, the following research proposition can be derived:

Proposition 2: SMEs and start-ups with many and intense ties of information exchange inside their network acquire relevant skills and knowledge in shorter time than their peers. This leads to a considerably better performance in terms of innovation and growth rates.

3.3 Financial Exchange

Financial exchange occurs in different forms in a B2B-relation. The term ranges from a simple transaction of money for a disposal of goods or services to intertwining financial stakes such as share ownership, e.g., automobile manufacturer Porsche AG is owned by the Volkswagen AG, which itself is majority-owned by the Porsche Holding SE. In this section though, the focus lies on the exchange of money for goods or services.

Undoubtedly, the key aspect of any profit-oriented and economically reasonable interaction is the exchange of money. Therefore, the implications of this interaction type are highly relevant in the analysis of their impact on firm performances. This insight leads to the question how this type of exchange implicitly affects SMEs and start-ups and what further implications such firms can conclude from the current findings.

First and in support of the network success hypothesis, a correlation between an increase in the number of different ties between supplier and customer is found with growing sales as well as decreasing sales volatility between the two interacting parties (Tuli, Bharadwaj, and Kohli 2010). As this finding might seem redundant at first sight, it is important in the sense that firms can judge whether or not to intensify a relationship with respect to monetary investments into a key-customer relationship on their prediction of the development of financial exchanges between the two firms. This is of further interest for SMEs as well as start-ups since such firms more often face capacity limits and thereby can base such decisions between more customers or intensified key-customers on numerical and analytical developed variables. This is additionally supported by Cannon and Homburg (2001) who argue that intensified buyer-supplier relationships lower customer firm costs, a finding that provides additional parameters in the decision-making process. As some might interpose that these lower costs in an intensified relationship are usually offset by lower prices due to a weakened negotiating position for the supplier, the overall profitability is higher for firms with close relations due to their ability to reduce selling, general and administrative expenses of long-term relationships compared to firms with a more transaction-focused strategy (Kalwani and Narayandas 1995).

Furthermore and in agreement with the network founding hypothesis, a marked network with strong ties enables entrepreneurs to acquire resources below the market price, which means that over time, the preservation of strong and established ties with a high level of trust are not as costly as the continuous forming of new weak ties (Stam, Arzlanian, and Elfring 2013). For the financial exchange type, it can be argued in conclusion that scholars acknowledge the positive effects of networks and networking efforts on the financial performance, especially from the cost-perspective.

Subsequently, when the risk impact of partnerships on firms is considered, a reduced volatility effect in incoming cash flows for firms with strong ties can be found. Further, broad relations protect firms against unsuspected shifts in the stock market (Thomaz and Swaminathan 2015). While the latter might not be as relevant for SMEs and start-ups unless they operate in a network with mainly publicly traded firms, the former is of even more importance. Since the continuity of steady cash flows is essential for business survival in the first phases of its life cycle, such firms should devote remotest attention to it and hence use the described beneficial effects by strategically forming network ties.

In conclusion, it can be argued that SMEs and start-ups have to base decisions on capacity limits more often in their earlier business life-cycle. Thus, it is even more important for them to acknowledge the empirically proven effects on cash flow stability and cost-reduction opportunities. Therefore, choices regarding the establishment of new or intensifying of existing ties could and should be based on their impacts of financial performance. Nevertheless, scientific research and empirical findings with direct relation to SMEs and start-ups are rare. This reasoning and vacancy suggest the following research proposition:

Proposition 3: SMEs and entrepreneurial businesses that intensify their efforts in optimizing financial exchanges to their partners are able to establish more cost-efficient relations. They are also financially more stable than comparable firms because of their entrusted and intensified network structure.

3.4 Social Exchange

Social exchange can be defined as all possible ways in which a firm benefits from the perceived recognition of its stakeholders resulting from the firm’s relations to another organization inside its business network. Unlike in information exchange, the involved firms do not benefit from their direct communication or collaboration, but rather from the public acknowledgement of their relation to each other. This can be seen, e.g., at the university spin-off e.GO, an automobile manufacturer for electric cars. The firm gains broader attention and recognition through its cooperation with Volkswagen (e.GO Mobile AG 2019).

Håkansson classifies social exchange as the process in which firms reduce uncertainties and overcome spatial and cultural differences in order to achieve the foremost success out of short-term as well as long-term relationships. In this section, the implications of social exchange are considered with the objective to clarify whether such type of interaction has an implicitly more significant meaning for SMEs and start-ups.

To begin with, it shall be pointed out that in the light of social exchange in a B2B-context, most scholars agree that as with informal personal relationships, commitment and trust are the main determinants for a sustainable long-term relationship (e.g., Doney and Cannon 1997; Morgan and Hunt 1994; Wilson 1995). This completes Håkansson’s characterization of social exchange and emphasizes the importance of the factor trust in this situation. Even though this can be regarded as a general implication for firms operating in business networks, it is important enough to also be mentioned in this framework. That being the case and again as well as in personal relationships, credibility and trustworthiness are neither always guaranteed nor evidently observable. Moreover and especially in business networks, aspects such as imbalances of power between the two parties, degree of communication, goal congruence, and the firms’ stakes in the relationship affect its outcome and continuity (Anderson and Weitz 1989). This illuminates not only the importance of social exchange in general, but specifically the quality of such exchange, i.e., intensified, honest, and straight-forward communication and action.

Furthermore, SMEs and start-ups in particular can benefit from successfully conducted social exchanges with similar firms as well as with more established ones. Consistent with the network founding hypothesis, it is known that the perceived status and recognition, e.g., through publicly announced or industry-wide recognized cooperation or interaction, contributes to the sustainability and continuity of such firms (Stuart 2000; Stuart, Hoang, and Hybels 1999). This achieved recognition can be associated with the possibility for potential investors, employees, and customers to achieve judgement about the hidden fundamental aptitudes of the firm in question (Hoang and Antoncic 2003). This is a very important and substantial understanding for the considered firms as these researches empirically prove such carry-over effects and thereby encourage younger and smaller firms to make use of them. This claim is supported by arguing that such ties signal confirmation by established competitors or suppliers and thereby increase young firms’ legitimacy (Baum and Oliver 1992), a finding backing the network success hypothesis as well (see also: Stuart, Hoang, and Hybels 1999).

In summary, social exchange is fundamentally important for SMEs and start-ups. The substantial effects on short-term business development and growth rates through higher awareness, prestige, and attention benefit such firms even more than established businesses because young and small firms have a lot more room for improvement in this area. Overall, this logic suggests the following research proposition:

Proposition 4: Start-ups and relatively unknown SMEs that form an alliance or publicly announce a cooperation experience a higher degree of recognition and status.

3.5 Multiplex Interaction of the Exchange Types

In consideration of the objective of this paper – providing detailed research and insights of the relevant findings of the multiplexity of such exchange types – this section reviews further observations and discoveries from current research on the interaction of product/service, information, financial, and social exchanges between firms. After analyzing the single types, the research question arises what kind of interdependencies and reciprocal relationships can be detected throughout these different types, whether there are reciprocal furtherances or mutual dependencies and if so, what implications they have for the examined firm types.

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Details

Title
Multiplex Business Networks. The Many-Faced Relationship
College
University of Mannheim  (Chair of B2B Marketing, Sales & Pricing)
Grade
1,3
Author
Year
2019
Pages
40
Catalog Number
V477244
ISBN (eBook)
9783668940499
ISBN (Book)
9783668940505
Language
English
Series
Aus der Reihe: e-fellows.net stipendiaten-wissen
Tags
Multiplex Business Networks, business networks, interfirm networks, business network theory, business relationships, compound relationship, multiplex relationships, collaborative relationships, B2B relationships, interorganizational relationships, business ties, multiplex business ties, direct ties, indirect ties, marketing channel dyads, business alliances, marketing alliances, product alliances, strategic alliances, alliance networks, knowledge networks, buyer-supplier-relationship, buyer-seller-relationship, structural holes, small business alliances, small business networks
Quote paper
Martin Hölscher (Author), 2019, Multiplex Business Networks. The Many-Faced Relationship, Munich, GRIN Verlag, https://www.grin.com/document/477244

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