The performance of relational ties: A functional approach in the biotechnology industry

Abstract

Understanding the performance of social networks has attracted the attention of contemporary management research. The performance of a firm's strength of social ties has been the subject of considerable debate. On the one hand, strong ties draw on redundant and close partner experiences to increase a firm's specialization. On the other hand, weak ties gain access to non-redundant ideas, resources and opportunities to increase a firm's flexibility to market opportunities. Strong and weak ties have, thus, been depicted as opposing influences to a firm's performance. This study, however, offers an alternative explanation to this strong and weak tie debate. In this study, a theoretical and empirical examination of strong and weak tie performance is conducted in the biotechnology industry. This study finds strong and weak ties exhibit distinct knowledge sharing and commercializing functions that positively impact a biotechnology firm's performance. By incorporating the distinctive functions of strong and weak ties, a firm's tie strength does not exert opposing influences to performance. In addition, due to their distinctive functions, strong and weak ties exhibit diminishing return effects. This suggests a firm can develop a network structure that maximizes its ability to develop its research knowledge and capitalize on commercializing opportunities. The contributions and implications of this study are also discussed.

'Absorptive link': an absorptive capacity and alliance approach to biotechnological product success

“…Furthermore, network studies find that a firm's reliance on past experiences will favour partners with similar experiences and thus the selection of redundant alliance partners will inhibit a firm's efforts to innovate (e.g. Coleman, 1988;Ng, 2004;Ng et al, 2006).…”