Network effects on organizational decision-making: Blended social mechanisms and IPO withdrawal |
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| Institution: | 1. Departament d’Arquitectura de Computadors, Universitat Politècnica de Catalunya, Barcelona, Spain;2. Foundation for the Neutral, Free and Open Network - guifi.net, Gurb, Catalonia;1. College of Management and Economics, Tianjin University, China No. 92 Weijin Road, Nankai District, Tianjin 300072, China;2. Leo J. Meehan School of Business, Stonehill College, 320 Washington St, North Easton, MA 02356, USA;1. Department of Finance, National Taichung University of Science and Technology, No.129, Sec. 3, Sanmin Road, North District, Taichung City 404, Taiwan, ROC;2. Institute of International Business, National Cheng Kung University, No.1, University Road, Tainan City 701, Taiwan, ROC;3. Department of International Business Management, Tainan University of Technology, No.529, Zhongzheng Road, Yongkang District, Tainan City 710, Taiwan, ROC;4. Department of Business Administration, Shih Hsin University, No.1 Lane17 Sec. 1, Mu-Cha Road, Taipei City 116, Taiwan, ROC;1. Hull University Business School, University of Hull, Hull HU6 7RX, United Kingdom;2. Durham University Business School, Durham University, Durham DH1 3LB, United Kingdom |
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| Abstract: | This paper develops a new approach to the study of network effects in organizations and markets by proposing that structural influences on social and economic action result from contingent blends of well-understood social mechanisms. We emphasize the interplay of three different network processes: resource and information transfer, status signaling and certification, and social influence. Different mixes of these mechanisms characterize disparate networks because the obligations imposed by ties and the capacities of partners result in situations where mechanisms amplify or diminish one another. We test hypotheses about mechanism interactions using four years (1997–2000) of data on high-technology IPOs that situate organizational decisions about whether to withdraw an offering in two distinct networks. We find that network mechanisms exert multiple moderating effects on one another and that those effects vary systematically across venture capital syndicate and director interlock networks. These findings help to explain why different networks exert disparate effects, why the effects of some structures change as their larger contexts shift, and why even very successful organizations can sometimes find themselves hamstrung by their connections. |
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| Keywords: | Network mechanism Multiple networks Inter-organizational networks High technology industries Initial public offering |
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