Network advantage: Uncontested structural holes and organizational performance in market crises
Management
Andrew Shipilov; Stan X. Li; Matthew S. Bothner; Nghi Truong
Published in the Strategic Management Journal, 2023
Crises in the form of pandemics, wars, or market crashes, affect the relationship between a firm's position in collaboration networks and its future performance. Stan X. Li of the Department of Management and co-authors examine how crisis conditions affect the link between structural holes and organizational performance. Since brokerage offers early access to diverse perspectives and autonomy in exchange relations, the benefits of brokerage should rise when crises erupt. However, evidence on the subject has been inconclusive, raising the question of whether crisis actually imposes a boundary condition on structural hole theory. Using longitudinal data on investment banks, and exploiting the 2000 dot.com crisis as well as the 2008 financial crisis, they explore whether crises moderate the favourable effect of brokerage on performance. Their results reveal that only exclusive, and not shared, structural holes are advantageous for performance, as they facilitate ambidextrous responses to crisis. Implications for brokerage theory and new research on crisis are discussed.
