| This dissertation consists of three essays that study the implications of the reciprocity between interfirm networks and governance choice and the interactions between resource stocks for organizational governance, interfirm network evolution, and corporate strategy. The first essay examines the impact of organizational governance choice on interfirm networks. Interfirm networks literature in strategy has exerted significant influence on organizational governance literature, by finding the roles of social mechanisms, which are embedded in the networks of interfirm relations, in economic exchanges. However, according to the findings of this study, apparently significant impact of networks on governance is in fact a manifestation of the impact of governance on networks, under certain conditions. Using transaction cost economic, resource based theory, and network theory, this study identifies such boundary conditions by linking exchange conditions, which determine organizational governance choice, with network constructs such as tie strength, network centrality, and clustering. The second essay looks at the determinants of the value of combined resource stocks, primarily from resource attribute level and from dyad and industry structure levels of analysis. In addition, this study examines the implications of sub-additivity in resource combination for M and A and the resource based view. Previous research has generally assumed additivity or super-additivity in resource combinations. This study argues that the value of the firm can diminish substantially due to irrecoverable overlaps between the combining firms' resources. This research identifies intra- and inter-firm transferability (i.e., fungibility and tradability) of firm resources as key conditions under which value can be destroyed in resource combinations. The counter-intuitive implications of our study help re-interpret the previous mixed empirical findings in the M and A literature. The third essay examines heterogeneity in governance choice, from a network based view. Whereas previous studies on network embeddedness found the existence of social mechanisms in economic exchanges, those are silent about the heterogeneity in governance choices shaped by network conditions. Once a causal link from governance to networks is considered, governance heterogeneity becomes an important issue. This research provides empirical findings that network attributes, such as network centrality similarity and network cluster co-location, determine the choice between alliance and M and A governance. Furthermore, this study finds evidence that indicates that only when resource based and network based perspectives are deployed together, non-biased analyses of governance choice are ensured. From methodology standpoint, the first essay develops a formal model of endogenous network formation and governance choice and the second essay a formal model of resource combinations. The first and second essays deploy agent based simulation methodology, and the third essay uses statistical analyses with field data. |
