The Strength of IT-Based (Virtual) Interfirm Ties in the Development of Complex Product Systems - Information Technology and Product Development - page 175

Fig. 9.1 MIPS CoPS
development network
(adapted from
Gomes-Casseres, 1994)

IDT

NEC

Bull

Toshiba

LSI Logic

Kubota

Daewoo

Prime

MIP S

Siemens

AT & T

DEC

Silicon
graphics

Olivetti

Sony

and markets that these other companies control (Gulati, 1998; Gulati, Nohria, &
Zaheer, 2000; Lavie, 2006). Similarly, learning through networks has also been
identified as an important motivation for collaboration (Hamel, Doz, & Prahalad,
1989; Gulati et al., 2000).
This view suggests that firms can experience learning economies related to new
technologies and new markets through network relationships with other firms. For
example, Japanese car companies strategically determined that they should learn
through alliances with their American counterparts; as a result of the intent behind
these alliances, Japanese auto manufacturing firms enjoyed superior performance
(Hamel et al., 1989).
Although many firms restrict their collaborative efforts to arm's-length engage-
ment with other firms (in a transactional form), a good many others embed
themselves with their partners so deeply that their economic action cannot possi-
bly be interpreted as atomistic in the neoclassical economics sense (Granovetter,
1973, 1985; Gulati et al., 2000; Uzzi, 1997). In contrast to arms-length transac-
tional relationships, embedded relationships often involve a high degree of trust ,
which reduces transactional uncertainty, and creates opportunities for the exchange
of products, services, and knowledge that are difficult to price or enforce contractu-
ally (Uzzi, 1996). Consequently, when firms are embedded with one another, they
are likely to learn more from each other because the exchange is anchored by trust.
Thus, to fully understand the extent of embeddedness between two collaborat-
ing firms, the need exists to conceptualize the level of trust in these relationships.
Although trust usually comes from frequent face-to-face interactions between indi-
viduals who represent these companies, it is also important to understand that
frequent interactions can also lead to distrust between firms. However, in the spirit
of Granovetter (1973), this chapter focuses on situations where frequent interac-
tions between companies are more likely to lead to trustful relationships. This point
is especially crucial here because frequent virtual interaction between people lacks
the personal touch (characteristic of socially embedded relationships), which can
often lead to negative affects/emotions/feelings.