The Strength of IT-Based (Virtual) Interfirm Ties in the Development of Complex Product Systems - Information Technology and Product Development - page 179

who exchange among themselves, for example, information, affect, and friendship
(Tichy, 1973). Thus, many researchers suggest that cliques are usually established
between a few players who are strongly connected to each other while excluding
a majority of people who could be a part of this network. Although cliques may
seem to exclude a great many actors, they often connect different clusters of other
networks that the focal actors belong to. In the context of NPD in CoPS, if the NPD-
involved firms are closely knit friends while they maintain memberships in other
closely knit groups, such well-connected firms may be able to access information
that will be beneficial for NPD.
For example, Uzzi and Spiro (2005) investigated the concept of “small worlds”
in NPD in the Broadway musical setting. Their findings suggest that a moderate
level of clique formation (in terms of its ability to create small worlds) is beneficial
for NPD. In other words, past a certain threshold, “

cohesive cliques tend to
overlook important information that is discrepant with their current thinking because
members tend to exchange common rather than unique perspectives” (Uzzi & Spiro,
2005, p. 463). Although cliques in the social context can have this curvilinear effect
on the outcomes of product development, cliques formed using virtual connections
are likely to overcome this liability because IT affords greater reach and richness.
Acting just as socially embedded cliques do, virtually embedded cliques can
be informal in terms of how actors communicate using non-company-sponsored
channels. Information can be exchanged on a website for common interests
such as a professional organization's website. However, deep proprietary infor-
mation is exchanged usually through one or few means because members are
intent on keeping NPD information within their limited circle of friends, their
clique.
It is possible, however, that an outsider can be in another clique with a member
of the focal virtual forum and can access information through that member. Herein
lies the downside of this model of virtual embeddedness. If the outsider is a rival
company, the company may gain access to highly proprietary information that might
hurt the focal firm.

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9.7 Egocentric V-Embeddedness

When a company is egocentric in its virtual network focus on NPD in CoPS,
their search for systems knowledge may be embedded in a larger community
of alter firms. Brusoni et al. (2001) studied three major system integrator firms
in aircraft engine control systems and discovered that most of these systems
integrator firms simultaneously outsourced production to partner firms while main-
taining their knowledge of the outsourced components. Companies follow a certain
logic as they maintain their knowledge of their outsourced sub-systems; that is,
they monitor the interdependencies between components in terms of uneven rate
of technology changes. This clearly suggests that the focal firm focuses on its
competitive advantage in terms of its knowledge co-specialization activities and
capabilities. Also, these virtual connections between firms operating under this