Geography Reference
In-Depth Information
for network evolution: homophily, preferential attachment and multiconnectivity. The
following sections briel y review these concepts before geography is explored as a fourth
potential condition of network evolution.
Homophily vs
.
diversity between i rms
According to homophily theory, i rms with similar attributes have greater ease in devel-
oping characteristic-based trust (Zucker, 1986) and are therefore more likely to engage
in trust-demanding activities. The similarity between i rms implies a stronger overlap of
interests, strategies and interpretative frameworks to deal with information on markets
and products. Hence, networks are expected to expand by a process in which new partners
are chosen for similarity or homophily (Rowley et al., 2005; Sorenson, 2003; McPherson
et al., 2001). The homophily between i rms may be measured as the similarity in i rm
size, age and form as well as similarities in terms of strategy and products. Alternatively,
however, alliances may also be hypothesized to follow a pattern of diversity. Firms may
choose to collaborate exactly because of dif erent, complementary resources and com-
petencies (Rowley et al., 2005) in order to yield synergies from collaboration. Therefore,
the dissimilarity with respect to strategy, resource endowment and so on may be also be
a driving element in the formation of strategic alliances.
Preferential attachment and multiconnectivity
Apart from i rm-specii c characteristics that may be compared and assessed for pair-wise
homophily, Powell et al. (2005) also propose structural ef ects on future tie formation
that would produce endogenous dynamics. The preferential attachment hypothesis
expects i rms with many ties at one point in time to be more likely to receive new ties
in the future than those with fewer ties. There is obviously an accumulative advantage
for well positioned actors on the one side and a liability of disconnectedness for periph-
eral actors on the other, as the authors found in earlier research (Powell et al., 1996).
Alternatively, the multiconnectivity hypothesis expects networks to expand through a
process in which i rms seek diversity of relations and form multiple independent paths.
By moving in dif erent communities and connecting to heterogeneous groups, the i rm
enhances the multiple reachability of partners. Empirically, however, Powell et al.
largely disprove homophily and popularity by analysing extensively the evolution of the
strategic alliance network in US biotechnology over a 12-year period between 1988 and
1999. Instead, they found strong support for the multiconnectivity hypothesis, because
new alliances were more likely to form between those i rms that were more multiply or
more diversely linked to each other at a previous stage of network growth. This i nding
suggests that networks entail a logic of multiconnectivity, where new linkages rein-
force diversity and multiple cohesion (Powell et al., 2005). Another strand of network
research supports these conclusions from a dif erent perspective. While the former
approach emphasizes the mechanisms of change through the appearance of new ties in
an incumbent network, Walker et al. (1997) emphasize path-dependence and persistence
in network structure through its evolution over time. In their empirical analysis of the
alliance network in biotechnology they found that early partner choice at the beginning
had a signii cant impact on future cooperation. A year-to-year comparison of structural
equivalence for each pair of actors showed that if two i rms were connected to the same
other companies, that is, they were structurally equivalent, they most likely remained so
