Interconnected Firms and the Value of Network Resources

Abstract

In recent years, alliances have become even more popular than mergers and acquisitions. Alliance formation has led to the emergence of interconnected firms, which are embedded in alliance networks. This paper offers a theory of network resources to evaluate the competitive advantage of interconnected firms. It distinguishes shared resources from non-shared resources, identifies various types of rent, and illustrates how firm-, relation-, and partner-specific factors determine the contribution of network resources to the rents that interconnected firms extract from their alliance networks. This paper revisits traditional assumptions of the resource-based view and suggests that the nature of relationships may matter more than the nature of resources in creating and sustaining the competitive advantage of interconnected firms.

Citation

Lavie, D. (2006), "Interconnected Firms and the Value of Network Resources", Cooper, C.L. and Finkelstein, S. (Ed.) Advances in Mergers and Acquisitions (Advances in Mergers and Acquisitions, Vol. 5), Emerald Group Publishing Limited, Leeds, pp. 127-141. https://doi.org/10.1016/S1479-361X(06)05007-1