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Market-Based Solutions to Vital Economic Issues
Research
Feb 25, 2019

How To Join the Club: Patterns Of Embeddedness And the Addition Of New Members To Interorganizational Collaborations

Abstract

Using U.S. venture capital investment data from 1985 to 2008 and qualitative interviews, we examine how group dynamics influence the growth of interorganizational collaborations through the addition of new members. We argue that group dynamics that develop among members in a collaboration, as well as between each member and prospective newcomers, influence which new members join existing collaborations. For prospective newcomers, we distinguish between their depth of embeddedness, the strength of a prospective newcomer’s past relationships with any incumbent member of the collaboration, and breadth of embeddedness, the proportion of incumbent members with which the newcomer has had prior ties. For incumbent members, we examine network faultlines, or subgroups in their collaboration, that may lead to power struggles. We find that when strong network faultlines exist, the depth and breadth of a prospective newcomer’s embeddedness will have different influences on its likelihood of joining the collaboration: A newcomer with greater depth of embeddedness with the collaboration may be perceived to influence power dynamics in the group, leading to lower likelihood of joining, whereas a newcomer with greater breadth may not suffer the same liability. We also find that newcomers with greater depth benefit from the status of their strongest tie in the collaboration, and newcomers with greater breadth are more desirable partners when they are more experienced. Overall, our results highlight the mechanisms of anticipated power distribution and mediation as overlooked concerns in member additions to collaborations, especially when there is conflict.


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