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Market-Based Solutions to Vital Economic Issues
Research
Mar 8, 2017

Institutional Change and Network Evolution: Explorative and Exploitative Tie Formations of Co-Inventors During the Dot-Com Bubble in the Research Triangle Region

Abstract

This paper investigates how institutions impact tie formation, arguing that institutions can direct firm strategies towards exploration or towards exploitation. It translates these strategies into tie formations: explorative tie formation produces structural holes as a source of good ideas, while exploitative tie formation closes structural holes to facilitate the mobilization of resources to move ideas into products. Using the example of co-inventors in information and communication technology in Research Triangle region during the dot-com bubble, explorative tie formation during the bubble and exploitative tie formations after its burst were expected. Stochastic actor-oriented models did not clearly support our assumptions. It was found that the emergence of venture capital led to a large variance in connection patterns during the bubble, probably resulting from overlapping institutional effects. After the burst of the bubble, these incoherencies disappeared.


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