Does Efficient Social-Network Structure Benefit the Performance of Business Groups and Core Firms? The Underlying Mediation Mechanism for Small World Network Structure and Internationalization in Cross- Level Business Group Network

Chen, Y. Y. 2019. Does Efficient Social-Network Structure Benefit the Performance of Business Groups and Core Firms? The Underlying Mediation Mechanism for Small World Network Structure and Internationalization in Cross- Level Business Group Network. NTU Management Review, 29 (3): 1-42. doi:10.6226/NTUMR.201912_29(3).0004

Ying-Yu Chen, Bachelor Program of Management Science and Finance, National Dong Hwa University

Abstract

Small-world networks have received much theoretical attention from sociologists, business-management researchers, and others. In the present study, I examine both financial and internationalization performance under a small-world network structure of business groups. Using the perspective of network analysis, I set out to clarify the effects of small-world network structures on the financial performance of groups and their core firms. I also test the internationalization performance of groups and its mediating role between small-world networks and group financial performance. This study extends business-group research by examining the effects that group and cross-level nested dimensions can have on financial and internationalization performance. With longitudinal business-group data in Taiwan from the BGT directory spanning the years between 2009 and 2013, I present evidence that small-world networks have shaped dynamic financial outcomes. The evidence indicates that the relationship between small-world networks and the financial performance of groups is U-shaped. The evidence additionally indicates that an inverted U-shaped relationship characterizes the interactions between the small-world networks and the nested core firms of groups. However, small-world network structures do not affect the internationalization performance of groups. In these regards, the current study makes theoretical contributions to the business group literature and to structural theory. 


Keywords

small-world networkbusiness groupfinancial performanceinternationalization performancecore firm


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