Structural Antecedents of Corporate Network Evolution

Abstract: While most network studies adopt a static view, we argue that corporate social networks are subject to endogenous dynamics of cognitive path dependence and self-reinforcing power relations. Over time, these dynamics drive corporate networks to become increasingly focused (i.e., more homogeneous, stable, and tightly knit). More focused networks induce organisations to perpetuate existing routines, at the expense of developing new capabilities. We examine the role of organisational structure in maintaining balanced, rather than focused, networks, so that business organisations can realise progressive and timely adjustments to their evolving environments. We develop a theoretical argument, illustrated with the divergent network adjustment patterns of two large, mature companies, suggesting that business organisations with the following structural antecedents are likely to maintain balanced networks: the concurrence of centralisation and decentralisation; a high degree of differentiation and an intermediate level of integration; and an intermediate degree of formalisation.