Øystein D. Fjeldstad

CONFIGURING VALUE FOR COMPETITIVE ADVANTAGE: ON CHAINS, SHOPS, AND NETWORKS

Building on Thompson’s (1967) typology of long-linked, intensive, and mediating technologies, this paper explores the idea that the value chain, the value shop, and the value network are three distinct generic value configuration models required to understand and analyze firm-level value creation logic across a broad range of industries and firms. While the long-linked technology delivers value by transforming inputs into products, the intensive technology delivers value by resolving unique customer problems, and the mediating technology delivers value by enabling direct and indirect exchanges between customers. With the identification of alternative value creation technologies, value chain analysis is both sharpened and generalized into what we propose as a value configuration analysis approach to the diagnosis of competitive advantage. With the long-linked technology and the corresponding value chain configuration model as benchmark, the paper reviews the distinctive logic and develops models of the value shop and the value network in terms of primary activity categories, drivers of cost and value, and strategic positioning options.

Strategy Tradeoffs in the Knowledge and Network Economy

In traditional “value chain” firms, the main activity tradeoff is between differentiation and low cost. Increasingly, however, firms are creating customer value through networks (eg AOL) or by providing knowledge-based solutions for customers (eg venture capital firm Kleiner Perkins). This article discusses the quite different activity tradeoffs faced by these “value networks” and “value shops”. It then explores the tradeoff between exploitation (focusing on short-term performance) and exploration (focusing on transcending short-term activity tradeoffs). Finally, in reviewing the implications for managers, it discusses the problem of trying to manage different types of business (value chains, networks and shops) within the same corporation.

Network Paradigm: Applications in Organizational Science

Network theory and analysis have played a prominent role in the field of organization science for more than six decades. Previous articles of the organizational networks literature have discussed the attributes, antecedents, and consequences of networks. Our article focuses on the organizational functions of networks. Specifically, we discuss how networks enable exploration, exploitation, and organization.

Considering clustering measures: Third ties, means, and triplets

Abstract Measures that estimate the clustering coefficients of ego and overall social networks are important to social network studies. Existing measures differ in how they define and estimate triplet clustering with implications for how network theoretic properties are reflected. In this paper, we propose a novel definition of triplet clustering for weighted and undirected social networks that explicitly considers the relative strength of the tie connecting the two alters of the ego in the triplet. We argue that our proposed definition better reflects theorized effects of the important third tie in the social network literature. We also develop new methods for estimating triplet, local and global clustering. Three different types of mathematical means, i.e. arithmetic, geometric, and quadratic, are used to reflect alternative theoretical assumptions concerning the marginal effect of tie substitution.

Information-mediated network effects: network composition and customer benefit in the presence of information asymmetry

This article advances a novel information-mediated network effect argument that is particularly relevant in industries where information asymmetry may prevent customers from obtaining full service benefits. The article presents and tests the argument that customers’ access to capital is a function of the network of other customers affiliated with their bank, hence an economic network effect. Co-affiliation in a bank by actors from a credit-seeking firm’s network increases the amount and quality of the information available pertinent to that firm and hence provides the firm with the opportunity to access capital more closely aligned with its true credit-worthiness. Contrary to intuition but in line with economic network theory, the study shows that very low levels of co-affiliation also increase a firm’s credit availability. Such information-mediated network effects is empirically studied in a sample of 613 small and medium-size firms and their bank affiliations. There are significant implications for customers’ choice of banks and major bank policy choice implications associated with segmentation and customer recruitment.