{"title":"The power of embeddedness: how nodal power affects the value appropriation potential of firms in economic networks?","authors":"Saroj Kumar Pani, Madhusmita Tripathy","doi":"10.1108/ijppm-11-2022-0564","DOIUrl":null,"url":null,"abstract":"<h3>Purpose</h3>\n<p>This paper explains why some firms manage to capture disproportionate value from their network of relationships, leading to superior performance. The paper examines how a firm's dependencies affect its value appropriation potential (VAP) in economic networks.</p><!--/ Abstract__block -->\n<h3>Design/methodology/approach</h3>\n<p>The paper follows the axiomatic method and the embeddedness perspective of firms to develop an index called nodal power, which captures the power that accrues to a firm in exchange-based economic networks. Thereafter, using the formal method and simulation, it shows nodal power reflects a firm's VAP in economic networks.</p><!--/ Abstract__block -->\n<h3>Findings</h3>\n<p>The study analysis and findings prove that a firm's dyadic level exchange relations and the embedded network structure determine its VAP by affecting the nodal power. A firm with lesser nodal power is likely to appropriate less value from its relations even if it equally contributes to the value creation. This finding explains how the structural and relational characteristics of a firm's network enable disproportionate value appropriation.</p><!--/ Abstract__block -->\n<h3>Practical implications</h3>\n<p>Nodal power furthers the scope of analyzing firms' economic relationships and changing power equations in dynamic networks. It can help firms build optimal strategic networks and manage the portfolio of relationships by predicting the impact of changing relations on firms' VAP.</p><!--/ Abstract__block -->\n<h3>Originality/value</h3>\n<p>The paper's original contribution is to explain, through formal analysis, why and how the structure and nature of relations of firms affect their VAP. The paper also formalizes the power-dependence principle through a dependency-based index called nodal power and uses it to show how interfirm dependencies are key to value appropriation.</p><!--/ Abstract__block -->","PeriodicalId":47944,"journal":{"name":"International Journal of Productivity and Performance Management","volume":null,"pages":null},"PeriodicalIF":3.6000,"publicationDate":"2023-12-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of Productivity and Performance Management","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1108/ijppm-11-2022-0564","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"MANAGEMENT","Score":null,"Total":0}
引用次数: 0
Abstract
Purpose
This paper explains why some firms manage to capture disproportionate value from their network of relationships, leading to superior performance. The paper examines how a firm's dependencies affect its value appropriation potential (VAP) in economic networks.
Design/methodology/approach
The paper follows the axiomatic method and the embeddedness perspective of firms to develop an index called nodal power, which captures the power that accrues to a firm in exchange-based economic networks. Thereafter, using the formal method and simulation, it shows nodal power reflects a firm's VAP in economic networks.
Findings
The study analysis and findings prove that a firm's dyadic level exchange relations and the embedded network structure determine its VAP by affecting the nodal power. A firm with lesser nodal power is likely to appropriate less value from its relations even if it equally contributes to the value creation. This finding explains how the structural and relational characteristics of a firm's network enable disproportionate value appropriation.
Practical implications
Nodal power furthers the scope of analyzing firms' economic relationships and changing power equations in dynamic networks. It can help firms build optimal strategic networks and manage the portfolio of relationships by predicting the impact of changing relations on firms' VAP.
Originality/value
The paper's original contribution is to explain, through formal analysis, why and how the structure and nature of relations of firms affect their VAP. The paper also formalizes the power-dependence principle through a dependency-based index called nodal power and uses it to show how interfirm dependencies are key to value appropriation.
期刊介绍:
■Organisational design and methods ■Performance management ■Performance measurement tools and techniques ■Process analysis, engineering and re-engineering ■Quality and business excellence management Articles can address these topics theoretically or empirically through either a descriptive or critical approach. The co-Editors support articles that significantly bring new knowledge to the area both for academics and practitioners. The material for publication in IJPPM should be written in a manner which makes it accessible to its entire wide-ranging readership. Submissions of highly technical or mathematically-oriented papers are discouraged.