Network pathways of peripheral firm entry: Empirical evidence from the global airline industry

Abstract

Previous research on interfirm collaboration indicates that networks tend to be structurally stable due to path dependence and embedded firms' incentives to preserve their positional advantages. As a result, industry networks often resemble a core-periphery structure where peripheral firms seem to have little or no opportunity to access the core. Yet, under certain conditions, peripheral firms do manage to cross over to the industry center. In this paper, we examine one such condition: a sudden and unexpected change in the external environment. More specifically, we examine the relationship between the occurrence of an industry-level disruptive event and the dynamics of tie formation/dissolution facilitating or inhibiting peripheral firms' progress toward the center of the industry network. We substantiate our investigation by using longitudinal data on the alliance activities of 258 airlines and applying Stochastic Actor-Oriented Models (SAOM). We integrate our statistical analysis with interview material and descriptive network analysis. The findings reveal a variety of patterns of network entry, contributing novel insights to theories on network dynamics, innovation, as well as policy and practice.