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Whereas network ideas and approaches have become prominent in both the managerial and sociological literatures, we contend that the increasing emphasis on network structures and their evolution has distracted us from the important issue of whether and when networks actually work in the ways that our theories assume. In particular, we explore the well-established assumption that knowledge flows over network paths, with special attention to the role of friction when the supposed information transfer spans multiple dyads. Our analysis shows that friction is omnipresent and has implications at both the system and subsystem levels. More specifically, we present a rich set of research opportunities that addresses implications of friction for the variation of knowledge flows for different network structures and also for the distribution of knowledge among the actors within a particular network.

The construct of novelty is an important primitive for theories of organization learning, strategic change, and innovation. The organizational pursuit of novelty is generally theorized as necessary for long-term organizational adaptation and survival yet variance increasing in the short term. We argue that the recent explosion of studies of exploration and exploitation tend to conceptualize and operationalize novelty quite narrowly. In contrast, we treat novelty as a multidimensional construct and discuss implications of this approach for future research.

The movement of personnel between firms has been shown to have important implications for firms, yet there has been little direct investigation of the underlying mechanisms. We propose that in addition to their human capital, mobile individuals carry social capital, affecting the outcomes of the firms they join and leave by altering the patterns of interaction between firms. In this study, we examine how job mobility affects firm influence in a technical standards setting committee for U.S. wireless telecommunications. We hypothesize and find that hiring individuals who are richer in social capital increases firm influence in technical standards setting committees by increasing the hiring firm's social capital. We also find the benefits of hiring social capital are attenuated when an interfirm relationship is maintained by multiple individuals. In contrast, we find that the loss of personnel does not affect a firm's social capital or influence over standards directly but that it does have an effect on firm social capital and influence contingent on changes in the firm's business strategy. In advancing these arguments, we address the broader question of individuals as carriers of social capital and the conditions under which interpersonal connections are appropriable by firms.

Theories of network evolution frequently focus on "network endogeneity," which stresses predictable, path-dependent evolution rooted in previous network structure. However, theories of technological evolution and innovation remind us that networks may undergo significant change as technological discontinuities exert pressures on existing relationships and firms engage in exploratory search. How can we incorporate sources of change into our theories of network evolution instead of focusing so squarely on sources of inertia? By using recent advances in graph theory, we develop a more flexible theory of network evolution by examining two patterns of partner selection that have the potential to change networks: "shortcut" formation between relatively unconnected partner clusters, and the entry of new firms into the "main component" of incumbent partners. Our findings suggest an important contingency for the endogeneity perspective: structural homophily predicts shortcut formation but not alliance formation within clusters. Furthermore, we demonstrate that the pattern of alliance formation between incumbents and new entrants to the alliance network is driven by a combination of endogenous and exogenous mechanisms. New entrants attach to more prominent incumbents, but they are more likely to attach with an alliance deal that comprises multiple partners. We demonstrate these findings in an industry where systemic technology encourages cooperation and where network entry is prevalent—the mobile communications industry from 1993–2002.

Theories of innovation diffusion no longer focus exclusively on explaining the rate at which innovations diffuse or the sequence in which they are adopted. They also focus on explaining why certain innovations diffuse extensively, becoming de facto standards, whereas others do so partially or not at all. Many of these theories specify a bandwagon process: a positive feedback loop in which increases in the number of adopters create stronger bandwagon pressures, and stronger bandwagon pressures, in turn, cause increases in the number of adopters. Factors affecting if and how many times this feedback loop cycles explain if and how many potential adopters jump on a bandwagon. We argue that one important factor has not yet been incorporated into theories explaining bandwagons' extent: the structure of social networks through which potential adopters of innovations find out information about these innovations which can cause them to adopt these innovations. We advance a theory of how the structure of social networks affects bandwagons' extent. We propose that both the number of network links, as well as small, seemingly insignificant idiosyncracies of their structures, can have very large effects on the extent of an innovation's diffusion among members of a social network.

Organizational research advocates that firms balance exploration and exploitation, yet it acknowledges inherent challenges in reconciling these opposing activities. To overcome these challenges, such research suggests that firms establish organizational separation between exploring and exploiting units or engage in temporal separation whereby they oscillate between exploration and exploitation over time. Nevertheless, these approaches entail resource allocation trade-offs and conflicting organizational routines, which may undermine organizational performance as firms seek to balance exploration and exploitation within a discrete field of organizational activity (i.e., domain). We posit that firms can overcome such impediments and enhance their performance if they explore in one domain while exploiting in another. Studying the alliance portfolios of software firms, we demonstrate that firms do not typically benefit from balancing exploration and exploitation within the function domain (technology versus marketing and production alliances) and structure domain (new versus prior partners). Nevertheless, firms that balance exploration and exploitation across these domains by engaging in research and development alliances while collaborating with their prior partners, or alternatively, by forming marketing and production alliances while seeking new partners, gain in profits and market value. Moreover, we reveal that increases in firm size that exacerbate resource allocation trade-offs and routine rigidity reinforce the benefits of balance across domains and the costs of balance within domains. Our domain separation approach offers new insights into how firms can benefit from balancing exploration and exploitation. What matters is not simply whether firms balance exploration and exploitation in their alliance formation decisions but the means by which they achieve such balance.

We examine how interaction between mid-level managers in technical committees facilitates subsequent alliance formation in a longitudinal study of 87 cellular service providers and equipment manufacturers. Joint participation by firms in technical committees helps them identify potential alliance partners and particular opportunities for technical collaboration. This effect is magnified by sustained participation by individuals on behalf of their firms, demonstrating that interfirm relationships are enhanced by the interpersonal bonds that are forged in technical committees. In contrast, we find that the effect of joint technical committee participation on alliance formation decreases as firms have more prior alliances, suggesting that technical committees provide a more critical avenue for knowledge exchange when firms do not have the luxury of exchanging information through contractual linkages. Taken together, these findings suggest one venue where managerial action can transform existing social structure, because technical committee activity facilitates the entry of less-established firms into alliance networks.