The role of social capital and structural arrangements in explaining intercompetitor behavior

Existing research on interfirm behavior focuses primarily on customer-supplier relations, on industry level competitive dynamics, or on the motives and practices of cooperative activities. To date, very little research exists that examines firm level determinants of practices a firm employs in relation to its competitors. This dissertation focuses on the relations among competing firms, specifically, on a firm\u27s competitive aggressiveness and intercompetitor cooperation. It is argued in this dissertation that competitive aggressiveness and intercompetitor cooperation can be explained by the senior executive\u27s social capital and the firm\u27s structural arrangements. The study is grounded in the theoretical framework of social embeddedness, which argues that all economic activity is affected by the social context in which it occurs. A review of the literature on competition and interfirm behavior, social networks, and organizational structure led to the choice of the three major constructs that are examined: intercompetitor behavior (conceptualized as competitive aggressiveness and intercompetitor cooperation), social capital, and structural arrangements. The research design was cross-sectional. Data were collected through a mail survey, which was sent to the senior strategic decision maker of small manufacturing firms in the North Eastern U.S. A total of 149 useable questionnaires were retuned and used in the study. Hypotheses on the relation between (a) executives\u27 social capital and intercompetitor behavior and (b) structural arrangements and intercompetitor behavior were tested through correlational analysis. Multiple regressions, correlations, t-tests and ANOVAs were used to test the hypotheses. Results are consistent with the overall framework of social embeddedness, and indicate (a) that competitive aggressiveness is primarily a function of the firm\u27s structural arrangements, and (b) that intercompetitor cooperation is a function of both managerial social capital and the firm\u27s structural arrangements. The interpretation of the findings is consistent with literature which suggests that aggressiveness is likely to be a function of the firm\u27s capabilities to successfully carry out aggressive acts. Findings with regard to intercompetitor cooperation suggest that both social capital and structural arrangements are used as a buffer against the risk associated with intercompetitor cooperation. The implications of these findings are discussed and avenues for future research are proposed