Page - (000344) - in Knowledge and Networks

342 embeddedness of a firm in its relevant environment (e.g., the industry, the region). Signaling competence to other actors in the network (Ahuja, 2000; Stuart, 2000), both aspects enhance the perceived attractiveness of actors as a potential collabora- tion partner. In general, firms relatively well endowed with resources, such as inno- vative capabilities (past innovation activity) or technical capital (technology stock), can exploit more opportunities to form links than less well-endowed firms can, for potential partners perceive them as more competent than other firms and as better able to offer more knowledge and relevant information (Ahuja, 2000). In turn, the number of connections that the firm already possesses—its embeddedness—favors new collaborations. In network studies the popularity of actors (or centrality as defined by their number of linkages with other partners) is highly contingent on the degree of their popularity in prior periods. This continually recurring phenomenon, often referred to as preferential attachment (Barabási & Albert, 1999, p. 510),2 is attributable to two effects. First, highly connected actors have broader access to information about potential partners than less connected actors do (Gilsing et al., 2008). The more connections an actor has, the more information that actor auto- matically also has about the partners of his or her partners, and the more visible potential partners are. Second, potential partners perceive the central firm or actor as more attractive than other candidates because the information about the central actor diffuses more widely and quickly among a high number of potential partners than is the case with noncentral firms. Moreover, a high number of connections signals to potential partners a high level of competence and experience in managing and organizing alliances, a large repertoire of technical capabilities, and access to a broad and diverse knowledge pool (Ahuja, 2000; Gulati, 1999). Giuliani (2007), for instance, found that the most central actors in the knowledge network possess the most comprehensive knowledge base. The causal direction of this link is not clear, however. Firms or actors do not have infinite capacity to establish new links. The returns on the creation of new links decrease with the total number of linkages because the costs of managing all the linkages increase as the information benefits decrease (Ahuja, 2000; Hagedoorn & Frankort, 2008). Besides, overembeddedness poses the risk of becoming locked in, of forfeiting access to novel and nonredundant informa- tion, and of thereby losing innovative potential (Gilsing et al., 2008; Uzzi, 1997). Corroborating this curvilinear relationship for the composition of linkages as well, Wuyts et al. (2005) found that the diversity of the collaboration portfolio positively influences innovativeness up to a certain optimal threshold. Actors whose popular- ity and opportunities are growing have to be increasingly selective in their partner choice (Ahuja, 2000). In the context of mutual agreements on collaboration and the search for the opti- mal linkages out of a pool of potential partners, reciprocity becomes paramount. Firms or actors want a return on the effort and resources they invest in the collabora- tion. Reciprocity creates trust among the potential partners and makes collaboration 2 Preferential attachment essentially refers to the tendency of a network’s new entrants to be partial to connecting to central actors (Barabási & Albert, 1999). U. Cantner et al.