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This chapter aims to identify the main determinants that define the architectural properties of network emergence and significantly influence the dynamics underlying network evolution in time. The identification and analysis of these determinants, as well as the dynamic processes tied to them, allows to appreciate the competitive bases and consequences of network morphology. To this purpose, using a complex systems perspective as an integrative conceptual approach, we represent networks as complex dynamic systems of knowledge and capabilities. We perform a comparative in-depth analysis of the processes underlying the emergence and evolution of STMicroelectronic's global network and of Toyota's supplier network in the US so as to allow an elucidatory empirical assessment of the theoretical representation elaborated in the article.

Purpose – This chapter is intended to encourage comparative-historical research in strategy by articulating a framework for the study of industry and firm evolution.

Design/methodology/approach – Strategy research at its core tries to explain sustained performance differences among firms. This chapter argues that one, out of the many ways to create a productive marriage between strategy research and historical scholarship, is to carry out historically informed comparative studies of how firms and industries gain and lose their competitive position. While much of current strategy research adopts a large N hypothesis testing mode with the implicit assumption that one discovers generalization just like a Newtonian law such as F=m×a that applies across all space and time, an historically grounded methodology starts from the opposite direction. It assumes that a process or event may be idiosyncratic and therefore seeks to establish with detailed evidence that a 2nd (and later 3rd, 4th, … nth) process or event is indeed similar before generalizing across observations.

Findings/originality/value – The chapter argues that the field of strategy would benefit from allocating more effort on building causal generalizations inductively from well-researched case studies, seeking to establish the boundary conditions of emerging generalizations. It articulates a comparative research program that outlines such an approach for the arena of industry and firm evolution studies.

We extend Diamond's (1989, 1991) life-cycle hypothesis to posit that, once they reach the stage of bank borrowing, firms begin with prime loans and evolve toward borrowing more cheaply at LIBOR as they grow larger, less risky and less characterized by asymmetric information. We conduct multinomial logit regressions to explain firms’ membership in one of three groups: prime only, prime and LIBOR, and LIBOR. We also examine spreads over prime and LIBOR and find that loans set up to allow borrowing at prime carry higher spreads than those allowing borrowing at LIBOR. Both sets of tests support the life-cycle hypothesis.

Purpose – To discuss how coevolutionary framework is useful to research emerging and evolving phenomena, such as global sourcing of business services, where West meets East.

Approach – The authors first introduce the phenomenon of global sourcing of business services and then review extant literature on coevolutionary research.

Findings – The authors discuss how global sourcing is a coevolutionary and multilevel phenomenon, which can be better understood by identifying micro and macro factors (task, firm, industry, and country), demand and supply (clients and service providers), technological and institutional factors (Information and Communication Technology (ICT), digitization, demographic trends, national and regional policies).

Research implications – The authors identify the main mechanisms, research questions, and methodological issues that underlie coevolutionary analysis.

Originality/Value – The main contribution of this chapter is twofold: provide a deeper and more nuanced understanding of global sourcing of business services, and assert that in coevolutionary research the role of mechanisms affecting a phenomenon may change over time.

Although a growing body of literature that we will discuss later in the paper gives evidence of changing perspectives on entrepreneurship – perspectives that reveal increasing emphasis on the collectivity – two troubling themes persist: (1) the “myth of the lonely only entrepreneur,” and (2) the supply versus demand perspectives on mass entrepreneurial activity. In the sections that follow, we briefly describe these perspectives and argue that they have long since overstayed their welcome.

This chapter investigates how regional start-up rates in the knowledge-intensive services and high-tech industries are influenced by knowledge spillovers from both universities and firm-based R&D activities. Integrating insights from economic geography and organizational ecology into the literature on entrepreneurship, we develop a theoretical framework which captures how both supply- and demand-side factors mold the regional bedrock for start-ups in knowledge-intensive industries. Using multilevel data of all knowledge-intensive start-ups across 286 Swedish municipalities between 1994 and 2002 we demonstrate how characteristics of the economic and political milieu within each region influence the ratio of firm births. We find that knowledge spillovers from universities and firm-based R&D strongly affect the start-up rates for both high-tech firms and knowledge-intensive services firms. Further, the start-up rate of knowledge-intensive service firms is tied more strongly to the supply of university educated individuals and the political regulatory regime within the municipality than start-ups in high-tech industries. This suggests that knowledge-intensive service-start-ups are more susceptible to both demand-side and supply-side context than is the case for high-tech start-ups in general. Our study contributes to the growing stream of research that explains entrepreneurial activity as shaped by contextual factors, most notably academic institutions, such as universities that contribute to knowledge-intensive start-ups.

Existing research in firm internationalization tends to adopt the perspective of relatively fixed country specific advantages and disadvantages. However, firms operating from small developing countries may experience rapidly shifting country-specific advantages due to industrial policy interventions. These changes influence the internal configuration and, ultimately, the internationalization paths of firms, a factor that is not captured by current theory. Using a combination of a country case study and nested multiple firm cases, data were collected on how organizations internationalized from Trinidad and Tobago, a small developing country. Unlike the relatively deterministic outward patterns predicted by existing theories, analysis revealed both evolutionary and co-evolutionary trajectories of development. These outcomes suggest that as a country moves to more open economic environment, network connections in the form of supplier and institutional relationships are of increased value for firms seeking to enter external markets.

People centrally located within networks enjoy a variety of benefits. Why some people achieve such advantage while others do not is not well understood. Using a novel dataset that maps the workflow network among software engineers at a Fortune 500 technology company, I trace the evolution of the position of 804 new entrants to the firm over a period of three years. Findings paint a consistent picture as to the determinants of position in this network: one’s team and one’s job at time of entry, rather than intellectual or social endowment, play the strongest roles in determining one’s subsequent centrality and autonomy.

The origin and nature of meaningful, persistent firm-specific differences is a central issue in the study of business strategy. I investigate in this paper the role of characteristics physically external to firms, but embodied in their local geographic areas, in driving differences in firms’ organizing strategies. Specifically, I examine the extent to which location-specific characteristics affect the organization of pharmaceutical firms’ research laboratories bringing both qualitative and quantitative evidence to bear on this issue. Analyses of the histories of several late 19th century drug makers suggest that differences in local institutions, labor markets, and demand structures played important roles in affecting case firms’ strategic evolution. For example, while Mulford (Philadelphia PA) exploited the strength of nearby universities and the city’s public health system in organizing around leading-edge capabilities in bacteriology, Sterling (Wheeling WV) found that its local environment rewarded investments in marketing and distribution. Panel data analysis on a sample of firms from the late 20th century provides complementary evidence, demonstrating that the scientific orientation of modern drug discovery laboratories is positively and significantly correlated with measures of the strength of the local scientific and technical base. Together, these analyses suggest that location-specific characteristics may be important in driving firm heterogeneity and, ultimately, competitive advantage.