Does Efficient Social-Network Structure Benefit the Performance of Business Groups and Core Firms? The Underlying Mediation Mechanism for Small World Network Structure and Internationalization in Cross- Level Business Group Network

• Published in: Tai Da Guan Li Lun Cong Vol. 29; no. 3; pp. 125 - 166
• Main Author: 陳膺郁(Ying-Yu Chen)
• Format: Journal Article
• Language: English
• Published: Taiwan 國立臺灣大學管理學院 01.12.2019; National Taiwan University Press, NTU College of Management
• Subjects: Financial performance; Globalization; Social network analysis; Social networks; Taiwan; 財務績效; core firm; 集團企業; small-world network; financial performance; 國際化績效; 核心母公司; 小世界網絡; internationalization performance; business group
• ISSN: 1018-1601; 2410-2490
• DOI: 10.6226/NTUMR.201912_29(3).0004

Small-world networks have received much theoretical attention from sociologists, business-management researchers, and others. In the present study, I examine both financial and internationalization performance under a small-world network structure of business groups. Using the perspective of network analysis, I set out to clarify the effects of small-world network structures on the financial performance of groups and their core firms. I also test the internationalization performance of groups and its mediating role between small-world networks and group financial performance. This study extends business-group research by examining the effects that group and cross-level nested dimensions can have on financial and internationalization performance. With longitudinal business-group data in Taiwan from the BGT directory spanning the years between 2009 and 2013, I present evidence that small-world networks have shaped dynamic financial outcomes. The result indicates that the relationship between small-world networks and the financial performance of groups is U-shaped. The evidence additionally indicates that an inverted U-shaped relationship characterizes the interactions between the small-world networks and the nested core firms of groups. However, small-world network structures do not affect the internationalization performance of groups.