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competitive advantage can be achieved via...

1. overall cost leadership: low-cost position relative to firms' peers

2. differentiation: create products/services that are unique and for which customer will pay a premium


competitiveness of locations

determined by mutually reinforcing factors:
input conditions
context for firm strategy and rivalry
demand conditions
related and supporting industries


ordered thinking

bounded information processing in rivalry
you think about what the other person is thinking


irrationality in rivalry

so focused on what the other person's doing and rivalry, that you lose sight of what you're actually doing

puts you at a disadvantage since you're focusing too much on rivals and not enough on absolute value of thriving


not all business units are created equal

people promoted faster in more powerful depts (Pfeffer and Moore)

rate of salary growth and length of time in each job depend on unit in which a manager started his career

admin positions better compensated if housed in more important functional unit (Pfeffer)


network density

improves unit performance
improves small networks that reside w/in units

positive relationship b/w density of work ties & perf (p=.15)
positive relationship b/w density of social ties & perf (p=.22)

denser networks are more viable



extent to which ties funnel thru one member


network centrality

organizational units more central in a network of business units are more innovative

teams that are more central in team networks perform better

positive relationship b/w network centrality of leader and performance (p = .29)



link diverse groups in a network


advantage of being a broker

better compensated, evaluated better, and receive more promotions

less likely to have ideas dismissed, more likely to have ideas evaluated as valuable

Burt, 2002


network density and brokerage

unit networks = denser when unit leaders minimize existence of structural holes (Cross & Parker)


problems with brokers (esp when many structural holes but just a few brokers spanning them)

can easily morph into bottlenecking (leading to inefficiency and harms unit performance)

unit communication risks collapse if brokers leave

brokers don't have incentive to share responsibilities


misfit: brokers

brokers don't have clear incentive to share brokerage responsibilities; a misfit b/w unit and individual levels

unit leaders must create conditions for structural holes to be spanned by multiple brokers


business activities should be aligned according to:

same basic competitive orientation - either overall cost leadership or differentiation


units accrue power when...

they act with unity, solve critical problems, and are irreplaceable


in units, pattern of ___ equates to shape of social network

info sharing

core properties of networks = density & centrality
density is overall beneficial for network performance and viability
brokers benefit disproportionally in networks


porter value chain

each unit should be united by common orientation

its not the general strategy, but all the business activities are united by common competitive orientation


brokers and creativity

gives access to discreet information; allows you to be potentially more creative


participants and correctly using second-order reasoning

Hedden and Zhang:
25% of time at first

65% of time with training


density improves network performance



organizational units more central in a network of business units are more innovative

Tsai and Ghoshal


teams that are more central in team networks perform better

Balkundi & Harrison

positive correlation b/w network centrality of leader and performance (r = .29)