Browsing by Author "Li, Toby"

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    Escaping Bear Hugs: A New Venture's Network Building and the Effects on Its Bargaining Power
    (2019-04-19) Li, Toby; Li, Haiyang; Hoskisson, Robert
    A new supplier having a more prominent client, while critical for its survival and growth, also results in weaker bargaining power to appropriate value through that client. Prior literature has focused primarily on the weaker supplier growing the number of network clients to strengthen its bargaining power, without distinguishing the types of clients needed. This paper proposes two network-based solutions for the weaker supplier that draw on resource dependence theory (RDT) and the resource-based view (RBV): 1) building a 'competing' network of multilaterally rival clients to reduce dependency on its focal client, or 2) developing a ‘learning’ network of diverse clients to enhance its value to its focal client, respectively. This paper also explores the challenges for the supplier in accessing each network type to draw dyadic-level bargaining power. A supplier accessing a 'competing' network - based on dependence reduction using similar resources - results in more immediate short-run bargaining advantage, but not in the long run due to limited diverse learning. Meanwhile, a supplier accessing a 'learning' network - based on enhancing value by acquiring more heterogeneous knowledge resources – this results in more sustainable long-run bargaining advantage, but it can sacrifice more immediate short-run gains due to initial integration adjustments needed for diverse learning. This paper thus reflects the inherent tradeoffs in pursuing either an RDT or RBV-based bargaining solution. We test and find support for these predictions using supplier driller – client operator partnerships in the oil-gas industry as our empirical context.