The Other Side of the Network Coin: Cost Considerations of Network Structure

The purpose of this study is to investigate the differential impact that inter-organizational network connections have on organizational level change. Drawing from the strategic leaning perspective on adaptation, this study investigates how the nature of inter-organizational ties among top management impact the cost and the effectiveness of an organizational level change process. To build on the existing empirical work in this area, this study employs a virtual experiment to create a controlled laboratory investigation of the hypothesized relationships among the strength, formalization, and functional equivalence of network ties; and the cost and effectiveness of an organizational change process. The findings of this study provide support for the strength of weak ties argument and structural hole theory, in addition to suggesting a caveat to Galbraith's information processing model. Furthermore, the results reveal that the tradeoff between increasing effectiveness and decreasing costs is not universally applicable across all decisions regarding network structure.