Network theory

Isin Guler and Rajat Khanna

Chapter 7 in A Guide to Key Theories for Strategic Management, 2026, pp 117-132 from Edward Elgar Publishing

Abstract: This article examines the contributions of network theory to strategic management, highlighting how economic action is embedded within social structures of relationships. Specifically, it examines how network approaches extend and complement existing strategic management theories, particularly in relation to competitive advantage, firm boundaries, and resource allocation. Four key mechanisms link network ties to firm performance: resource/knowledge access, trust development, power dynamics, and status signaling. We distinguish between interfirm networks (both formal and informal) and intrafirm networks of collaboration, demonstrating how each influences organizational outcomes. By capturing the complex interdependencies among external actors, internal constituents, and tasks, network theory provides valuable tools for understanding strategic decision-making, innovation processes, and the microfoundations of firm capabilities, ultimately uncovering how competitive advantage emerges from relationships rather than solely from internal resources.

Keywords: Network Theory; Interorganizational Relationships; Intrafirm Networks; Knowledge Transfer; Human And Relational Capital; Interdependencies (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035342846
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