Network Structure and Business Survival: the Case of U.s. Automobile Component Suppliers

Recent studies in organization theory and business strategy argue that the structure of a firm's network of inter-organizational relationships can both help and harm the firm's performance. We examine how three aspects of network structure affect supplier survival in the U.S. automobile industry, focusing on relationship duration, supplier autonomy, and customer status. We examine the impact of these aspects of network structure in different competitive contexts by considering differences in the modular and architectural technological characteristics of the components. Using life-history data on all carburetor and clutch manufacturers in the U.S. from 1918 to 1942, we find that suppliers of architectural goods such as carburetors benefit from long-term relationships, high status customers, and current autonomy. By contrast, structural autonomy is the only aspect of network structure that affects suppliers of modular goods such as clutches. This comparison speaks directly to the contingent nature of the influence of network structure, with the benefits and constraints deriving in large part from the nature of the inter-firm routines that firms create in order to coordinate their relationships. Relationships that require extensive sets of inter-firm routines tend to lead to greater benefits and constraints of network structure, while network structure has more restricted influence on relationships that require less intensive inter-firm routines.