The influence of social capital on strategic choice: An examination of the effects of external and internal network relationships on strategic complexity

Abstract

In this research we investigated the direct contributions of social capital via network involvement to the strategic complexity of firms. Specifically, we looked at three network types – trade associations, external personal networks, and internal personal networks – to assess their individual and collective effects on strategic complexity. We empirically tested the relationships in the rural telecommunications industry using a mailed survey to this population's CEOs. We obtained 203 responses (30% response rate). Using Poisson regression, we found that all three network types were positively associated with strategic complexity, which was measured as product portfolio breadth. We also discovered that initial conditions affected strategic outcomes, with larger firms and cooperative ownership associated with greater strategic complexity.