Sophistication of interfirm network strategies in the Canadian investment banking industry

Abstract

Using data on all underwriting syndicates in Canada over nearly 40 years, we examine whether, and if so to what extent, managers are aware of and strategic about their network positions by comparing the effects of partner selection on network position at two levels of complexity. Our findings show that when investment banks' managers formed and joined underwriting syndicates, they improved their network positions by spanning more structural holes. They did not, however, distinguish between constrained and unconstrained structural holes, which would require a more complex understanding of the network. Our study suggests that models of network-based competitive advantages and network change need to consider more fully firms' network strategies and the cognitive limits of the managers enacting them.