Niche and performance: The moderating role of network embeddedness

Ann Echols, Wenpin Tsai

Research output: Contribution to journalArticlepeer-review

167 Scopus citations

Abstract

What is the relationship between niche and performance? We identify two types of niche positions-product niche and process niche-defined by the extent to which a firm offers distinctive products and has distinctive operational processes, respectively. We argue that the effect of each niche on firm performance is contingent upon network embeddedness-the extent to which a firm is involved in a network of interconnected inter-firm relationships. Using data covering the period 1995-98 pertaining to venture capital firms and their holdings in initial public offerings (IPOs), we show that both product niche and process niche interact with network embeddedness to determine firm performance. Our findings suggest that the extent to which a firm offers distinctive products or processes will be more positively associated with firm performance when network embeddedness is high.

Original languageEnglish (US)
Pages (from-to)219-238
Number of pages20
JournalStrategic Management Journal
Volume26
Issue number3
DOIs
StatePublished - Mar 1 2005

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Strategy and Management

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