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Local Embeddedness in International Professional Service Firm Networks

Seckute, Elze LU and Weller, Sina LU (2017) BUSN09 20171
Department of Business Administration
Abstract
Networks have been recognized as an alternative internationalization approach for Professional Service Firms (PSFs). However, the exploration of tensions, which result from attempts to unite network members and at the same time support their diversity, has been rather neglected in the past. Furthermore, the role of local embeddedness in the presented setting seems to have been overlooked. We have implemented a qualitative research addressing the unity-diversity tension that occurs in cross-border interfirm networks from the perspective of managers in locally embedded PSFs. Through the lens of agency theory, we assess these kinds of networks specifically from two angles which shape the conflicts within them. First, local knowledge... (More)
Networks have been recognized as an alternative internationalization approach for Professional Service Firms (PSFs). However, the exploration of tensions, which result from attempts to unite network members and at the same time support their diversity, has been rather neglected in the past. Furthermore, the role of local embeddedness in the presented setting seems to have been overlooked. We have implemented a qualitative research addressing the unity-diversity tension that occurs in cross-border interfirm networks from the perspective of managers in locally embedded PSFs. Through the lens of agency theory, we assess these kinds of networks specifically from two angles which shape the conflicts within them. First, local knowledge asymmetries among the network members hinder the practicality of formal outcome-based contracts. Second, professional knowledge asymmetries result in monitoring problems among the members and thus make formal behavior-based contracts inapplicable. Through our research, we have further identified cultural differences among the members as a third factor contributing to conflicts. The members of these specific networks approach the examined tensions with creating unity by implementing informal, relational contracts based on social mechanisms such as trust, solidarity, information exchange and flexibility. This helps them to align the interests of their members as well as reduce professional knowledge asymmetries. At the same time, they seek to preserve their diversity in the form of their local embeddedness, i.e. their local knowledge, cultural background and their local networks. (Less)
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author
Seckute, Elze LU and Weller, Sina LU
supervisor
organization
course
BUSN09 20171
year
type
H1 - Master's Degree (One Year)
subject
keywords
Interfirm Networks, Professional Service Firms, Local Embeddedness, Knowledge Asymmetry, Relational Contracts.
language
English
id
8917632
date added to LUP
2017-06-27 10:47:15
date last changed
2017-06-27 10:47:15
@misc{8917632,
  abstract     = {Networks have been recognized as an alternative internationalization approach for Professional Service Firms (PSFs). However, the exploration of tensions, which result from attempts to unite network members and at the same time support their diversity, has been rather neglected in the past. Furthermore, the role of local embeddedness in the presented setting seems to have been overlooked. We have implemented a qualitative research addressing the unity-diversity tension that occurs in cross-border interfirm networks from the perspective of managers in locally embedded PSFs. Through the lens of agency theory, we assess these kinds of networks specifically from two angles which shape the conflicts within them. First, local knowledge asymmetries among the network members hinder the practicality of formal outcome-based contracts. Second, professional knowledge asymmetries result in monitoring problems among the members and thus make formal behavior-based contracts inapplicable. Through our research, we have further identified cultural differences among the members as a third factor contributing to conflicts. The members of these specific networks approach the examined tensions with creating unity by implementing informal, relational contracts based on social mechanisms such as trust, solidarity, information exchange and flexibility. This helps them to align the interests of their members as well as reduce professional knowledge asymmetries. At the same time, they seek to preserve their diversity in the form of their local embeddedness, i.e. their local knowledge, cultural background and their local networks.},
  author       = {Seckute, Elze and Weller, Sina},
  keyword      = {Interfirm Networks,Professional Service Firms,Local Embeddedness,Knowledge Asymmetry,Relational Contracts.},
  language     = {eng},
  note         = {Student Paper},
  title        = {Local Embeddedness in International Professional Service Firm Networks},
  year         = {2017},
}