Local Embeddedness in International Professional Service Firm Networks
Sammanfattning: 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.
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