Journal of International Business Studies (2019)
ª 2019 Academy of International Business All rights reserved 0047-2506/19
Understanding the structural characteristics
of a firm’s whole buyer–supplier network
and its impact on international business
performance
Amalesh Sharma1,
V. Kumar2,3,4,5, Jun Yan6,
Sourav Bikash Borah7 and
Anirban Adhikary8
1
Mays Business School, Texas A&M University,
College Station, TX 77843, USA; 2 Center for
Excellence in Brand and Customer Management, J.
Mack Robinson College of Business, Georgia State
University, Atlanta, GA, USA; 3 HUST, Wuhan,
Hubei, China; 4 Hagler Institute for Advanced
Study, Texas A&M University, College Station, TX,
USA; 5 Indian School of Business, Hyderabad,
India; 6 Management School, Huazhong
University of Science and Technology, Wuhan,
China; 7 Indian Institute of Management
Ahmedabad, Ahmedabad, India; 8 Indian Institute
of Management Udaipur, Udaipur, India
Correspondence:
J Yan, Management School, Huazhong
University of Science and Technology,
Wuhan, China.
Tel: 0086-27-8754-2754;
e-mail: yanjun@mail.hust.edu.cn
Electronic supplementary mate-
rial The online version of this article
(https://doi.org/10.1057/s41267-019-00215-
x) contains supplementary material, which is
available to authorized users.
Received: 15 September 2017
Revised: 24 October 2018
Accepted: 10 November 2018
www.jibs.net
Abstract
Building on the network theory and the concept of organizational
ambidexterity, we investigate the impact of structural characteristics of a
firm’s whole buyer–supplier network: network density, betweenness
centralization, and average clustering coefficient on its international business
(IB) performance. We also explore the moderating roles of average path length
and PageRank centrality. Using a manually-collected dataset and a robust
empirical methodology, we find that, while network density is negatively
related, betweenness centralization and average clustering coefficient have an
inverted U-shape and a U-shaped relationship with IB performance,
respectively. We also find significant moderation effects, and, in the process,
we show the economic importance of firms’ whole buyer–supplier network to
their IB performance. We contribute to the international business and whole
buyer–supplier network literature.
Journal of International Business Studies (2019).
https://doi.org/10.1057/s41267-019-00215-x
Keywords: whole buyer–supplier network; international business performance; am-
bidexterity; network structure; curvilinear relationship
INTRODUCTION
Achieving success in international markets predominantly depends
on the exploitation of existing firm-specific advantages (FSAs) and
the development of new FSAs that can be exploited in the future
(Vahlne & Jonsson, 2017b). FSAs include assets such as: privileged
access to raw material, technology, and brands; superior gover-
nance structure; a distribution channel; and an organizational
culture. Consequently, scholars argue that firms must be able to
explore and exploit (ambidexterity) FSAs in international markets
(Luo & Rui, 2009) to achieve profitability (Vahlne & Jonsson,
2017b). Drawing from the literature on organizational learning,
this stream of research shows that tilting towards either exploration
or exploitation creates challenges for profitability and growth. For
example, by relying on exploration, Volvo in 1999 could create
new innovations and add new customer segments. However,
 Buyer–supplier networks and IB performance
profitability declined due to the lack of exploita-
tion. Similarly, Nokia gained high levels of prof-
itability due to exploitation, but the lack of
exploration created significant challenges for the
firm (Kortmann, Gelhard, Zimmermann, & Piller,
2014). On the other hand, IKEA has remained
profitable in international markets by embracing
ambidexterity (Vahlne & Jonsson, 2017b).
To achieve ambidexterity, MNEs rely on a net-
work of relationships. Recent developments in the
Uppsala internationalization model suggest that, to
achieve success in international markets, a firm
must be a part of a relevant network, otherwise it
suffers from liability of outsidership (Johanson &
Vahlne, 2009). International business performance
(IBP)1 of a firm depends not only on managerial
intent but also on the actions taken by other
network members (Vahlne & Jonsson, 2017b).
Networks provide firms with opportunities to
exploit FSAs and develop new FSAs (Coviello,
2006). Among multiple relationships that a firm
establishes, those formed with buyers and suppliers
are of especially high importance due to their long-
term nature and the repeated interactions involv-
ing multiple firms, leading to greater commitment,
trust building, and knowledge accumulation
(Kotabe, Martin, & Domoto, 2003). These benefits
of a buyers–suppliers (BSR) network may help firms
not only exploit current FSAs but also develop new
FSAs (Johanson & Vahlne, 2009). While the Upp-
sala model acknowledges the role of BSR relation-
ships in facilitating ambidexterity and subsequent
performance in international markets (Vahlne &
Jonsson, 2017b), we know very little about the
structure of the BSR networks which may facilitate
IBP, and which is in the firm’s best interest to
establish. Specifically, research in this domain
suffers from four major limitations.
First, research in IB has focused on alliances
rather than BSR networks. Although important,
alliances in international markets are highly unsta-
ble (Bello, Katsikeas, & Robson, 2010), and firm
performance decreases with an increase in geo-
graphical dispersion and the size of the alliance
portfolio (Bos, Faems, & Noseleit, 2017). To under-
stand IBP of a firm from the network perspective, one
must concentrate on unique and long-term inter-
organizational relationships, such as BSR networks
which are more stable and can help a firm achieve
ambidexterity (Aoki & Wilhelm, 2017, Im & Rai,
2008). Second, extant IB literature lacks research on
multi-tier relationships and considers only a firm’s
direct connections (ego network). Consideration of
Journal of International Business Studies
Amalesh Sharma et al
multi-tier relationships results in a unique structure
(a whole network2) consisting of a complex inter-
play between direct and indirect, voluntary and
involuntary, and home country and foreign coun-
try relationships. Concentrating on an ego-centric
view may be problematic as lower-tier suppliers are
critical for the exploitation of existing FSAs and the
development of new FSAs (Borgatti & Li, 2009;
Kano, 2017). Conversely, however, lower-tier sup-
pliers may also engage in opportunistic behavior,
hindering a firm’s IBP (Obloj & Zemsky, 2015).
Therefore, considering the whole network perspec-
tive may challenge the conventional findings based
on an ego-centric view. Third, while the Uppsala
model has been extended to explain IBP, the model
focuses only on a firm’s position in the network
(Johanson & Vahlne, 2009; Vahlne & Johanson,
2017a). While the firm position may allow the firm
to gain access to knowledge and information in IB
operations, exploration and exploitation require
collaboration from all network members (Vahlne &
Jonsson, 2017b). Therefore, in addition to position,
the structure of the network is critical in facilitating
such collaborations. Additionally, the structure of
the network is vital because a firm cannot apply
selection rules in a whole BSR network (Kano,
2017). As a firm cannot control who enters the
network, the only way to benefit from the network
is to control the structure.
Finally, due to the nature of multi-tier relation-
ships and in particular involuntary relationships, as
well as the inherent power dynamics of BSR
networks, firms suffer from information overload
and power asymmetries (Ireland & Webb, 2007)
which may hinder a firm’s ability to exploit exist-
ing FSAs and explore new FSAs. Firms need strategic
levers to overcome such overload and asymmetries.
Given the research linking network position to
performance (Johanson & Vahlne, 2009) and the
research linking a structural element such as
network reach (Schilling & Phelps, 2007) to the
effect of network structure, it is important to
integrate structural elements with positional ele-
ments in the literature to provide a holistic under-
standing. While doing so, we must also focus on
the challenges associated with a comprehensive
BSR network and how firm position and network
reach may mitigate such challenges. These ele-
ments, among others, serve as strategic levers for
managing a network.
Building on the existing research gaps as dis-
cussed above, this study attempts to answer two
research questions: First, what is the relationship
 Buyer–supplier networks and IB performance Amalesh Sharma et al

between the structural characteristics of a firm’s
whole BSR network3 and its IBP? And second, how
does a firm’s position in the network and network
reach moderate these relationships?
Drawing on the network theory (Borgatti & Halgin,
2011) and the organizational ambidexterity perspec-
tive (March, 1991), we attempt to answer these
questions. Specifically, we explore the impact of
three key structural characteristics critical to under-
standing the architecture of a firm’s whole buyer–
supplier network: network density (measures the
degree of interconnectedness between network mem-
bers), betweenness centralization (measures the num-
ber of information gatekeepers in the network), and
average clustering coefficient (measures the cliquish-
ness of the network) on a firm’s IBP (Bellamy &
Basole, 2013). In addition, we focus on two strate-
gic levers: PageRank centrality that indicates the
status or influence of the focal firm in the network
and average path length that captures the reach (or
distance) between one member and the others.
These two strategic levers may help a firm mitigate
challenges of information overload and power
asymmetries (see Table 1 for the research gap and
the unique contributions of our study).
We use whole BSR network data for 303 firms
spanning from 2013 to 2015, from 50 different
industries, and expanding across 28 different coun-
tries. We then estimate a random-effects regression
model accounting for potential endogeneity in the
three focal variables, time, and geography fixed
effects. We make multiple contributions to theory4
and practice. We contribute to three streams of
literature. First, we contribute to the domain of the
Uppsala model. By delving deeper into structure,
we highlight that merely being part of a network is
not adequate and only certain types of networks
can lead to success in international markets.
Second, we contribute to the BSR network in
international business by demonstrating that the
interplay between structure and position, along
with different structural elements, is a recipe for

Table 1 Network theory-representative empirical literature

Study Level of Network variable Type of Industry Data Methodological concerns

analysis relationship
Endogeneity Heterogeneity
b
Schilling & Ego Clustering coefficient , average Linear High US No Yes
Phelps path lengthb Technology,
(2007)a Manufacturing
Bellamy et al. Ego Network densityb, average path Linear Electronics US Yes Yes
(2014) lengthb
Fang et al. Ego Closeness, betweenness Linear CPG US Yes No
(2016) centrality, average path lengthb
Thomaz & Ego Average path lengthb Curvilinear Electronics, US No No
Swaminathan Software,
(2015) Telecom &
Power
Swaminathan Ego Average path lengthb, Centrality Curvilinear Computer US No No
& Moorman Software
(2009)
Oehme & Ego Network centrality Linear Biotechnology Germany No No
Bort (2015)
Grewal et al. Ego Degree, eigenvector, and Curvilinear Open source US No Yes
(2006) betweenness centrality projects
Chakravarty Ego Buyer–supplier concentration Linear Electronic US Yes Yes
et al. (2014)
This Study Whole Network density, betweenness Curvilinear 50 industries 28 Yes Yes
centralization, average countries
clustering coefficient, average
path length, PageRank centrality
a
While this paper captures network structure at industry level, there are many disconnected firms with single connection which do not capture the
whole network of those firms.
b
Although some studies have calculated network density and clustering coefficient in the context of a network, the calculations are biased and do not
adequately represent whole networks. Purely from a theoretical standpoint, such conceptualization may not be appropriate as it applies whole network
properties but calculates the same at an ego-centric level.

Journal of International Business Studies

 Buyer–supplier networks and IB performance Amalesh Sharma et al

success in international business. Finally, we con- However, it is not clear whether or not such
tribute to network research by highlighting that indirect connections are insiders. To understand
while theorizing about networks, one must focus all of these various facets, we focus on a specific
on the type of networks (alliances, buyer–supplier, type of network – the whole BSR network.5
interpersonal, etc.) and level of relationship (whole Long-term BSR networks play a vital role in
vs. ego), as well as on different elements in the facilitating ambidexterity (Johanson & Vahlne,
network. We offer three practical directions to 2009; Martin, Swaminathan, & Mitchell, 1998).
managers as discussed in a later section. Firms’ supply chains help achieve ‘‘structural sep-
aration’’, as supply chains consist of loosely con-
nected subsystems (Kristal et al., 2010). The
THEORETICAL BACKGROUND inherent tension between exploration and exploita-
AND HYPOTHESIS DEVELOPMENT tion at a subsystem level is mitigated by the
synergies achieved at the system level (Kristal
Uppsala model and Organizational Learning:
et al., 2010). Through an ambidextrous supply
Network Theoretic View
chain, a firm can achieve capabilities vital in
Research on the Uppsala model was first published
environments characterized by demand, competi-
in 1977 (Johanson & Vahlne, 1977). The model,
tion, and technological uncertainties (Patel, Terje-
which was initially conceptualized to understand
sen, & Li, 2012), such as those existing in
the internationalization of firms, has now been
international markets (Werner, Brouthers, &
extended to focus on explaining performance in
Brouthers, 1996). The Uppsala model argues that,
international markets (Vahlne & Johanson, 2017a).
since knowledge exploration and exploitation take
The model highlights that networks provide firms
place under uncertain conditions in international
with knowledge and resources to exploit existing
markets (Forsgren, 2016), whole BSR networks that
FSAs and develop new FSAs in international mar-
determine success in international markets are of
kets. Ambidexterity is achieved through commit-
special importance.
ment and knowledge-development processes which
We employ the lens of network theory. Network
eventually affect performance (Vahlne & Johanson,
theory focuses on suppliers’ actions within an
2017a).
ongoing pattern of exchange relationships and
Through the changes in commitment and knowl-
contends that such actions can be rationalized by
edge development processes, a firm develops a new
economic as well as non-economic motives of
bundle of resources which act as FSAs. Developed
suppliers (e.g., power and position within the
FSAs can be exploited through networks of host–
network) (Granovetter, 2005, Gulati, 1998; Kim,
country and home–country relationships (Rugman
2014). Network theory emphasizes two distinct
& Verbeke, 2001) and the interactions between
dimensions: flow and bond (Borgatti & Halgin,
different home countries and host-country network
2011). In the context of the Uppsala model,
members (Iurkov & Benito, 2017). Although the
scholars have primarily dealt with the dimension
evolution of the Uppsala model brings out novel
of flow (Forsgren, 2016), which can be understood
ideas by integrating networks, ambidexterity, and
in relation to the theory of structural holes (Burt,
performance, subsequent scholars argue that net-
2009). The theory of structural holes suggests that,
work structure plays a vital role in determining a
if a firm is connected to other firms which are not
firm’s ability to explore and exploit (Forsgren,
connected to each other, it can receive non-redun-
2016). As exploration and exploitations are at
dant information which can help in building
loggerheads (March, 1991), certain network struc-
exploration capabilities (Rowley, Behrens, & Krack-
tures may facilitate one over the other. Such
hardt, 2000). Another opposing view suggests that
imbalance creates challenges for ambidexterity
a focal firm must create a dense network that
and subsequent performance (Forsgren, 2016). In
hinders opportunistic behavior and provides a
addition, another challenge that the model faces is
better quality of information (Patel, Fernhaber,
the assumption that all business relationships are
McDougall-Covin, & van der Have, 2014). Such
the same and all network members are insiders,
dense networks may be vital in creating norms,
which is not true in real life. Again, it is important
trust, and behavioral patterns that enhance faster
to understand that the focal firm’s indirect con-
and superior transfers of knowledge and curtail
nections may affect exploration and exploitation
opportunism (Iurkov & Benito, 2017). The bond
(Granovetter, 2005), which in turn affects IBP.
dimension looks at the role that power plays in the

Journal of International Business Studies

 Buyer–supplier networks and IB performance
network (Borgatti & Halgin, 2011). Contrary to the
flow dimension, bond primarily focuses on how a
firm within a given network can coordinate
between others in that same network, increasing
benefits for the orchestrating firm (Borgatti &
Halgain, 2011). While the flow dimension will
indicate how network structure can facilitate
ambidexterity in IB contexts, the bond dimension
will highlight how a firm can orchestrate that flow.
To understand how BSR network structure can
facilitate exploration and exploitation of FSAs, one
would need to integrate flow and bond perspectives,
as there are challenges specific to each dimension
which may hinder or facilitate ambidexterity (Jo-
hanson & Vahlne, 2009; Martin, Swaminathan, &
Mitchell, 1998). First, multi-tier BSR networks may
prevent firms from employing selection criteria
beyond their direct suppliers (Tier1) and achieving
strategic objectives of exploration and exploitation
(Kano, 2017); hence, opportunistic behavior con-
cerns are more prevalent in such a network (Laz-
zarini, Claro, & Mesquita, 2008). Such opportunistic
behavior may lead to the lack of knowledge sharing
(Ernst & Kim, 2002) and pose challenges for recon-
figuration (Borgatti & Li, 2009). Second, the globally
dispersed nature of the BSR networks with dissimilar
technology and cultures creates information over-
load for the focal firm (Lu & Shang, 2017; Villena,
Revilla, & Choi, 2011). As a focal firm is bounded
rational, information overload may create a dys-
functional supply chain as the organization tends to
focus on some pieces of information while neglect-
ing others. This may reduce organizations’ pursuit of
ambidexterity (Simsek, 2009). The lack of focus on
the entire spectrum of opportunities will hinder
exploitation. Further, information overload presents
coordination challenges which may deteriorate
resource commitment and hinder exploitation (Rug-
man & Verbeke, 2003). In IB, coordination issues
lead firms to concentrate on less uncertain markets
and create FSAs which are difficult to exploit beyond
proximate geographical regions (Guler & Guillen,
2010). Third, a skewed focus on a few partners would
restrict learning from and about other partners.
Fourth, the inherent power asymmetry in BSR net-
works (Ireland & Webb, 2007) leads bounded
rational firms to focus on a narrow set of dominant
network members, creating redundancy of knowl-
edge (Jean, Kim, & Sinkovics, 2012; Yli-Renko &
Janakiraman, 2008), challenges for knowledge
reconfiguration, and increased chances of retaliation
from suppliers due to trust issues (Ireland & Webb,
2007). Mutual commitments required for
Amalesh Sharma et al
exploitations and explorations of FSAs may suffer
due to less powerful players’ arms length relation-
ships with the focal firm (Khoja, Adams, & Kauff-
man, 2011). Finally, the opportunistic behavior of
lower-tier suppliers and the non-contractual nature
of the relationships beyond Tier1 may cause coordi-
nation challenges and pose a grave threat to a firm’s
pursuit of ambidexterity, and subsequently IBP
(Kano, 2017; Verbeke, 2003). As firms lack capabil-
ities to directly monitor, select, and manage the
whole BSR network, scholars propose to explore the
structure of a BSR network that may mitigate some of
these concerns to help achieve ambidexterity and
subsequently IBP (Chandra & Wilkinson, 2017).
Therefore, while theorizing, we take into consider-
ation the challenges of the BSR network and inte-
grate these challenges with the ambidexterity and
performance literature.
Selection of Network Variables
Our selection of network variables is based on several
criteria. As our study is network-based, it is important
to identify constructs which define a network com-
pletely. We explore multiple disciplines including
social sciences, biology, and physics which have done
a great deal of work in this domain. Such research has
shown that network density (ND), betweenness cen-
tralization (BC), and average clustering coefficient
(CC) are three fundamental elements which describe
the structure of a network (Dong & Horvath, 2007).
These elements not only signify the tradeoffs in a
network (Provan, Fish, & Sydow, 2007) but also
highlight how edges have combined to create a
network (Kaiser & Hilgetag, 2004). Without under-
standing this important aspect, one would have to
alter the analysis as different graphs would make
different assumptions for the error term (Stadtfeld,
2012). Thus, theorizing for networks, our measures
indicate both completeness and high predictability.
Second, we are interested in how network structure
can provide firms with resources for the development
and exploitation of FSAs. These variables are essential
from an ambidexterity perspective. Extant literature
has shown that ND (by differentially affecting speed
and access to knowledge; Rowley, Behrens, & Krack-
hardt, 2000), BC (by facilitating or hindering the focal
firm’s access to knowledge; Bellamy & Basole, 2013),
and CC (due to homogeneity within clusters and
heterogeneity across clusters; Schilling & Phelps,
2007) will affect exploration and exploitation. There-
fore, the selection of our independent variables is
based on network theory and ambidexterity
perspectives.
Journal of International Business Studies
 Buyer–supplier networks and IB performance
The moderators selected are also based on mul-
tiple criteria. First, both average path length (a
network level property; Lazer & Friedman, 2007)
and PageRank centrality (a node level property;
Iurkov & Benito, 2017) have been shown to affect
exploitation as well as exploration of FSAs. Second,
these two moderators are especially significant in
the BSR network context. Prior research has shown
that these moderators help in mitigating concerns
associated with bounded rationality and oppor-
tunistic behavior (Li, 2014; Gnyawali & Madhavan,
2001), which are two important challenges associ-
ated with a whole BSR network. Third, the Uppsala
model focuses on network position as a central
driver of performance (Vahlne & Jonsson, 2017a).
Therefore, PageRank centrality, a measure of net-
work position, helps us integrate our work with the
existing scholarship. Again, those who critique the
Uppsala model argue that a firm’s outsidership is
related to the distance between the current position
and a relevant network (Forsgren, 2016). Therefore,
average path length would shed light on this
aspect.
Hypothesis Development
Network density (ND)
Network density signifies the depth of connections
between network partners or the degree of inter-
connectedness between network members (Provan
et al., 2007; Rowley et al., 2000). While scholars in
IB present a rosy view of ND (Ahuja, 2000; Bellamy,
Ghosh, & Hora, 2014), we argue that, as firms move
from an ego to a whole network and from alliances
to BSR networks, such arguments need further
reconsideration. Common benefits cited in the
literature are that high density helps a firm exploit
FSAs as it reduces opportunistic behavior and
minimizes coordination and administration costs
and operating overheads (Kano, 2017). High ND
enhances the speed and richness of information
exchange (Iurkov & Benito, 2017), facilitates trust
and reputation, builds richer collaboration and
resource pooling, and introduces mechanisms of
joint problem solving which facilitate the creation
of future FSAs (Ahuja, 2000; Bellamy et al., 2014).
However, these benefits of ND are not guaranteed,
and extant literature suggests that it can only
facilitate information and knowledge flow in cer-
tain situations (Coleman, 2000). For example, to
receive the benefit of the speed of information flow,
members in the network should not only have
information but also be willing to share that
Journal of International Business Studies
Amalesh Sharma et al
information. Again, opportunism can only be cur-
tailed if there are shared norms between network
members, and if such norms are enforceable (Cole-
man, 2000). However, BSR networks may not offer
these situations. First, as we move from a firm’s
direct connections (ego) to non-contractual Tier 2
suppliers, there is a lack of consensus about goals a
focal firm aspires to achieve in the long run (Lee,
Klassen, Furlan, & Vinelli, 2014). Therefore, devel-
oping common norms for suppliers across tiers may
be problematic. Similarly, increased ND restricts
norms enforcement, facilitating unionizations as
predicted by bond dimension (Borgatti & Li, 2009).
Second, power dynamics may lead to non-sharing
of information by the lower-tier suppliers. This
issue is enhanced as suppliers may also be the firm’s
upstream competitor (Tsai, 2002). Therefore, while
extant literature in IB may provide multiple advan-
tages of ND, firms may not realize such benefits
within the context of whole BSR networks.
From an IB perspective, high density creates
multiple challenges. First, increases in ND can lead
to information overload because there are multiple
paths passing through each partner, as well as
through the focal firm. Such information overload
is detrimental to knowledge reconfiguration and
coordination (Simsek, 2009). An increase in infor-
mation overload would lead a firm to focus on less
uncertain markets and create FSAs which are diffi-
cult to exploit beyond a narrow set of markets
(Iurkov & Benito, 2017). Increases in ND negatively
affect exploration, as the problem of information
overload will lead a firm to focus only on certain
knowledge and information (Gargiulo, Ertug, &
Galunic, 2009), which is detrimental for the dis-
covery of new knowledge in international markets
(Iurkov & Benito, 2017). Therefore, ND should also
negatively affect knowledge development
processes.
Second, there are inherent power dynamics in
BSR networks (Ireland & Webb, 2007), as lower-tier
suppliers (such as those in Tier 2) lack their own
FSAs, making them the most vulnerable in the
network (Ernst & Kim, 2002). These vulnerable
partners are particularly resistant to changes, and
such vulnerability may hamper trust and commit-
ment in a relationship (Vahlne & Jonsson, 2017b).
Higher levels of interactions due to high ND create
the unionization of lower-tier suppliers (Lee et al.,
2014) which are detrimental to coordination (as
suppliers may negotiate as a group) and exploita-
tion of FSAs. Increases in ND make removal of weak
network links problematic (Lee et al., 2014), raising
 Buyer–supplier networks and IB performance
challenges for the reconfiguration and exploitation
of FSAs in international markets. Finally, increases
in ND hinder a firm’s ability to access novel
information (Rowley et al., 2000), as a result
reducing the firm’s exploration capabilities (Rowley
et al., 2000). As an increase in ND undermines a
firm’s ability to exploit existing FSAs and develop-
ment of new FSAs, it should reduce a firm’s IBP.
Hence, we hypothesize that
Hypothesis 1: Network density is negatively
related to a firm’s international business
performance.
Betweenness centralization (BC)
Betweenness centralization refers to the number of
firms that have the potential to control the flow of
information (i.e., information gatekeepers) between
network members (Bellamy & Basole, 2013). A firm is
considered to be more central if it falls between other
members of the network. In a network with low BC,
many firms have the ability to control the flow of
information, whereas, in networks with high BC,
only a few firms are capable.
Prior literature in IB documents the role of
information gatekeepers (Spencer, 2003). Conse-
quently, scholars have argued that information
gatekeepers act as a conduit of knowledge flow
(Spencer, 2003). By virtue of occupying gatekeeping
positions, these firms may apply, filter, and reframe
knowledge as it passes from suppliers to the focal
firm (Kim & Park, 2010). In a whole BSR network,
there can be multiple gatekeepers (Kim, Choi, Yan,
& Dooley, 2011), and they may also even lie in the
lower tier (supplier’s suppliers) (Yan, Choi, Kim, &
Yang, 2015). These suppliers bring in diverse infor-
mation which enhances the exploration capability
of the focal firm (Yan et al., 2015). Again, with the
increase in BC, firms derive the benefits of integra-
tion and coordination (Provan & Milward, 1995),
positively affecting exploitation and exploration of
FSAs. An increase in BC reduces information over-
load concerns as the network gatekeepers act as the
conduit of knowledge (Spencer, 2003). Decreases in
information overload will increase capabilities to
exploit current FSAs and the development of new
FSAs, enhancing IBP (Kano, 2017).
However, an increase in BC beyond a point may
be detrimental to both exploration and exploita-
tion, as it alters the power dynamics within a
network. From an exploitation perspective, gate-
keepers will emerge as leaders and try to maintain
Amalesh Sharma et al
power between themselves, and the focal firm will
become dependent on these gatekeepers for infor-
mation (Provan et al., 2007). This would reduce the
focal firm’s ability to reconfigure and coordinate.
Reconfiguration is hindered because powerful
information gatekeepers will resist any attempt to
change the value chain that would adversely affect
their position. Again, coordination becomes prob-
lematic as the focal firm may not have any collab-
orative relationships with lower-tier suppliers.
Networks with high BCs would lead to a dysfunc-
tional supply chain as the vulnerable lower-tier
suppliers may reduce their commitment to the
relationship (Kano, 2017). Without such commit-
ments, lower-tier suppliers are free to act oppor-
tunistically, which may hinder both exploration
and exploitation of FSAs. Research in internation-
alization shows that the lack of commitment by
network members hinders future FSA development
and the efficient exploitation of existing FSAs
(Vahlne & Jonsson, 2017b). Finally, as a bounded
rational focal firm routinizes its filters toward a few
powerful members (Simsek, 2009), it may nega-
tively affect ambidexterity due to the focus on only
a few players. As BC initially increases and then
reduces exploration and exploitation beyond a
certain point, we hypothesize:
Hypothesis 2: There is an inverted U-shaped
relationship between betweenness centralization
and a firm’s international business performance.
Average clustering coefficient (CC)
Average clustering coefficient highlights the degree
to which nodes in a network are clustered together
(Basole, 2016). With increases in CC, a firm derives
the benefits of quality, speed, the likelihood of
information access, and the depth of information
through redundancy within clusters, as well as
novelty of information (through sparse connec-
tions) across clusters (Schilling & Phelps, 2007).
Extant IB literature emphasizes that clusters help
exploitation and the exploration of resources in
international markets (Rugman & Verbeke, 2003;
Iurkov & Benito, 2017). Clusters provide the ben-
efits of non-location-bound FSAs (technological
advantage) that enhance a firm’s exploitation
capabilities (Banalieva & Dhanaraj, 2013). Simi-
larly, with an increase in between-cluster hetero-
geneity, a focal firm gets access to diverse
knowledge which enhances exploration capabilities
(Schilling & Phelps, 2007).
Journal of International Business Studies
 Buyer–supplier networks and IB performance
Initially, with the creation of clusters, a focal firm
has to deal with a group of unionized suppliers
which would change the power dynamics within
the network. As previously argued, the unioniza-
tion of lower-tier suppliers (which is possible
within clusters because of high connectivity
between network members) can give rise to oppor-
tunistic behavior, hindering knowledge develop-
ment. This would create challenges for the
development of new FSAs. Apart from power
asymmetry, clusters may also be a source of
conflict. Clusters are formed with different strategic
objectives and may even compete with each other
(Lorenzen & Mudambi, 2012). Conflicts due to
competition between clusters would present chal-
lenges for coordination, reconfiguration, and rela-
tionship development between network members,
hindering exploration and exploitation and nega-
tively affecting IBP. As a result of such conflicts,
exploration would be hindered as a firm’s access to
heterogeneous knowledge across clusters would
diminish (Schilling & Phelps, 2007). Managing
such conflicts also requires managers to invest vital
cognitive resources, creating further challenges for
MNEs operating in markets with high uncertainty
(Provan & Skinner, 1989).
However, increases in CC beyond a certain point
will introduce many powerful clusters which will
reduce the power asymmetry within the network.
Once the power in the network is evenly dis-
tributed, firms can derive the benefit of knowledge
development. As there are dense ties within clus-
ters, the repeated interaction will facilitate trust
and build collaboration essential for the develop-
ment of new FSAs (Philips, Lawrence, & Hardy,
2000), which can be exploited in international
markets. As CC negatively affects exploration and
exploitation initially and then facilitates the same,
we hypothesize:
Hypothesis 3: There is a U-shaped relationship
between the average clustering coefficient and a
firm’s international business performance.
Moderators
While explaining the relationship between whole
BSR network characteristics and IBP, we argued
how a firm’s ability to achieve ambidexterity
through network structure drives its IBP. In doing
so, we focus on concerns associated with informa-
tion overload and power asymmetry which may be
detrimental to achieving ambidexterity. As a firm
Journal of International Business Studies
Amalesh Sharma et al
accesses information from distant network mem-
bers and develops FSAs through joint efforts with
network members, it is important to understand
how reach between these network members may
create challenges or facilitate exploration and
exploitation. Since, from the knowledge flow per-
spective, reaching each network member is essen-
tial for the development of FSAs, we consider
average path length (AP) as a moderator in our study.
Further, it is important to understand how a firm
can balance asymmetric power structure in a net-
work. Consistently, we look at PageRank Centrality
(captures the focal firm’s status/position) as
another moderator in our study. Status may be a
source of power for the focal firm (Yang, Lin, & Lin,
2010), but it also helps balance power exerted by
others (Thye, 2000). Balancing power would essen-
tially help achieve ambidexterity and subsequent
performance in international markets.
Average path length (AP)
Average path length reflects the reach or accessibil-
ity between one firm and others in the BSR
network. In the context of IB, reach influences
propensity to explore new opportunities (Ellis,
2011). Information can travel faster from one node
to another if the network has a shorter AP which
not only impacts likelihood, speed, and integrity of
knowledge between firms but also shows how
robust and responsive the network is. Prior schol-
ars, however, argue that shorter path length may
not be effective while exploring opportunities
(Lazer & Friedman, 2007). Therefore, from a flow
perspective, one would need to keep the network
characteristics in mind while making an assertion
about the role of AP.
With increases in AP, nodes become more distant
from one another (Kenis & Knoke, 2002). As a
result, firms that lie on the periphery remain
isolated, creating challenges of information over-
load (Li, 2014). As a result, coordination between
lower-tier members becomes problematic, exploita-
tion becomes hindered, and knowledge reconfigu-
ration becomes limited, meaning that firms need to
invest considerable time and effort to manage such
relationships (Iurkov & Benito, 2017). Again, as an
increase in AP makes peripheral members more and
more isolated from the focal firm, it will boost
opportunistic behavior detrimental to the exploita-
tion of existing FSAs and the development of new
FSAs (Kenis & Knoke, 2002). Finally, exploration
becomes problematic as these isolated suppliers
may not form collaborative relationships with
 Buyer–supplier networks and IB performance
other network members. Such concerns are more
prominent in networks with high ND, which
already suffer from information overload issues
with numerous direct and indirect connections
(Uzzi, 1997). Therefore, increases in AP will further
increase the negative effects of high ND on IBP.
Hence, we hypothesize:
Hypothesis 4a: Average path length negatively
moderates the relationship between network
density and a firm’s international business
performance.
High BC implies that certain firms occupy posi-
tions of power in the network that leads to
increases in non-reciprocity of lower-tier suppliers
(Tsai, 2002). A network with high BC would further
suffer from increases in AP. An increase in AP makes
peripheral members more and more isolated from
the focal firm, which is detrimental to the exploita-
tion of existing FSAs and the development of new
FSAs (Kenis & Knoke, 2002). The lack of collabora-
tion with lower-tier suppliers will reduce knowl-
edge development capabilities, hindering
exploration. Additionally, exploitation is hindered,
as coordination between these distant connections
becomes more challenging with an increase in AP.
Similarly, as isolated lower-tier suppliers may
engage in opportunistic behavior, recombination
of knowledge may become considerably hindered.
Hence, we hypothesize:
Hypothesis 4b: Average path length negatively
moderates the relationship between betweenness
centralization and a firm’s international business
performance.
Contrary to ND and BC, an increase in AP is
beneficial for networks with high CC. Heterogene-
ity between clusters provides firms with the unique
knowledge and resources essential for exploration.
With shorter AP, there will be intense connectivity
between network members, which may lead to the
sharing of common rather than novel information
across clusters. This common information will be of
no help for the focal firm for exploration and
creation of new FSAs (Uzzi & Spiro, 2005). Again,
concerns regarding opportunistic behavior would
rise with shorter AP as there will be intense
connectivity between network members which will
in turn enhance the issues of unionization. There-
fore, shorter AP may significantly reduce the ben-
efits of clusters. With increases in CC and AP, the
focal firm will have access to novel insights from
Amalesh Sharma et al
international markets, which would also help in
the identification and exploitation of existing FSAs.
As an increase in AP helps exploration and exploita-
tion for networks with high CC, this would posi-
tively affect IBP. Hence, we hypothesize:
Hypothesis 4c: Average path length positively
moderates the relationship between average
clustering coefficient and a firm’s international
business performance.
PageRank centrality (PC)
PageRank centrality refers to the position/status or
reputation of the focal firm in the network. The PC
of a firm is vital in ripping the benefits from the
network to which it belongs. PC signifies the
influence of the focal firm over other nodes in the
network (Kumar & Jan, 2014). A node is considered
to be of high status if it is connected to others
which are also influential (Kukkala, Saini, & Iyen-
gar, 2016). However, PC also takes into considera-
tion a firm’s indirect relationships. It penalizes
distant connections and assumes that a node is
important if it is connected to other important
nodes, and also if those important nodes do not
have any significant connections. Hence, PC mea-
sures the status of actors in terms of popularity,
brokerage power, prestige, and approachability
(Kumar & Jan, 2014). Consequently, a focal firm
with high network status may enjoy the fruits of
both exploration and exploitation (Zaheer, Gözü-
büyük, & Milanov, 2010).
High PC can reduce the negative effect of ND on
IBP for multiple reasons. First, network status can
reduce both imbalances of power (Thye, 2000) and
opportunistic behavior (Gnyawali & Madhavan,
2001). By virtue of occupying a higher status, a
focal firm may provoke retaliation if others in the
network are not behaving according to the rules of
the game (Yang et al., 2010). Balancing the power
within the network would assist in reconfiguration
as well as knowledge development, and conse-
quently can help a firm successfully exploit current
FSAs and develop future FSAs. Second, high status
facilitates finding partners for exploring novel
domains (Dimov & Milanov, 2010), positively
affecting knowledge development and the creation
of future FSAs. Finally, with increases in PC, a firm
can balance the power structure (Thye, 2000),
which would diminish the threat of unionization
(Kano, 2017) and facilitate exploitation. Hence, we
hypothesize:
Journal of International Business Studies
 Buyer–supplier networks and IB performance
Hypothesis 5a: PageRank centrality positively
moderates the relationship between network
density and a firm’s international business
performance.
In a network with high BC, a few firms may gain
status and power as they hold key information
within the network (Bellamy & Basole, 2013). With
an increase in PC, the status of the focal firm also
increases, which diminishes the status difference
between network members. However, diminishing
status differences may also lead to an increase in
the power struggle, resulting in conflict between
network members (Cowen, 2012). Especially, in
networks with high BC where there are a few power
centers, such diminishing status differences can
create more conflicts, leading to challenges of
coordination and reconfiguration. Exploration
may also be negatively affected by high levels of
conflict and lack of trust between network mem-
bers. Hence, we hypothesize:
Hypothesis 5b: PageRank centrality negatively
moderates the relationship between betweenness
centralization and a firm’s international business
performance.
A negative effect of power asymmetries arising
due to the emergence of clusters can be managed if
the network has a high PC. Contrary to a network
with a high BC, an increase in CC leads to the
power difference between different clusters. With
an increase in network status, therefore, the focal
firm will balance the power asymmetries between
clusters within the network (Thye, 2000), which
will enhance exploration–exploitation of FSAs and
subsequently performance in international mar-
kets. Hence, we hypothesize:
Hypothesis 5c: PageRank centrality positively
moderates the relationship between average
clustering coefficient and a firm’s international
business performance.
Based on the above discussion, we present the
conceptual framework (see Figure 1) of our study.
METHODS
Data
We have compiled a database by collecting data
from multiple sources: Bloomberg database, firms’
financial reports, and firms’ sustainability reports.
The data collection process is shown in WA-
Journal of International Business Studies
Amalesh Sharma et al
Figure 2 in the Web Appendix. Our data represents
firms’ buyer–supplier information across tiers6 for
2013–2015. The data collection process embeds
significant manual labor and challenges. While
Bloomberg provides information on firms across
geographies and industries, many have different
reporting standards. Hence, there is a possibility of
mismatches between the data reported in Bloom-
berg and what companies have disclosed publicly.
In case of such a mismatch, which is limited, we
have relied upon publicly-disclosed information by
individual firms.
The construction of whole buyer–supplier net-
works requires significant manual labor. For exam-
ple, the General Electric Company (GE) has 445
Tier 1 suppliers, whereas Walmart has 564. Simi-
larly, total buyers of GE are 272. However, these are
just the direct relationships, which at best represent
the egocentric network. To construct the whole BSR
network of GE, for example, we need to find out the
buyers and suppliers of all 445 direct suppliers. One
of the prominent suppliers of GE is Microsoft,
which has 437 suppliers and 251 customers. Not all
of these suppliers and buyers may be directly
connected to GE, but will be a part of the whole
BSR network. After constructing the whole BSR
network of GE, we have a total of 5856 firms in the
network. The largest network in our sample is for
Walmart with 7212 firms, whereas the smallest is
for Mitsubishi Tanabe Pharma Corporation with
233 firms. On average, we have 2299 firms in every
buyer–supplier network of 303 global firms. Our
data consist of firms from 28 countries across 50
industries. We used Gephi 0.9.1 and R to construct
our whole buyer–supplier networks.
It is important to check if our sample represents
the overall population in the database. We check
this by using the descriptive statistics of the pop-
ulation and the sample. We have randomly selected
2000 firms from the Bloomberg database. Of these
2000 firms, we found that only 628 have informa-
tion about their Tier 1 suppliers’ buyers and
suppliers (which represents the whole network).
We find that the average values of ND, CC, and BC
of the 628 firms’ whole networks are 0.003, 0.071,
and 12.9, respectively, which are very close to the
average values of our sample firms (average values
of ND = 0.002; CC = 0.06; and BC = 11.29). This
signifies that our sample is representative of the
available population. Finally, we checked if our
sample suffers from selection bias and did not find
any such evidence.7
 Buyer–supplier networks and IB performance Amalesh Sharma et al

PageRank
Whole Buyer-Supplier Centrality
Network Characteristics
H5a(+)

Network Density H1(-)

H4a(-) H5b(-)

Betweenness International Business

H2(∩)
Performance
Centralization
H4b(-) H5c(+)

Average Control Variables

H3(U)
Clustering
H4c(+)
Coefficient
Average Path
Length

Figure 1 Conceptual framework.

Variable Operationalization Network density ðNDÞ ¼

Actual number of ties among network members
Potential number of ties
Dependent variable ð1Þ
International business performance: To measure a firm’s
IBP, we need a variable8 that distinguishes IBP from a To clarify the conceptualization and the opera-
firm’s overall business performance. Consistent with tionalization, let us consider the example of 3M.
the literature, we operationalize the ‘‘international 3M’s network has 2291 nodes (g) and 4774 edges
business performance’’ of a firm as the total values of (relationships). To compute the potential number
revenue from the international businesses (Hult et al., of ties, we need to know the maximum number of
2008: Shrader, 2001). We operationalize this variable relationships possible, which can be captured with
over a period of time, mitigating the concerns raised the formula g2 C, where C represents the total
by prior researchers regarding the use of cross- combinations possible. Now, for 3M, the potential
g
sectional data to measure IBP (Hult et al., 2008). Note number of ties = 2 C. = 2291 2 C. = 2,623,195. This
that ‘‘international revenue’’ is the only audited provides ND of 3M = 4774/2,623,195 = 0.00182.
measure reported in the balance sheet of firms, and Figure 2a and b provides the visual representation
we use it as a primary indicator of the IBP. However, of networks with high and low ND.
the literature raises concerns regarding international Betweenness centralization. BC is the heterogeneity
revenue as a proper indicator of IBP as it does not or variability in betweenness centrality between
account for the costs, and the importance of costs actors in a network. Consistent with the literature,
may be significant in international markets. To we operationalize BC as follows:
support our primary dependent variable (DV), we ( )
Xg h i
also measure IBP as ‘‘international ROA’’ (operational- 0
 0
BC ¼ 100  C B ð n Þ  C B ð n i Þ =ð g  1 Þ ð2Þ
ized as the ratio of international profits9 to the total i¼1
assets) and use it as a secondary DV. This is to note that
international ROA explicitly captures the profit from where, g is the number of firms in the network,
0
IB. For additional robustness, we use multiple other CB ðn Þ refers to the largest realized normalized
variables that depict the IBP of a firm including betweenness centrality for the firms in the network,
0
ROA,10growth in IB revenue (Hult et al., 2008), Tobin’s and CB ðni Þ refers to normalized betweenness cen-
q11 (Katsikeas, Morgan, Leonidou, & Hult, 2016), and trality for firm i. For 3M, we can compute
0 0
growth in IB profits (Autio, Sapienza, & Almeida, 2000). CB ðn Þ ¼ 0:091. Now, computing CB ðni Þ for each
firm in the network and
  then summing up will give
Pg  
Independent variables 0
 0
CB ðn Þ  CB ðni Þ ¼ 207:51. Hence, using
Network density. Consistent with the literature, we i¼1
operationalize ND as the ratio of the actual number Eq. 2, we can find the BC of 3M at time
of ties between network members to the potential t = 100 9 (207.51/2290) = 9.06. Figure 3a and b
number of ties (Ahuja, 2000, Rowley et al., 2000).

Journal of International Business Studies

 Buyer–supplier networks and IB performance Amalesh Sharma et al

Figure 2 a Low ND firm: Mitsubishi (ND = 0.002324). b High ND firm: Cobham Plc. (ND = 0.007066).

provides visual representation of networks with   Xk  

1 PRðpi Þ
high and low BC. PCð pÞ ¼ ð1  dÞ þd ð5Þ
g i¼1
C ðp i Þ
Average clustering coefficient. Consistent with the
literature (Basole, 2016), CC is operationalized as: where PRðpi Þ is PageRank of any node pi ; g is the
g total number of nodes in the network; C(pi) is the
X
CC ¼ 1=g Ci ðwÞ: ð3Þ out-degree of pi . (number of links going out of pi .);
i¼1 pi is the ith link to node p and d is a damping factor,
which lies between 0 and 1. We calculate PageRank
where Ci (w) is the clustering coefficient of firm i.
g centrality using Google’s PageRank algorithm.
P
For 3M, we can find that Ci ðwÞ. = 80.62. If we
i¼1 Control variables
plug this information into Eq. 3, we will get CC of
Control for firm-specific, industry-specific, IB-speci-
3M = 80.62/2291 = 0.035. Figure 4a and b provides
fic, and network-specific variables.
visual representations of two networks with a low
Firm-specific Control: Consistent with prior litera-
and high CC, respectively.
ture, we control for firm size (operationalized as the
number of employees), ROA, and age of the firms
Moderating variables (Autio et al., 2000). We also control for absorptive
Average path length: The AP is operationalized as:
capacity (operationalized as marketing and techno-
P logical intensity). Finally, in a separate sub-analysis,

i6¼j lði; jÞ P
n
AP ¼ : ð4Þ we also use product diversification ½ Pi ln P1i ],
g ðg  1 Þ
where Pi is the share of the ith segmenti¼1 in the total
where i and j are two nodes in the network such sales of the firm (Kim, 2016) as an additional
that i = j; and g is the total number of firms in the control variable. Segments are coded based on the
P four-digit SIC code.
network. For 3M, lði; jÞ. = 21,310,836. Incorpo- Industry-specific control: We control for competi-
i6¼j
rating this into Eq. 4, we get AP = 21,310,836/ tive intensity using the Herfindahl–Hirschman
Index (HHI), computed at the global level. HHI
(2291 9 2290) = 4.062. indicates the market concentration. According to
PageRank centrality: Consistent with the literature the U.S. Department of Justice, a market with an
(Kumar & Jan, 2014), PC is operationalized as: HHI of less than 1500 is considered competitive. It

Figure 3 a Low BC firm: Akzo Noble (BC = 8.17). b High BC firm: Alcoa (BC = 37.77).

Journal of International Business Studies

 Buyer–supplier networks and IB performance
Figure 4 a Low CC firm: Jerónimo Martins (AC = 0.016). b High CC firm: Oki Electric (AC = 0.13).
has been found that higher competitiveness within
an industry is associated with a firm’s IBP (Kirca,
Hult, Deligonul, Perryy, & Cavusgil, 2012).
IB-specific control: We control for a firm’s interna-
tional experience (Kirca et al., 2012) and interna-
tional diversification (operationalized as the ratio
of foreign sales to total sales) (Capar & Kotabe,
2003).
Network-specific control: Finally, we control for
network diameter in our study. Network diameter is
the length of the largest geodesic in the graph. It
signifies how far is the farthest node in the graph.
With increases in network diameter, the focal firm
may find it harder to communicate with the firms
on the periphery, influencing the focal firm’s IBP.
Model Specification
We test for several functional forms and violations
of regression assumptions. We test for violations of
linearity using the observed versus predicted val-
ues; violations of normality using a Kolmogorov–
Smirnov test; serial correlations using a residual
autocorrelations plot; multicollinearity using vari-
ance inflation factor (VIF),12 tolerance, and condi-
tion index; and heteroscedasticity using a Breush–
Pagan test. We do not find any significant viola-
tions. We use SAS, STATA, R, and Gelphi for
variable operationalization and estimation. We
use a maximum likelihood estimation approach
to estimate our models.
Accounting for endogeneity
The decision to develop a whole BSR network is a
firm’s strategic choice (Wuyts & Geyskens, 2005),
and that choice influences the global performance
of the firm. Specifically, firms may be strategic or
managers may choose the level and the type of
network based on their evaluations of the potential
of buyers and suppliers with an aim to maximize
gains from international markets. Consistently for
econometricians, the whole BSR network charac-
teristics may be potentially endogenous. We explic-
itly account for the potential endogeneity in our
Amalesh Sharma et al
focal variables using the two-step control function
approach (Petrin & Train, 2010). Extant literature
shows that not accounting for endogeneity is a
major issue in prior network-based research (Car-
penter, Li, & Jiang, 2012) and in IB (Hult et al.,
2008). In the first stage, we estimate the correction
terms by regressing the potentially endogenous
variables, ND, BC, and CC on a set of exogenous
variables. Consistent with the literature that sug-
gests that firm-specific assets may influence a firm’s
network design (Jensen & Roy, 2008), we include
return on assets (ROA), profit, age, and size of the
firm. We also include network diameter and inter-
national experience of the firm in our first-stage
regression models.
In addition to the above variables, in line with
the exclusion restrictions proposed by Maddala
(1983) and Hausman (1978), we include the aver-
age of similar firms’ ND (SimNDit Þ, BC (SimBCit Þ,
and CC (SimCCit Þ, respectively, and the number of
Tier 1 suppliers (No Tier1it Þ in the first-stage models
that are excluded from our final model. We find the
similar firms by comparing the revenues of the
focal firm with those of other firms in the industry
to which the focal firm belongs. These variables
satisfy both the requirements of relevance and
exogeneity13 and, thus, serve as valid exclusion
variables. We argue that industry characteristics
and market conditions are key determinants of
firms’ strategic choices, especially for decisions
characterized with ambiguity. Hence, these exclu-
sion restrictions are relevant. Further, the average
of similar firms’ network characteristics can at best
capture the industry performance, not an individ-
ual firm’s IBP, thus satisfying the exogeneity crite-
ria. Building on the theory of mimetic
isomorphism (DiMaggio & Powell, 1983) and the
literature on industry recipe (Spender, 1989), we
argue that the SimNDit , SimBCit , and SimCCit should
influence focal firms’ ND, BC, and CC. Further, we
also argue that the number of Tier 1 suppliers will
influence the focal variables as the structure
depends on the Tier 1 suppliers and how they are
Journal of International Business Studies
 Buyer–supplier networks and IB performance Amalesh Sharma et al

Interaction between Betweenness Centralization and PageRank Centrality Interaction between Average Clustering Coefficient and Average Path
Length
800000 60000

IB Performance
IB Performance

600000
40000
400000

200000 20000

0
0
2 7 12 17 22 27 0.01 0.06 0.11 0.16 0.21
-200000
Betweenness Centralization Average Clustering Coefficient
IB_PERF_MEAN(PC) IB_PERF_MIN(PC) IB_PERF_1.5 TIMES IF MEAN(PC)
IB_PERF_MEAN(AP) IB_PERF_MIN(AP) IB_PERF_MAX(AP)

Interaction between Average Clustering Coefficient and PageRank

Centrality
50000
IB Performance

40000
30000
20000
10000
0
0.01 0.06 0.11 0.16 0.21
Average Clustering Coefficient
IB_PERF_MEAN(PC) IB_PERF_MIN(PC) IB_PERF_MAX(PC)

Interaction between Betweenness Centralization and Average Path Interaction between Network Density and PageRank Centrality
Length
600000
IB Performance

40000
IB Performance

400000
0
200000 0.0009 0.0034 0.0059 0.0084 0.0109

-40000
0
2 7 12 17 22 27 Network Density
Betweenness Centralization -80000
-200000
IB_PERF_MEAN(PC) IB_PERF_MIN(PC) IB_PERF_MAX(PC)
IB_PERF_MEAN(AP) IB_PERF_MIN(AP) IB_PERF_MAX(AP)

Figure 5 Moderating Effects.

linked to the other players in the network. How- Unobserved heterogeneity, time fixed-effect,
ever, the number of suppliers will not determine geography fixed effects, and omitted variable bias
the performance as quality and size may also Firms may be inherently different in their network
account for performance.14 Hence, our first stage development strategies, which may not be reflected
regression equations are as follows: in their observed characteristics. Hence, it is critical
to account for the unobserved firm-level hetero-
NDit ¼ cND þ dND SimNDit þ kND No Tier1it þ hND zit geneity. We estimate a random effects model that
þ gND
it captures the unobserved heterogeneity across firms.
ð6aÞ We capture the time fixed effect using a dummy
variable approach. We create three dummy vari-
ables for years 2013, 2014, and 2015, respectively,
BCit ¼ cBC þ dBC SimBCit þ kBC No Tier1it þ hBC zit
and use year 2013 as the baseline. We use the
þ gBC
it dummy variables for year 2014 and year 2015 as the
ð6bÞ additional independent variables in our model. We
capture the fixed effect of geographic regions15
CCit ¼ cCC þ dCC SimCCit þ kCC No Tier1it þ hCC zit operationalized as dummy variables in terms of
þ gCC continents (e.g., Asia, Europe, America Australia,
it
and Africa); we consider Africa as the baseline.
ð6cÞ
Finally, we account for the omitted variable bias by
where zit denotes the exogenous variables. including the estimated value of lagged DV
gND BC CC
it ; git ; and git are the residual terms.
( LagdDV ) obtained by regressing lagged DV on
difference between DV at t - 1 and t - 2. Our final

Journal of International Business Studies

 Buyer–supplier networks and IB performance Amalesh Sharma et al

model after accounting for endogeneity, unob- significant evidence of endogeneity in ND (pND ¼
served heterogeneity, time, and geography fixed 25100000:00; p ¼ 0:000Þ, BC (pBC ¼ 11098:54; p ¼
effects is as follows16: 0:009Þ, and CC ðpCC ¼ 461868:30; p ¼ 0:000). Fur-
ther, unobserved heterogeneity matters and with-
Int Perfit ¼ ai þ bND NDit þ bBC BCit þ bSQ BC
BC2it out accounting for it may lead to biased parameter
þ bCC CCit þ bSQ CC
CC2it þ bND BC
BCit  NDit estimates. We find supports for Hypothesis 1 such
þb ND CC
CCit  NDit þ b CC BC
BCit that ND is negatively related to IBP (b ¼
10500000:00; p ¼ 0:000Þ: Our understanding that
 CCit þ bAP APit þ bPC PCit
þ bAP ND
ðAPit  NDit Þ

the BC has an inverted U-shaped relationship
bBC ¼ 76990:51; p ¼ 0:021; bsq BC ¼ 2585:07;
p¼
þb AP BC
ðAPit  BCit Þ 0:046Þ and CC has a U-shaped relationship bCC ¼
þb AP CC
ðAPit  CCit Þ 465226:10; p ¼ 0:000; bsq CC ¼ 1761747:00; p¼
PC ND 0:000Þ with IBP is supported by our model and
þb ðPCit  NDit Þ
data (Hypothesis 2 and Hypothesis 3 respectively).
þ bPC BC
ðPCit  BCit Þ These results further indicate that the relationship
þ bPC CC
ðPCit  CCit Þ between characteristics of a firm’s whole BSR
X
J network and its IBP may not be linear but rather
þ oj Controlj þ pND g^ND BC BC
it þ p g^it curvilinear. Drawing our attention to the modera-
j¼1
tion effects (see Figure 5), we find that AP nega-
þ pCC g^CC
it þ eit tively moderates the impact of BC on IBP,
ð7Þ supporting Hypothesis 4b (b ¼ 1699:04; p ¼
0:006Þ. Further, we find that AP positively moder-
where ai represents the unobserved heterogene-
ates the relationship between CC and a firm’s IBP
ity;Int Perf it is international business performance;
(b ¼ 20053:55; p ¼ 0:000), supporting Hypothesis
pND , pBC , and pCC represent the parameters of the
4c.
residual terms from Eqs. 6a–c.
We also find that PC positively moderates the
relationship between ND and IBP (b ¼
714000000:00; p ¼ 0:000Þ, supporting Hypothesis
RESULTS
5a. We get support for Hypothesis 5b, such that
We present the correlation and descriptive statistics
PC negatively moderates the relationship between
in Table 2. Moving our attention to the first-stage
BC and IBP (b ¼ 912903:40; p ¼ 0:000Þ; and for
regression results in Table 3, we see that the
Hypothesis 5c in such a manner that PC positively
SimNDit (b ¼ 0:12; p ¼ 0:000Þ, SimCCit (b ¼ 0:64;
moderates the relationship between CC and a firm’s
p ¼ 0:000Þ, and the SimBCit (b ¼ 0:03; p ¼ 0:000Þ
IBP (b ¼ 12800000:00; p ¼ 0:008Þ. Finally, we do
significantly influence a focal firm’s ND, CC, and
not find any significant impact of AP on
BC. Results further suggest that the number of Tier
the relationship between ND and IBP (b ¼
1 suppliers has a negative influence on ND
446467:30; n:s:Þ.17
(b ¼ 2:16; p ¼ 0:000Þ, and BC (b ¼ 0:77;
Moving our attention to the control variables,18
p ¼ 0:000Þ. However, the number of Tier 1 suppliers
we find that international diversification positively
positively influences CC (b ¼ 0:86; p ¼ 0:000Þ. A
(b ¼ 25872:41; p ¼ 0:000Þ; international experience
firm’s profit (EBITA) has a negative impact on ND
positively (b ¼ 135:65; p ¼ 0:007Þ; network diame-
(b ¼ 1:71; p ¼ 0:000Þ, and a positive impact on BC
ter negatively (b ¼ 1367:70; p ¼ 0:000Þ; marketing
(b ¼ 0:25; p ¼ 0:086Þ, and CC (b ¼ 0:46; p ¼ 0:000Þ.
intensity negatively (b ¼ 16373:24; p ¼ 0:026Þ;
While the network diameter negatively influences
competition negatively (b ¼ 39486:40; p ¼
ND (b ¼ 0:77; p ¼ 0:000Þ and CC (b ¼ 0:25;
0:003Þ, and estimated value of lag of international
p ¼ 0:000Þ, it positively influences BC (b ¼ 0:02;
revenue positively19 (b ¼ 0:56; p ¼ 0:000Þ influence
p ¼ 0:000Þ. Finally, results indicate that as ROA of a
the IBP. Our proposed model has AIC = 19,748.66.
firm increases, BC decreases (b ¼ 0:28; p ¼ 0:080Þ.
Further, the time fixed effect of year 2015 is weaker
Table 4 (Model 1) shows the results of the main
than that of the baseline year ðb ¼ 2468:79; p ¼
model in Eq. 7 where the primary dependent
0:058Þ and the geography fixed effect of America is
variable is international revenue. We present the
weaker than that of Africa ðb ¼ 4440:90;
standard errors and p values in the result tables
p ¼ 0:070Þ. Finally, we find that the two-way inter-
and exact p values in the text. We find
action effects between network characteristics are

Journal of International Business Studies

 Buyer–supplier networks and IB performance Amalesh Sharma et al

significant. We estimate several other benchmark

(15)

0.57
0.25
models in order to be sure that the proposed model

1
is significantly better for explaining the relation-
(14)

0.03

0.04
0.04
ship between whole network characteristics and a

1
firm’s IBP. We estimate Eq. 7 without heterogeneity

- 0.08**
0.07**
(AIC = 21,335.16); without endogeneity (AIC =
(13)

8.45
1.80
19,785.41) (see Model 7 in WA-Table 3 in Web

1
Appendix); and without endogeneity and hetero-

0.16***

0.18***
- 0.05

53.95
35.87
(12)

geneity (AIC = 21,344.63). As evident from the

1 results, the performance of our proposed model
- 0.08**
(AIC = 19,748.66) is significantly better than that
0.73***
0.17***

85.61
53.98
(11)

0.04 of other benchmark models. This is to note that we

1

get support for Hypotheses 1, 2, 3, 4a, 4b, 4c, and 5a

152,940.60
88,594.74
in the model with our secondary dependent vari-
0.10***

- 0.01
0.08**

able ‘international ROA’ (Model 2 in Table 4). In a

(10)

0.05

0.04

separate analysis, we also capture the country fixed

1

effects. As displayed in WA-Table 4 (Model 11), we

- 0.08**

- 0.08**
0.13***
- 0.00

get directionally consistent results. However, the

-0.04
0.05

5.08
6.62
(9)

quadratic effect of BC is not significant, and most of

1

the home-country fixed effects are insignificant.

- 0.17***
0.16***
0.14***

0.09***
- 0.02

We also estimate a model with main effects (with-

0.08**
0.07**

0.18
0.14

***Significant at 1%, **significant at 5%, *significant at 10%. Correlations are rounded to the second decimal point.
(8)

out their interaction with each other) and control

1

variables (see WA-Table 2, Model 1). We find

- 0.12***
- 0.21***

- 0.17***
-0.10***

support for our hypotheses.

0.23***
0.17***

0.28***
0.08**

0.04
0.06
(7)

Robustness check
- 0.06*

- 0.06*
0.12***

0.09***

0.14***

In addition to the proposed model in Eq. 7, we

- 0.05
- 0.02
0.09**

0.007
0.007
-0.01
(6)

conduct several additional analyses to ensure the

1

robustness of our results and discuss the same here.

- 0.17***
- 0.16***
- 0.11***

- 0.07**

One variable at a time: We estimate Eq. 7 again in

0.14***

0.11***
0.22***
0.24***
0.71***

0.16***

3.78
0.53

order to check the incremental performance of our

(5)

proposed model. We include one focal variable

- 0.24***

- 0.24***

- 0.28***

- 0.11***
- 0.07**

(e.g., ND) at a time along with the moderation

-0.09***

- 0.06*
0.11***
0.12***

0.002
0.001
0.06*

effects and control variables. Control variable only

0.01
(4)

model in Table 4 (AIC = 19,751.14); Model 2-only

- 0.11***

- 0.13***

- 0.10***
- 0.14***

- 0.12***

ND model (AIC = 19,823.03); Model 3-only BC

- 0.07**
- 0.08**

- 0.06*

11.29

model (AIC = 19,852.20); and Model 4-only CC

0.06*

-0.02
0.02

0.02

4.83
Table 2 Descriptive statistics and correlation matrix

(3)

model (AIC = 19,826.28) (see WA-Table 2 in the

1

Web Appendix) are inferior to our proposed model

- 0.45***
- 0.21***

- 0.17***

- 0.19***
-0.11***
0.09***

0.19***

0.14***
- 0.04

- 0.01

(AIC = 19,748.66) in terms of performance. This

0.08**

0.07**

0.067
0.033
0.05
(2)

analysis specifically shows that it is critical to

1

consider all the key characteristics to understand

22,762.04
35,099.63
- 0.14***

- 0.33***

- 0.08**
- 0.07**

the impact of a specific whole buyer–supplier

0.16***

0.17***

0.46***
0.12***
0.21***
0.17***

0.29***
- 0.03
0.06*

0.04

network on a firm’s IBP. Finally, we estimate an

(1)
1

additional model to rule out the understanding

(3) Betweenness centralization

that the moderating or control variables are driving

(6) PageRank centrality (PC)

the relationships of network characteristics with

(4) Network density (ND)
(5) Avg. path length (AP)
(1) International revenue

(13) Network diameter

(8) Marketing intensity

IBP. As evident from WA-Table 3 (Model 8), we get

(12) Int. experience
(2) Avg. clustering

consistent results, although the performance of the

(15) International
(7) R&D intensity

(14) Competition
coefficient(CC)

model is inferior to that of the proposed model.

(11) Firm Age

diversification

Alternate dependent variable specification: To be

(10) Size
(9) ROA

assured that our results are not driven by the choice

Mean
(BC)

SD

of the DV, we estimate the model in Eq. 7 with

Journal of International Business Studies

 Buyer–supplier networks and IB performance Amalesh Sharma et al

Table 3 First-stage regression results

Model 1a- DV: ND Model 1b- DV: BC Model 1c- DV: CC

Est. SE P Est. SE P Est. SE P

SimCC 0.64 0.041 0.000

SimND 0.12 0.035 0.000
SimBC 0.03 0.004 0.000
No. of Tier 1 suppliers -2.16 0.326 0.000 -0.77 0.160 0.000 0.86 0.136 0.000
ROA -0.65a 3.240 0.841 -0.28 0.158 0.080 -0.12 1.358 0.931
EBITA -1.71 0.294 0.000 0.25 0.146 0.086 0.46 0.124 0.000
Size 0.16 0.174 0.346 0.00 0.853 0.997 -0.20 0.737 0.788
Firm age -0.66 0.584 0.258 0.21 0.286 0.466 -0.24 0.248 0.326
Int. experience 0.19 0.870 0.825 -0.53 0.425 0.209 -0.11 0.367 0.773
Network diameter -0.77 0.122 0.000 0.02 0.005 0.000 -0.25 0.052 0.000
Intercept 0.00 0.000 0.000 1.76 0.075 0.000 0.04 0.006 0.000
F statistics 35.80 0.000 16.04 0.000 63.33 0.000
a
Estimates of control variables are scaled for better representation.

alternate DVs. We estimate our model with a firm’s
ROA and Tobin’s q (Hult et al., 2008). For ROA20 as
a DV (see Model 6 in WA-Table 3), we find largely
consistent results (support for Hypotheses 1, 2, 3,
4a, 4b, 5a, 5b, and 5c, with a few estimates
significant at p = 0.1 level). With Tobin’s q as DV
(AIC = 9184.38), we find support for Hypotheses 1,
2, 3, 4a, 4b, and 5a. Note that we cannot compare
the performance of these models, as the unit of
measurement of the DVs is different. Finally,
consistent with the literature (Hult et al., 2008),
we estimate the proposed model with ‘‘growth in
international business revenue’’ (see Model 5 in
WA-Table 3) and ‘‘growth in profits from interna-
tional markets’’ (AIC = - 2140.76) as two addi-
tional DVs.21 We get largely consistent results.
Estimating a model with the characteristics of ego
network for the same set of firms: We collect data on
the ND, BC, and CC for the ego network of the
same set of firms for the same time period.
Similarly, we capture the AP and PC for the ego
networks of the firms. We re-estimate Eq. 7 with
the ego network characteristics and we find support
for Hypotheses 1, 3, 4c, 4a and 5b. However, the
performance of the model with ego characteristics
(AIC = 26,169.60) is significantly inferior to our
proposed model (AIC = 19,748.66). We also find
that the model ðR2 ¼ 0:79Þ with whole network
characteristics has a significantly higher capability
to explain the variance in a firm’s IBP over a model
ðR2 ¼ 0:61Þ with ego characteristics.
Exploring mechanism
We assume that the mechanism behind the impact
of network characteristics on IBP is ambidexterity.
Thus, it is imperative that we document that
network characteristics influence organizational
ambidexterity22 (Kleinbaum & Stuart, 2014; Regner
& Zander, 2011) and IBP. In the absence of primary
data, we cannot directly address how firms gain
ambidexterity through the network and improve
IBP. Hence, we create a measure based on secondary
data which is a close reflection of ambidexterity
and we test the impact of network characteristics
on the measure of ambidexterity. Consistent with
the literature (Mizik & Jacobson, 2003), we opera-
tionalize ambidexterity for firm i at time period t as:

ðTotal Marketing Expenditure through Buyer  Supplier NetworkÞit

Ambidextarityit ¼
ðTotal Marketing ExpenditureÞit
ð8Þ
ðTotal R&D Expenditure through Buyer  Supplier NetworkÞit

ðTotal R&D ExpenditureÞit

Journal of International Business Studies

 Table 4 Parameter estimates

Model 1 (DV = Int. revenue) Model 2 (DV = Int. ROA) Model 3: Control only model

Hypothesis Est. SE P Est. SE P Est. SE P

Intercept 42,409.57 8933.393 0.000 0.00 0.000 0.000 - 25,946.43 22,569.550 0.250
Independent variables
Network density (ND) (-) - 10,500,000.00 1,380,658.000 0.000 - 0.06 0.029 0.046
Betweenness centralization (BC) inverted U-shaped 76990.51 33,200.004 0.021 0.00 0.000 0.006
Sq_BC - 2585.07 1294.995 0.046 0.00 0.000 0.096
Avg. clustering coefficient (CC) U-Shaped - 465226.10 127,108.700 0.000 - 0.02 0.011 0.021

Journal of International Business Studies

Sq_CC 1,761,747.00 302,605.100 0.000 0.01 0.008 0.084
Interaction between main variables
CC 9 ND - 256,000,000.00 37,700,000.000 0.000 - 1.28 1.126 0.255
CC 9 BC 3,618,531.00 1,244,170.000 0.004 - 0.02 0.046 0.637
ND 9 BC 61,600,000.00 21,100,000.000 0.004 1.52 2.672 0.571
Main effects of moderating variables
Average path length (AP) - 1298.22 1760.791 0.461 0.00 0.000 0.117 309.75 4351.530 0.943
Page rank centrality (PC) - 1,198,485.00 212,053.000 0.000 - 0.006 0.009 0.509 - 279,396.40 237,245.800 0.239
Moderation effects
ND 9 AP (-) - 446,467.30 647,543.500 0.491 - 0.09 0.030 0.003
BC 9 AP (-) - 1699.04 622.372 0.006 - 0.00 0.000 0.057
Buyer–supplier networks and IB performance

CC 9 AP (+) 20,053.55 3912.599 0.000 0.005 0.002 0.047

ND 9 PC (+) 714,000,000.00 178,000,000.000 0.000 25.92 7.272 0.000
BC 9 PC (-) - 912,903.40 230,624.500 0.000 - 0.008 0.005 0.112
CC 9 PC (+) 12,800,000.00 4,803,365.000 0.008 0.01 0.121 0.914
Control variables
ROA 45.65 75.212 0.544 0.00 0.000 0.000 179.94 57.456 0.002
International diversification 25,872.41 5454.969 0.000 0.00 0.000 0.305 27,046.62 5489.478 0.000
Amalesh Sharma et al

Size - 0.004 0.003 0.204 0.00 0.000 0.614 0.09 0.010 0.000
Firm age - 7.57 6.563 0.249 - 0.00 0.000 0.081 -50.01 43.615 0.252
International experience 135.65 50.049 0.007 - 0.00 0.000 0.085 179.64 65.501 0.006
Network diameter - 1367.70 135.250 0.000 0.00 0.000 0.413 1671.60 1254.850 0.183
R&D intensity - 8430.93 19,725.240 0.669 - 0.001 0.001 0.121 - 4072.32 19,820.940 0.837
Marketing intensity - 16373.24 7370.315 0.026 - 0.00 0.000 0.000 - 21,772.09 7370.537 0.003
Competition -39486.40 13,237.810 0.003 0.00 0.001 0.049 58,202.72 31,726.930 0.067
Estimated lag (DV) 0.56 0.015 0.000 0.00 0.000 0.006
Time fixed effect
Year_2014 - 454.04 1300.090 0.727 0.00 0.000 0.062
Year_2015 - 2468.79 1299.286 0.058 0.00 0.000 0.017
Geography fixed effect
Asia - 4230.73 4148.010 0.308 - 0.00 0.000 0.002 3673.15 19613.770 0.851
Europe 3477.65 2575.823 0.177 - 0.00 0.000 0.000 14,576.12 19,701.970 0.459
Australia - 2969.28 6182.249 0.631 0.00 0.000 0.005 1258.79 21,616.920 0.954
America - 4440.90 2446.955 0.070 0.00 0.000 0.004 2280.98 1,9529.700 0.907
 Buyer–supplier networks and IB performance Amalesh Sharma et al

The value of the ambidexterity measure lies

between + 1 to - 1. A score of + 1 indicates that a
Model 3: Control only model

firm’s entire marketing spending is through its BSR

network and that the firm invests no resources in
R&D through BSR network (purely exploitative
network). Similarly, a score of - 1 reflects a purely
SE

exploratory network. This proxy has a strong

resemblance with commonly used proxies in the
literature (Mizik & Jacobson, 2003). To simplify the
19,751.14

analysis and interpretation for the effects of struc-

tural characteristics on ambidexterity, we take the
Est.

absolute values of the operationalization. The new

operationalization has values ranging from 0 to 1
0.726
0.064
0.075
Model 2 (DV = Int. ROA)

(both inclusive), where 0 means that a firm is

P

purely ambidextrous (the firm balances exploration

0.102
0.000
0.002

and exploitations) and 1 means that the firm is

SE

non-ambidextrous (either exploitative or explora-

tory). We find that BC has a U-shaped relation-
10,322.91

ship23-
- 0.00
- 0.00
0.035

,
CC has an inverted U-shaped relationship 
Est.

b ¼ 2:01; p ¼ 0:002; bsq CC ¼ 2:84; p ¼ 0:096 ;

and ND has an insignificant positive impact
0.000
0.009
0.000

ðb ¼ 10:37; p ¼ 0:328Þ with ambidexterity, confirm-

P

ing our intuition that ambidexterity is indeed the

mechanism behind the proposed effects.
Model 1 (DV = Int. revenue)

1,917,942.000

Further, since the mediation analysis in the

78,698.230

presence of a non-linear term is quite challenging

4241.744

(Hayes & Preacher, 2010), we adopt ‘‘instantaneous

indirect effect’’ which suggests that the rate at
SE

which a change in the independent variable (IV)

changes the dependent variable (DV) through the
changes in mediation variable (MV), is denoted as
25,100,000.00

- 461,868.30

h, which can be estimated as the product of the

11,098.54

19,748.66

partial derivative of the function of MV with

respect to IV and the first derivative of the function
Est.

of DV with respect to MV. The analysis provides

significant direct, indirect, and total effects of
network characteristics on IBP. At the mean value
of BC, we find, h ¼ 0:92. Similarly, for mean plus/
Hypothesis

minus 1 standard deviation, we get h ¼ 1:40 and

h ¼ 0:44 respectively, suggesting that ambidexter-
ity mediates the proposed relationship between BC
and IBP. Further, at the mean value of CC, we get,
h ¼ 0:54.

DISCUSSION
Table 4 (Continued)

We have investigated the impact of structural

characteristics of a firm’s whole BSR network on
its IBP. Our study reveals the importance of
Endogeneity
Endo_ND

Endo_CC

considering the whole BSR network for designing

Endo_BC

international business strategies. The study pro-

AIC

vides compelling theoretical arguments for how the

Journal of International Business Studies

 Buyer–supplier networks and IB performance
whole network characteristics impact firms’ IBP.
We find that, while ND negatively influences a
firm’s IBP, BC has an inverted U-shaped relation-
ship. Similarly, there is a U-shaped relationship
between CC and a firm’s IBP. These are very
interesting and novel, as most studies demonstrate
either positive or negative effects of ego network
characteristics on firm performance (Rowley et al.,
2000). We also show that both network-level (e.g.,
AP) and node-level (e.g., PC) characteristics mod-
erate the proposed relationships. By doing so, we
are able to resolve the existing theoretical para-
doxes and propose a generalized framework to
highlight the role of a whole network on a firm’s
IBP. The lack of empirical work, which remains a
major concern for establishing a generalized phe-
nomenon, has been overcome in this study. In
doing so, we contribute to three separate streams of
literature.
Our first contribution is in the space of the
Uppsala model. We contribute to the Uppsala
model by challenging the fundamental assumption
that being a part of a relevant network will lead to
high performance in international markets. Extant
literature has pointed out that a focal firm must be
embedded in the relevant network to explore and
exploit FSAs, leading to performance (Vahlne &
Johanson, 2017a). Thus, scholars argue that ‘‘the
model should be seen as providing necessary but
not sufficient conditions for success’’ (Vahlne &
Johanson, 2017a: 1088). Providing theoritical cri-
tique to the Uppsala model, Forsgren (2016) sug-
gests that more work is required to understand how
network structure may facilitate or hinder firm
performance in international markets. We add to
this stream of literature by theorizing and empiri-
cally validating the kind of network structure a firm
may construct to explore and exploit FSAs, which
will ensure high IBP. Thus, we argue that network
embeddedness may not be adequate for perfor-
mance; a firm must consider all three central
network characterstics: ND, BC and CC. In doing
so, we also enhance the explanatory potential of
the Uppsala model. We add network structure as a
new dimension to the model and, therefore, answer
the call for research made by scholars in the past
(Forsgren, 2016).
Second, as we explore the whole BSR network, we
contribute to research on buyer–supplier networks
and international business performance. Research
in this space has looked at the BSR network from
the point of view of suppliers (Nobeoka, Dyer, &
Madhok, 2002) as a dyad of relationship (Zaheer &
Journal of International Business Studies
Amalesh Sharma et al
Kamal, 2011), and some scholars have focused on
network position and its impact on performance
(Turkina & Van Assche, 2018). Our study extends
the literature on buyer–supplier networks and
international business performance. We show that
performance in international markets is not only
driven by a firm’s position but also by the network
structure and by the interaction between position
and structure. We show that there is a differential
effect of structure–position interaction on firm
performance for different network characteristics.
While past scholars have focused on position as a
predictor of success in international markets (Turk-
ina & Van Assche, 2018), our work argues that such
relationships must be viewed from the perspective
of specific structural characteristics and their inter-
action with firm position. We show that, while
network status negatively moderates the relation-
ship between BC and IBP, it positively moderates
the relationship between CC and IBP. We highlight
the asymmetric effect of structure–position inter-
action on IBP and thus extend the knowledge in
the literature. Apart from this extension, we have
also shown that AP can mitigate concerns associ-
ated with bounded rationality and thus enhance
IBP. Structure–position interaction as well as inter-
action between different structural elements may
enhance or hinder performance in international
markets. Therefore, we bring in different structural
elements, interaction between the structural ele-
ments, and the interaction between structual ele-
ments and positions as new antecdents for success
in international business. In doing so, we have also
extended the Uppsala model by highlighting the
differential effect of network position on IBP.
Finally, our study makes a broader theoretical
point with regard to theorizing for network
research in general. Relying on alliance and inter-
personal networks, extant literature has shown how
an MNE can access knowledge from diverse inter-
national markets and how it can influence perfor-
mance in international markets (Iurkov & Benito,
2017; Yu, Gilbert, & Oviatt, 2011). Our work
establishes the idea of a whole buyer–supplier
network in this discussion. We present evidence
that a MNE must understand nuances associated
with different types of networks and their effect on
performance. Again, the level at which theorization
takes place also matters. For example, prior research
has almost always argued that ND has a positive
effect on performance of a MNE (Spencer, 2003; Yu
et al., 2011). Two rationales for such an explanation
are that highly dense networks provide
 Buyer–supplier networks and IB performance
opportunities for co-learning (Collinson & Rug-
man, 2008) and reduce opportunistic behavior
(McEvily, Perrone, & Zaheer, 2003), thereby
increasing performance in international markets
(Obloj & Zemsky, 2015). However, our results
suggest that, as we focus on whole buyer–supplier
networks, such findings may not hold true. This
pertains both to the nature of the buyer–supplier
network and multi-tier structure, and to the com-
plex interplay between these two elements. Because
a focal firm cannot apply selection rules going
beyond Tier 1 and because lower-tier suppliers lack
FSAs, density actually becomes detrimental to IBP.
Again, all network elements have differential rela-
tionship with performance (density has a linear
relationship whereas BC and CC have a curvilinear
relationship). These findings indicate that theoriz-
ing in the case of network research should consider
not only the type of network, but also different
elements in the network and the level of network
(whole vs. ego) while making predictions about the
relationship between structure and performance.
Managerial Implications
Our findings have important implications for MNEs
operating in international markets. Most MNEs face
significant challenges when it comes to the con-
struction of their supply networks. The rapid
change in customer expectations,24 coupled with
suppliers’ opportunistic behavior,25 have presented
major challenges for MNEs. To add to the agony,
there is an increase in global competition further
deteriorating MNEs’ performance in international
markets. Our findings therefore provide strategies
to MNEs to mitigate such concerns. We show that
designing a network in a specified manner can
overcome these challenges. Developing a BSR net-
work with low density, the optimal level of average
clustering coefficient, and BC can help a MNE not
only exploit existing FSAs but also develop new
FSAs. Thus, our research provides focal firms with
multiple strategies to mitigate such challenges.
MNE managers must look beyond their direct
suppliers and also construct a network considering
the indirect connection. However, changing the
supply network may not be easy for a firm and, in
many cases, it may be difficult to change the
existing structure. In such cases, a firm may use
our strategic levers to mitigate the challenges
associated with the existing structure.
Based on our findings, we argue that a firm must
first focus on three structural elements. Consider-
ing multi-tier structure, a firm may decide to add or
Amalesh Sharma et al
delete connections. First, firms that are a part of a
highly-interconnected network may need to add
other players on the periphery to gain access to
novel information. Firms may have limited busi-
ness relationships (in terms of value) with these
firms, but their strategic positions will be highly
beneficial. In this case, adding firms that may be
connected to diverse industries may provide firms
with significant new information and facilitate
exploration capabilities. Second, firms with high
concentrations of information gatekeepers in the
network may wish to develop ties with lower-tier
suppliers to create a more balanced power structure
in the network. Third, a firm may connect with
many suppliers with similar strategic objectives to
create high cliquishness. Fourth, if managers wit-
ness a change in the network characteristics, they
should consider whether it is due to their own
actions (e.g., changing the criteria for supplier
relationship building) or to external factors (e.g.,
suppliers removing themselves from the business).
A careful understanding of such interactions may
help design effective network strategies for
enhanced IBP. Again, in case a firm cannot change
its structure, the firm may certainly alter its posi-
tion by forming new relationships and by manag-
ing AP and network status.
It is also important for MNE managers to under-
stand the different types of network relationships.
While, in the case of alliances or interpersonal
networks, a firm may establish dense networks, our
findings indicate that this is not the case with a
whole buyer–supplier network. Therefore, to create
a holistic strategy, a firm must integrate findings
from alliances and interpersonal as well as the
buyer–supplier network to achieve high perfor-
mance in international markets. For example, while
a dense network with a high CC may be effective
for an alliance network, a BSR network with low ND
and moderate levels of both CC and BC will achieve
better results.
Economic Impact
As the prior discussion suggests, a firm can gain
(lose) in its international businesses if it does not
emphasize the whole network characteristics.
Hence, the insights from our research are of
economic importance to a firm. We discuss the
economic relevance of our study to the broader
audience of international businesses. We rely on
the estimates of our model and uncover the
economic relevance of increasing/decreasing the
values of the network characteristics. For example,
Journal of International Business Studies
 Buyer–supplier networks and IB performance
we find that a firm, on average, can gain an 18%
increase in international revenue by increasing BC
by 20% from its respective mean. However, the
same 20% increase in BC, along with a 10%
reduction in the AP, can yield a 18.71% increase
in international revenue, on average, thus exposing
the impact of the moderating variable. At the
tipping point of the CC, a firm can gain a 55%
increment in IB revenue over operating at the mean
value of CC.
LIMITATIONS AND FUTURE RESEARCH
DIRECTIONS
Although our research generates unique findings,
there are certain limitations. First, we provide a
generalized understanding across industries; how-
ever, we may have missed some industry-specific
factors. For example, while some industries may
require more exploration, others may rely more on
exploitation (Rowley et al., 2000). In those cases,
certain network structures may become more
important within a particular industry. Future
researchers may consider this aspect in greater
detail. Second, future research may even consider
incorporating lower-tiered relationships, such as
Tier 3, Tier 4, etc., and check whether our findings
still hold true. What may change if we incorporate
such relationships? One may argue that the curvi-
linear relationship between BC and CC with IBP
may change. Specifically, the inflection point may
shift as constraints of bounded rationality and the
threat of opportunistic behavior may rise. Third,
although our measures adequately capture whole
BSR networks, other network measures may gener-
ate additional insights. As the purpose of this
research is to offer a generalized framework, we
consciously refrained from delving into other net-
work measures. Future research may consider addi-
tional whole network characteristics. Fourth, future
researchers may explore additional mechanisms
through which network structure impacts IBP,
and may investigate how BSR networks evolve over
time. Fifth, while we do consider information flow
and bond, our work does not consider the different
functions that value-chain members perform.
Future research may consider different functions
that network members may perform and their
impact on profitability. Again, foreign market
expansion strategy and centralization/decentraliza-
tion of the governance system may impact a firm’s
IBP. Therefore, we urge future scholars to pay close
attention in this regard. Finally, there is also a
Journal of International Business Studies
Amalesh Sharma et al
possibility of intermingling as suppliers and cus-
tomers may be common to multiple firms. It would
be interesting to see how this intermingling may
affect IBP.
In summary, with an increased number of firms
going global, understanding and managing a whole
buyer–supplier network is critical for IB success.
This study is a novel attempt to create large-scale
whole networks and build a generalized framework.
We present managers with a concrete framework to
rely upon and create a holistic understanding of
relationships between a whole buyer–supplier net-
work and a firm’s IBP. Our study unravels many
hidden facts about a firm’s whole buyer–supplier
network and its effect on the firm’s IBP. Finally, we
believe that the study will significantly enhance
research in the domain of international business as
well as multi-tier buyer–supplier networks.
NOTES
1
International business performance refers to the
performance of a firm from its international busi-
nesses. A measure that isolates a firm’s performance
from its international business from that of its
domestic performance or overall performance will
distinctly capture the IB performance. One can
measure the performance using various matrices
including a firm’s revenue from IB operations and
return on assets from the IB operations.
2
Empirically, the characteristics of a whole net-
work are different not only in magnitude but also
structurally from that of ego networks (see WA-
Table 1 in the Web Appendix for the differences in
magnitude for a representative set of firms and WA-
Figure 1 in the Web Appendix for differences in
structure for a firm).
3
Note that we study the whole buyer–supplier
network, not the whole network. A whole network
may contain a firm’s buyers–suppliers, alliances,
intermediaries, and strategic partners. However, the
relationships a firm develops with various players
are different. Taking all players together and form-
ing a whole network faces structural issues, and,
hence, we limit to a particular type of network:
buyer–supplier, and concentrate on a pure multi-
tier perspective (whole) for the first time in the
literature. Further, our selection of a whole BSR
network is dependent on three reasons: (1) multi-
tier structure amplifies both adverse selection and
opportunistic behavior (Kano, 2017); (2) BSR
 Buyer–supplier networks and IB performance
networks are a combination of multiple relation-
ships (e.g., transactional, adversarial) (Choi, Doo-
ley, & Rungtusanatham, 2001), and therefore, we
are able to theorize at a much broader level than
any other relationship; and (3) BSR networks may
help an organization achieve knowledge, informa-
tion, and strategic competitiveness (Kristal,
Huang,& Roth, 2010).
4
Two key elements of theoretical contributions
include the addition of new knowledge and a
deepening understanding of existing knowledge
(Brown & Dant, 2008). Our theoretical contribu-
tions are driven by these two principles.
5
Wellman (1997) argued that while creating a
whole network, one needs to define the boundaries
of a population and who the external observer is.
Extant literature has argued that a whole network is
one where researchers study relationships between
all members in a predefined population (Wellman,
1997). We draw our boundaries of a whole BSR
network by capturing data up to Tier 2. This is
because, in most cases, a firm can only acquire
information up to Tier 2 level (Hartmann &
Moeller, 2014) and thus the firm’s supply base
policy is at best extended to Tier 2 suppliers (Choi
& Krause, 2006). In fact, scholars have pointed out
that ‘‘Coordination with Tier 2 suppliers is more
complex and difficult, because they have no direct
contractual relationship. The focal firm might
request information about its Tier 2 suppliers from
its Tier 1 suppliers, which maintains contractual
relationships with both sides. Information about
Tier 3 suppliers is nearly impossible to obtain’’
(Hartmann & Moeller, 2014, pg. 283). Given the
procedure of creation of the networks as outlined
by Wellman (1997) and Hartmann & Moeller
(2014), we can define our networks as whole BSR
networks.
6
Our data consists of 303 individual networks of
buyers and suppliers up to Tier 2. For example,
General Motors (GM) has 293 unique firms in Tier 1
and 6878 unique firms in Tier 2 in its whole
network; and General Electric (GE) has 717 unique
firms (445 suppliers + 272 buyers) in Tier 1 and
5139 unique firms in Tier 2 in its whole network.
The whole network of GM contains 7171 buyers-
suppliers and the whole network of GE contains
5856 buyers-suppliers. Recent research has outlined
that, in general, such data collection is a huge
challenge not only for researchers but also for firms
operating in the real world (Shao, Shi, Choi, &
Chae, 2018). For example, Shao et al. (2018) have
constructed single buyer–supplier network using
Amalesh Sharma et al
Bloomberg SPLC data and it took ‘‘15 weeks and
over 300 person-hours’’ (p. 115). Thus, in our work,
we are able to open a new frontier of data collection
for researchers and practicing managers.
7
We used the Heckman two-step approach to
assess if there is any potential bias and estimates
change due to such a bias. To assess the bias caused
by the sample selection, we compared the results of
the proposed model with the results obtained from
the two-step approach. We found strong consis-
tency between the estimates (we thank an anony-
mous reviewer for suggesting this). We used age as
the exclusion restriction in the selection model (see
Lu & Shang, 2017). See WA-Table 4 for results
(Model 9 and Model 10).
8
The research in ambidexterity has looked into a
variety of performance outcomes including objec-
tive as well as subjective measures (Junni, Sarala,
Taras, & Tarba, 2013). Ambidexterity positively
influences growth in sales (He & Wong, 2004),
stock market performance (Uotila, Maula, Keil, &
Zahra, 2009), firm survival (Junni et al., 2013), and
subjective ratings of performance (Gibson & Birkin-
shaw, 2004). In the context of IB, return on capital
growth is considered as a primary performance
indicator of ambidexterity (Hsu, Lien, & Chen,
2013). As we focus on exploiting current FSAs and
developing new FSAs in international markets, our
performance measures must not only reflect abso-
lute levels of performance but also relative levels of
performance (relative to inputs). Similarly, as firms
start developing new FSAs and exploit them, our
research must also focus on temporal measures of
performance. Finally, as a firm starts achieving
ambidexterity, it should reflect in stock market
performance which takes into consideration both
short-term and long-term aspects of performance.
In this work, we include multiple performance
measures to reflect these elements. Consistent with
the prior literature, international revenue is used as
an absolute measure of performance; international
ROA and ROA are used as relative measures of
performance; growth in international revenue and
growth in international profits have been used as
temporal measures of performance; whereas
Tobin’s Q is used as a measure of stock market
performance (Katsikeas et al., 2016). However, as
exploration and exploitation take place simultane-
ously in international markets, we use absolute
performance (international revenue) as the primary
dependent variable in our study (Vahlne & Johan-
son, 2017b). The correlation between dependent
variables in the study ranges between - 0.0483 and
Journal of International Business Studies
 Buyer–supplier networks and IB performance
0.7446. While growth in international revenue and
growth in international profits are highly corre-
lated (q = 0.7446, p \ 0.000), international ROA
and Tobin’s Q has a correlation of 0.587. Tobin’s Q
has the lowest correlation with growth in interna-
tional profit (- 0.0483).
9
Note that ‘‘international profit’’ is not an audited
measure and firms do not directly report them in
the balance sheet. We collect firms’ international
profit from various sources including news articles
in Lexis Nexis, firms’ profit statement in media,
analysts’ reports, etc. For example: https://www.
forbes.com/sites/samanthasharf/2015/04/28/ups-
delivers-stronger-than-expected-14-earnings-
growth/#606b82fe32ca captures UPS profit from
international business. Similarly, http://
calgaryherald.com/business/energy/schlumberger-
ceo-expects-further-pain-in-oilpatch captures the
profit margin of Schlumberger.
10
Note that ROA captures a firm’s overall perfor-
mance which includes the firm’s IB performance.
11
We thank an anonymous reviewer for suggest-
ing this.
12
With highest VIF = 2.38 and average VIF =
1.55, multi-collinearity is not a concern in our
model.
13
We test the validity of instruments using mul-
tiple tests. First, F test results for Eq. 6a–6c are
significant (see Table 3). Second, a modified Sargan
test to test the over-identification restrictions show
that there is no over identification issue. Third,
Angrist and Pischke F test to perform independent
tests for the strength of instruments (Angrist &
Pischke, 2008) illustrate that the instruments are
strong.
14
Correlation analysis further suggest that the
correlation between Tier 1 suppliers and dependent
variable is less than 0.19, and between Tier1
suppliers and endogenous variables is greater than
0.56 and significant. correlations of
SimNDit ,SimBCit , and SimCCit with IBP are
0.11,0.21, and 0.12, respectively. Correlations of
SimNDit , SimBCit , SimCCit with ND, BC, and CC are
0.74, 0.68, and 0.59, respectively. Similar instru-
ments are used by recent studies (see Saboo, Kumar,
& Anand, 2017).
15
Capturing country fixed effect is feasible. How-
ever, given the 28 countries in our data and with
some countries having only a few observations, we
test the country fixed effects in a separate robust-
ness analysis.
Journal of International Business Studies
Amalesh Sharma et al
16
Although we do not hypothesize, we account
for the two-way interactions between ND, BC, and
CC.
17
Haans, Peiters, & He (2015) provide guidance
regarding testing the moderation effects in
U-shaped or inverted U-shaped relationships. Fol-
lowing Haans et al., (2015), we now include the
interactions of the quadratic terms with moderat-
ing variables in a separate analysis. We find that the
estimate of the interaction between quadratic term
of BC and PC to be positive (b = 99,934.01,
p = .036), predicting a flattened curve when we
increase PC. This prediction is even reflected in the
graphical representation when we consider the
interaction between linear effect of BC and PC.
We also find that the coefficient of the interaction
between quadratic term of average clustering coef-
ficient and average path length to be positive
(b = 114,389.5, p \ 0.085). We did not find the
significant effects of other terms that include the
interaction of PC and AP with quadratic function of
average clustering coefficient and BC respectively.
18
This is to note that we estimate a separate
model with ‘‘product diversification’’ as an addi-
tional control. Since we could not calculate the
measure due to the lack of data for firms outside the
United States, we estimated the model for a sub-
sample. We find that product diversification has a
positive and a significant impact on IBP.
19
We also estimate our proposed model with
generalized least square (GLS) approach in order to
confirm that serial correlation does not influence
our results. Results are consistent..
20
When we estimate our model with ROA as the
DV, we remove ROA from the first stage models and
from the list of control variables.
21
While estimating these models, we drop the
estimated value of lag (DV) as the DVs are opera-
tionalized as growth variables.
22
The prior work by Kleinbaum & Stuart (2014)
and Regner & Zander (2011) shows that network
structure influences ambidexterity. Further, we
adopt the approach of testing from Sharma et al.
(2018) where they study the impact of process
characteristics on firm value relying on the mech-
anism of organizational learning/knowledge gain.
To explore that the mechanism is truly in place,
they have operationalized learning/knowledge as
the quality and quantity of patents that a firm
generates and test the impact of process character-
istics on quality and quantity of knowledge gained.
 Buyer–supplier networks and IB performance
Similarly, our proposed mechanism is ambidexter-
ity (exploration/exploitation) and we test the
impact of network characteristics on ambidexterity.
23
We argue and show that structural characteris-
tics of a firm’s BSR network assist a firm to achieve
ambidexterity, which in turn impacts IBP. As such,
given our new operationalization of ambidexterity,
the directions of the relationships of the structural
characteristics with ambidexterity should be
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ABOUT THE AUTHORS
Amalesh Sharma is an Assistant Professor of Mar-
keting at the Mays Business School at Texas A&M
University. He earned his Ph.D. in Marketing from
the Georgia State University, Atlanta. Amalesh is
interested in studying the impact of firm and cus-
tomer level strategies on firms’ performance. His
substantive areas of interest include Supply Net-
work, Innovation, Marketing-Mix Decisions, Cus-
tomer Management, and International Business.
V. Kumar is the Regents’ Professor, Richard and
Susan Lenny Distinguished Chair, and Professor of
Marketing, and Executive Director, Center for
Excellence in Brand and Customer Management, J.
Mack Robinson College of Business, Georgia State
University, Atlanta. VK has been recognized with
15 lifetime achievement awards in several areas in
Marketing from the American Marketing Associa-
tion (AMA) and other professional organizations.
VK has published over 250 articles, 25 books, and
has received over 25 Best Paper, Research and
Teaching Excellence Awards. VK has been honored
Publisher’s Note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional
affiliations.
Supplementary information accompanies this article on the Journal of International Business Studies website (www.palgrave.com/ journals).
Accepted by Constantine Katsikeas, Area Editor, 10 November 2018. This article has been with the authors for four revisions.
Journal of International Business Studies
Amalesh Sharma et al
in multiple countries with prestigious awards and
fellowships including the Chang Jiang Scholar,
HUST, China; Lee Kong Chian Fellow, Singapore
Management University, Singapore; Senior Fellow,
Indian School of Business, India; and Hagler Fellow,
Hagler Institute for Advanced Study, TAMU, Col-
lege Station, Texas. VK has also been recognized as
a Legend in Marketing where his works were
released as a 10-Volume encyclopedia with com-
mentaries from scholars worldwide.
Jun Yan is Associate Professor of Marketing and a
member of V. Kumar International Marketing Sci-
ence Institute at the School of Management,
Huazhong University of Science and Technology.
She obtained her Ph.D. in Marketing from Wuhan
University, China. Her research interests cover
multi-channel marketing, integrated marketing
communication, and customer relationship man-
agement. Her research has been published in multi-
disciplinary academic journals including Interna-
tional Journal of Market Research, Journal of
Interactive Advertising, Journal of Euromarketing,
Internet Research, Computers in Human behavior
and some of the leading Chinese business journals.
She is a Chinese citizen.
Sourav Bikash Borah is an Assistant Professor of
Marketing at Indian Institute of Management (IIM)
Ahmedabad, India. Sourav completed his Fellow
Management Program in Marketing from IIM Ban-
galore. Sourav is interested in firm level strategy
research where he is interested in investigating
service management strategy, supplier-relation-
ships, and business strategies in emerging markets.
Anirban Adhikary is an Assistant Professor of
Operations Management, Quantitative Methods
and Information Systems Area at Indian Institute of
Management Udaipur, India. He has completed his
Fellow Management Program in operations man-
agement from IIM Bangalore. His research interest
includes operational issues in firms’ supply chain
management and firm performance.