nep-net New Economics Papers
on Network Economics
Issue of 2012‒07‒08
six papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Distal embedding as a technology innovation network formation strategy By Paredes-Frigolett, Harold; Pyka, Andreas
  2. The role of reciprocation in social network formation, with an application to blogging By Alexia Gaudeul; Caterina Giannetti
  3. Modal choice and optimal congestion By Quentin David; Renaud Foucart, ECARES, Université libre de Bruxelles
  4. Interlinkages and structural changes in cross-border liabilities: a network approach By Alessandro Spelta; Tanya Araújo
  5.  The Temptation of Social Ties: When Interpersonal Network Transactions Hurt Firm Performance By  Leif Brandes;  Marc Brechot;  Egon Franck
  6. Why do industrial companies show different posture towards supply networks sustainability? A multiple case studies analysis By Jury Gualandris; Matteo Giacomo Maria Kalchschmidt

  1. By: Paredes-Frigolett, Harold; Pyka, Andreas
    Abstract: Although the area of innovation economics dates back to the early twentieth century with the seminal contributions of Schumpeter (1911), it is only recently that governments have understood the role of a comprehensive approach towards public sector economics that puts innovation systems in the eye of public policy decision makers. Although well researched in academia in recent years, the role that innovation networks play in driving successful processes of innovation and entrepreneurship has been less understood by policy makers. Indeed, so far public policy makers have been concerned with the macro level of public policy in a way that has been rather disconnected from the meso level of innovation networks. Not surprisingly, overall strategies for innovation network formation have not been on the radar screen of public policy. The academic community, on the other hand, has been devoting more attention to the study of innovation networks in an attempt to understand the role they play as a catalyst of innovation and entrepreneurship. By and large in the research community, the process of innovation network formation has been left rather unattended. Indeed, the question of how these networks are formed and what strategies can be developed to ignite processes of innovation network formation has been largely absent from the academic debate. In this article, we make a contribution in this area and present distal embedding as one of three generic innovation network formation strategies. We also show why distal embedding'' is particularly well suited for emerging regions of innovation and entrepreneurship. Our contributions lie at the macro-meso interface and can shed light on public policy at the macro level aiming to have a direct impact at the meso level of innovation network formation. --
    Keywords: entrepreneurship,innovation networks,innovation network strategy formation
    Date: 2012
  2. By: Alexia Gaudeul (Max Planck Institute of Economics, Jena); Caterina Giannetti (bRoyal Holloway, University of London)
    Abstract: This paper deals with the role of reciprocation in the formation of individuals' social networks. We follow the activity of a panel of bloggers over more than a year and investigate the extent to which initiating a relation brings about its reciprocation. We adapt a standard capital investment model to study how reciprocation affects the build-up of the individual social capital of bloggers, as measured by their links and interactions with others. This allows us to measure the role of content production and relationship building in the dynamics of online social networks and to distinguish between the social networking and media aspects of blogging.
    Keywords: Blogs, Friendship, LiveJournal, Reciprocation, Social Capital, Social Networks
    JEL: C33 D85 L82
    Date: 2012–06–22
  3. By: Quentin David (CREA, University of Luxembourg); Renaud Foucart, ECARES, Université libre de Bruxelles (ECARES, Université libre de Bruxelles)
    Abstract: We study the choice of transportation modes within a city where commuters have het- erogeneous preferences for a car. As in standard models of externalities, the market outcome never maximizes aggregate welfare. We show that in the presence of multiple equilibria prob- lems of coordination can worsen this result. Hence, a social planner focusing on the marginal impact of policies may miss the largest source of inefficiency. We discuss two policy tools: taxation and traffic separation (e.g. exclusive lanes for public transportation). Setting the optimal levels of taxation and of traffic separation constitutes a necessary but not a sufficient condition to reach the first best equilibrium. Comparing the relative efficiency of both poli- cies, we show that traffic separation should be preferred for large-scale policies while taxation better applies to marginal modifications of commuting patterns.
    Keywords: Modal choice, Coordination, Network effect, Cross-modal congestion
    JEL: R4 L5 H2
    Date: 2012
  4. By: Alessandro Spelta (Department of Economics and Business, University of Pavia); Tanya Araújo (ISEG - Technical University of Lisbon (TULisbon) and Research Unit on Complexity in Economics (UECE))
    Abstract: We study the international interbank market through a geometrical and a topological analysis of empirical data. The geometrical analysis of the time series of cross-country liabilities shows that the systematic information of the interbank international market is contained in a space of small dimension, from which a topological characterization could be conveniently carried out. Weighted and complete networks of financial linkages across countries are developed, for which continuous clustering, degree centrality and closeness centrality are computed. The behavior of these topological coefficients reveals an important modification acting in the financial linkages in the period 1997-2011. Here we show that, besides the generalized clustering increase, there is a persistent increment in the degree of connectivity and in the closeness centrality of some countries. These countries seem to correspond to critical locations where tax policies might provide opportunities to shift debts. Such critical locations highlight the role that specific countries play in the network structure and helps to situates the turbulent period that has been characterizing the global financial system since the Summer 2007 as the counterpart of a larger structural change going on for a more than one decade.
    Keywords: Cross-border exposures, interbank networks, financial linkages, debt shifting
    Date: 2012–06
  5. By:  Leif Brandes (Department of Business Administration, University of Zurich);  Marc Brechot (Department of Business Administration, University of Zurich);  Egon Franck (Department of Business Administration, University of Zurich)
    Abstract: We introduce agency concerns to social capital theory and predict that managers can use individual social capital to reduce personal effort costs, which is not in the best interest of the firm. To test this prediction, we collect data on all 8,019 hiring decisions from general managers in the National Basketball Association between 1981 and 2011. We find that managers have a clear preference for hiring players through social ties. The probability that a manager hires players from an NBA franchise to which he is socially tied is 27.6% higher than for an untied franchise. To isolate the motivation for this behavior, we complement our data with information on the sporting performance of teams. In line with agency theory, we find that the hiring of players through social ties reduces team performance. The effect is large: on average, each social-tie player reduces team winning percentage by 5.4%. Overall, this paper documents first empirical evidence that decision makers’ use of individual social capital can lead to reduced firm-level performance.  
    Keywords: Social Networks, Social Capital, Principal-Agent-Relationship, Worker Allocation, Basketball
    Date: 2012
  6. By: Jury Gualandris; Matteo Giacomo Maria Kalchschmidt
    Abstract: This research aims at moving a step forward toward the understanding of why industrial companies show different postures toward sustainability in their supply networks. Specifically, the role played by external pressures (i.e., from government and market) and internal capabilities (i.e., organizational commitment, supply management capabilities, innovation power) in determining companies’ attitude toward suppliers’ sustainability is theoretically and empirically investigated. To achieve our objectives, a multiple case studies analysis was performed since it is particularly suited when new complex phenomena are approached. This paper contributes to former literature by proposing a new comprehensive model specifying the role played by sustainable supply chain management’ (SSCM) antecedents in driving industrial companies’ postures.
    Keywords: supply network sustainability; SSCM; innovation power; supply management capabilities; government pressure; market pressure;
    Date: 2012

This nep-net issue is ©2012 by Yi-Nung Yang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.