Social Networks And Firm Performance

Nowadays, competitions between firms don’t only rely on their own internal resources, but also relate to the various external sources, such as information and channels of their social network. In this background, firms in a complex environments would more likely to get the external resources through their social network relationships, digging various heterogeneous resources, and then gaining their own competitive advantages. Thus, the firm social network is a very important factor to the development of firms.Firstly, this paper argues about the relationship between firms and their social networks under the China’s social context. Then this paper focus on the relationships between firms’ networks and their performances based on several important characteristics of the social network-the centrality, the structural holes and the key relationships. After that, this paper introduces the Porter’s strategic management theory, discussing the contingency effects of different competitive strategies in influencing the relationships between the firms’ network and their performances.In the empirical study part, our data comes from two resources:questionnaire data from Fujian Yongfu106firms and date calculated by Ucinet6software, this paper verify that the firms’network relationships, which include the centrality, the structural holes and the key relationships, have a positive impact on firms’ performance. Then this paper also verify the moderating effect of two competitive strategies. The empirical results reflect that the relationship between the centrality and the firms’ performance was impacted positively by low-cost strategy, and the relationship between the key relationships and the firms’ performance was the same. But the differentiation strategy has a negative impact on the relationship between the key relationships and the firms’ performances.Finally, this paper argue about the ways of firms to deal with the relationship with the social network and how firms set strategies to achieve specific process by the analysis of several typical cases. These studies will provide some suggestions about how domestic firms deal with the social network and competitive strategies to improve their performances.