Long Range Planning

The literature on inter-organizational collaboration has traditionally emphasized the need for access to external resources to explain partner selection choices by organizations (e.g. Mizruchi, 1992; Pfeffer and Nowak, 1976). Overall, this research tradition has emphasized how access to complementary resources held by others may offer strategic benefits to organizations (Powell et al., 1996; Uzzi, 1996). Notwithstanding these strategic advantages, collaboration also brings risks with it. For example, partners could find out information that the focal organization does not want to disclose, leading to so called unintentional knowledge spillovers (Lavie, 2006). Alternatively or partners could renege on their promises and cause a free-rider problem (Gulati and Singh, 1998; Meuleman et al., 2010). Therefore, firms should take into account the prospective partners' resources, capabilities, trustworthiness and cooperativeness during partner selection decisions (Gulati, 1995). However, given the paucity and ambiguity of information regarding a partner's resources, capabilities and reliability (Gulati and Gargiulo, 1999), firms rely on different information sources for partner selection. In line with this, three perspectives have emerged in the literature until now, each emphasizing a different information source to come to a partner selection decision. The first perspective suggests that organizations rely on directly observable characteristics (‘nodal attributes’) of prospective partners such as size, type of (business) activities and geographical location. The second perspective suggests that information is derived through the existing network structure. This perspective is called the embeddedness or social capital perspective. The third perspective, the ‘network strategy perspective’, states that organizations utilize knowledge and information about the network structure (Rowley and Baum, 2004; van Liere et al., 2008). Whereas each perspective carries validity in explaining partner selection choices, it remains to be explained when organizations use which of the three perspectives (nodal attributes, embeddedness and network strategy) when they select their partners? To address this question, we introduce the notion of ‘network accuracy’: defined as the extent to which organizations know who is collaborating with whom, and who holds which position within the network structure. Previous studies assume that organizations have similar network accuracy. They either assume that organizations have a boundedly rational, myopic understanding of the network (Cook et al., 1983; Hite and Hesterly, 2001) or a complete understanding. The complete understanding is instrumental for strategically maneuvering and navigating the network, in line with the network strategy perspective (Skvoretz and Willer, 1993; Van de Ven, 1976; van Liere et al., 2008). In reality, however, the network accuracy of organizations differs widely (Knoben et al., in press; Lhuillery and Pfister, 2011). Nonetheless, the implications of this divergence in network accuracy remain unexplored. To address this, we will advance and test the central claim that there is substantial heterogeneity in the network accuracy of organizations, and that this heterogeneity explains the use of different information sources, which leads to different partner selection choices. In short, we argue and show that when an organization has low network accuracy, it will rely on nodal attribute information and select homophilous partners. In contrast, when an organization has high network accuracy, it will rely on information through the