Network Synergy

Exequiel Hernandez, J. Myles Shaver

Research output: Contribution to journalArticlepeer-review

51 Scopus citations


Acquisitions can dramatically reshape interorganizational networks by combining previously separate nodes and allowing the acquirer to inherit the target’s ties, potentially creating network synergy. Network synergy is the extent to which combining an acquirer’s and a target’s networks through node collapse results in a more favorable structural position for the combined firm as the acquirer gains control of the target’s existing ties. We hypothesize that the likelihood of selecting a target increases when the expected network synergy is greater. Using data from the biotechnology industry (1995–2007), we find support for this hypothesis by showing that acquirers prefer targets that generate greater expected increases in network status and greater expected access to structural holes—even when we control for other known sources of synergies. We further show that these effects are driven by complementary combinations of the acquirer’s and target’s networks that go beyond the attractiveness of the target’s network per se. By integrating the networks and acquisitions literatures, we introduce a novel source of synergies, provide evidence of a previously unexplored mechanism of network change, and show how firms can exert agency in the process of network change.

Original languageEnglish (US)
Pages (from-to)171-202
Number of pages32
JournalAdministrative science quarterly
Issue number1
StatePublished - Mar 1 2019

Bibliographical note

Funding Information:
We thank Associate Editor Martin Kilduff and the anonymous reviewers for their guidance. Matthew Higgins provided us with the alliance data and countless insights about the biotechnology industry, for which we are extremely thankful. We received helpful comments from Matthew Bidwell, Emilie Feldman, Russell Funk, David Knoke, Anoop Menon, Aks Zaheer, Sri Zaheer, and seminar participants at Columbia, Harvard Business School, Wharton, the 2016 Strategic Management Society Conference, and the 2017 Academy of Management Conference. We thank the Wharton Dean’s Research Fund for generously financing this project. Sarath Balachandran and Anusha Fernando provided excellent programming support. This paper received the 2017 Glueck Best Paper Award from the Strategic Management Division of the Academy of Management. A summary of an earlier version is included in the 2017 Academy of Management Conference Best Paper Proceedings and circulates as “Network Synergy: How Firms Use Acquisitions to Enhance Their Network Position.”

Publisher Copyright:
© The Author(s) 2018.


  • acquisitions and network synergy
  • alliances
  • high-technology industry acquisitions
  • network node collapse


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