Interfirm networks in periods of technological turbulence and stability

This paper examines how network relations between firms influence firm survival by explicitly addressing the moderating role of changing technological regimes. Using longitudinal data on 1385 developers and 190 publishers of video games in the global video game industry between 1972 and 2007, the analyses show that the effect of network ties between developers and publishers on the survival probability of developers is moderated by the level of technological turbulence in the industry. The results show that the effect of network partner failure on firm survival is dependent on the strength of ties. The failure of strongly tied network partners harms developers in stable periods and benefits them in turbulent eras, while no such relation is found for weakly tied network partners. Network partner diversity positively affects firm performance in epochs of technological turbulence, while the effect plays no significant role for firm survival in stable settings. The results indicate that the relation between interfirm network relations and firm survival are moderated by sequences of technological renewal in the video game industry which causes the industry to go through an evolution that deviates from the typical S-shaped trajectory found in industries that are characterized by strong path-dependent processes.