Network Embeddedness and the Value of Complex Resources

This paper assesses the role of the structure of market networks in the imputation of value of knowledge-intensive resource exchanges. Our framework identifies two processes of knowing exchange value, namely knowing as learning and knowing as fad. We argue that knowing value as learning is enabled by the normative and cognitive proximity of exchange partners, and that this is facilitated by the centrality of the focal firm in market networks. We also argue that knowing value as a fad is based on a positional construction of the focal firm's status, which is determined by the centrality of the focal firm's network partners in their corresponding networks. This is a ranking system based on positional rather than reputational network data, whose efficacy stems from the inability of firms to manipulate their network positions because the latter are derived solely from the activities, events and relations in which the firms are actually involved.