How do interorganizational and interpersonal networks affect a firmʹs strategic adaptive capability in a transition economy?

This paper examines the effects of a firmʹs interorganizational network characteristics and a CEOʹs interpersonal network ties on a firmʹs strategic adaptive capability in a transition economy. Using a unique survey dataset of 250 Chinese firms, the paper focuses on the compositional diversity of a firmʹs interorganizational network and the structural holes in a CEOʹs interpersonal network. The results show that an interorganizational network that is diverse in composition and an interpersonal network that is rich in structural holes have significantly positive effects on a firmʹs strategic adaptive capability in Chinaʹs transition economy. However, a negative interaction effect occurs between interorganizational network diversity and interpersonal network structural holes. The results suggest that managers simultaneously consider both the individual and joint effects of interorganizational and interpersonal network characteristics when developing firm strategies.