Competitive Brokerage: How Information Management Capability And Collaboration Networks Act As Substitutes

IT-based information management and collaboration networks are both important sources of competitive information. Despite anecdotal evidence, limited research examines their contemporaneous impact on firms’ ability to compete effectively. We take an information asymmetry perspective to examine the mechanisms through which the firm’s information management capability and the structure of its collaboration network influence the structure of its competition network in product markets. We argue that taking a brokerage position in competition networks has a positive influence on a firm’s performance. We then explain how the firm’s information management capability and its position in collaboration networks each have a direct positive influence on its brokerage position in the competition network. Finally, we propose that information management capability and a central position in collaboration networks act as substitutes. We empirically test our model using a longitudinal competition network, a longitudinal collaboration network, and longitudinal secondary data about firms’ information management capability, drawn from 262 firms over a 15-year period. Our findings, robust to endogeneity concerns and alternative model specifications, reveal the direct and substitution effects of information management capability and collaboration networks on competition networks. This research contributes to the information systems and strategy literatures by offering insights into how IT enables firms to design competitive strategies by facilitating analyses of competitors’ information, and how the information gained by firms as they collaborate can enhance their ability to compete.