Murat Tarakci, PhD, Rotterdam School of Business, Erasmus University

Abstract Firms are interconnected within a social structure of ongoing relationships that can facilitate, control or hamper their economic exchanges. The embeddedness theory proposes that firms should cultivate a mix of arm’s length and embedded relationships within their network structure. We revisit this proposition along a behavioral perspective. In particular, we propose that firms may differ in their motives for choosing network partners (i.e., transactional and relational motives), and underscore the importance of matching a firm’s network structure with its behavioral motives. Using the survey data on firm-bank lending relationships collected from 4240 U.S. firms with fewer than 500 employees, we found that only firms that chose their partners based on transactional motives benefited from balancing arm’s length and embedded relationships. Such a mix of ties was in fact detrimental to firms that selected their partners with relational motives.

Murat Tarakci is an Associate Professor of Innovation Management at the Rotterdam School of Management, Erasmus University. Murat’s research aims at creating innovative organizations, and takes a behavioral approach. In particular, he examines what motivates managers’ search for new strategic initiatives, and how managerial power and leadership affect generating novel ideas. His research has been published or accepted for publication in Strategic Management Journal, Journal of Applied Psychology, Journal of Management, Journal of Management Studies, and Journal of Operations Management. Murat’s research has also been featured in popular media outlets including Financial Times and Harvard Business Review. He is currently serving as the academic director of MSc in Management of Innovation.

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