The Investment of Individual Resources in Professional Relationships

To build and maintain a professional work relationship, a manager must invest resources in the relationship. These resources could be individual (e.g. personal knowledge and expertise), or they could be available to the manager via membership in a firm (e.g. the firm's knowledge and reputation). We propose that the choice of resources invested in external professional relationships has implications for a manager's performance; specifically the ability to explore new business opportunities and exploit existing opportunities. Controlling for the effect of the structure of managers' networks, we find that managers who invest individual resources in their external relationships are more likely to identify new business opportunities whereas managers that invest firm resources are more likely to implement existing business. Furthermore, the choice of resources invested - i.e., the content of the manager's network - moderates the effect of network structure on the manager's tendency to explore or exploit. Hence, the findings of this study highlight the critical need to incorporate network content into theories about the effect of social structure on economic action.