Finalist for the Best Conference Paper Award at the 2015 SMS Annual Conference.
Research on networks emphasizes the addition or deletion of ties as the primary mechanism through which firms alter their networks to obtain valuable positions. This overlooks another mechanism of network change that is at least equally important: the ability of a firm to acquire another firm and inherit its network ties. Such ‘node collapse’ can radically restructure the network in one transaction, constituting a revolutionary change compared to the evolutionary effect of tie additions and deletions. Moreover, acquisitions occur in competitive markets, making it crucial to account for multiple firms simultaneously seeking to reach advantageous network positions. We explore how these issues affect the dynamics of the network at the firm and industry levels through a simulation in which actors acquire one another to span more structural holes. We find that acquisition-driven change affects the distribution of individual firms’ performance and the structural properties of the industry-wide network.