Measuring Firm Performance at the Network Level: A Nomology of the Business Impact of Digital Supply Networks

Abstract

For decades, information technology has been posited to have a major impact on firm performance. Investigations into this line of inquiry have almost always used constructs related to individual firm performance as their dependent measures, an approach that made sense under historical economic conditions. In recent years, however, value chains are giving way to digital supply networks with electronic interactions between tiers in the flow of goods and services. Such an environment makes it imperative to develop sophisticated measures of the performance of entire networks of firms, as opposed to individual firm performance. Using game-theoretic concepts, this paper explores several dimensions of networked organizational performance as a construct, as a set of measures, and as a construct within a nomology. It describes a program of research in which some empirical validation has already been completed and other work is now underway. We first validate measures for a dyadic view of network performance, followed by an n-firm perspective.