Other authors emphasize that the company’s technical environment can have asignificant impact on the development of a network among companies and itscomposition (Madhavan et al.1998), and compacted networks are not beneficial forcompanies operating in a turbulent technical environment (Rowley et al.2000).The company’s position within a network may differ. Basically, its role andimportance depend on assets possessed, know-how, patents and market position,etc. An interesting case in point would be the passenger transport industry. The-oretically, each airline in the network has the same rights and obligations. Inpractice, however, things are different, and the role and place of the individualairlines within the network are varied. Large, global airlines, which are mostly the1Alliance Network Structure39
founding entities of the network, are the leaders. In the middle of the group, thereare full members, which cooperate closely with each other and play a major role.Agreements between them are multilateral and exclusive, as in the case of StarAlliance. They are supported by the second level members, which usually havestrict and close ties with one of the full members of the group. Any differentiationbetween them has a hierarchical structure, i.e., full members have more power thanthe second rank of members, but the latter benefit from a depth of network con-nections and global scope. The carriers that cooperate with the network on a ‘‘fromconnection to connection’’ basis are the third group. They can also cooperate withairlines belonging to other networks because the principle of exclusivity does notapply to them. They are usually long distance carriers from relatively distantlocations which are seeking optimal connections between their major airports.Small regional carriers which are engaged to serve one or more specific routes canalso belong to this group. In other words, a dominant position in the network isheld by full members, and airlines that cooperate on the ‘‘from connection toconnection’’ basis are the least important. The latter do not have the full rights ofthe other members, but the principle of exclusivity does not apply to them.Although alliance networks are created to generate group-based advantage, theymust show benefits at the individual company level in order to attract and retainnew members. Therefore, the question arises: if the network generates profits, howmuch can an individual member receive? Authors taking a structural approachargue that the position of the company in the network shapes its power overpartners (Nohria and Garcia Pont1991; Lorenzoni and Baden-Fuller1995). Othersemphasize that scarce resources brought to the network by each company shapesits ability to extract profits from partners. In business practice, these approachesare equally important, and a company with unique and value-added assets canoften bargain for a central position in the network. Table1presents the factorsaffecting the company’s position within the network.