Power in reference to others
The previous section used node-level network measures to assert that the actors bestowed with power are more likely to innovate and that, in general, the higher the degree centrality of an actor, the more powerful this actor is. This second part of the argument discriminates power from centrality by stating that the power of an actor cannot only reside on the number of nodes to which this actor is connected to, but also on the relative power of its neighbors. According to this argument, power is inversely correlated to the power of its neighbors, such that, for an equal number of ties, the actors linked to powerless others are powerful, and the actors tied to powerful others are powerless (Borgatti & Halgin, 2011; Bozzo & Franceschet, 2016).
For instance, in a dyadic relationship A-В, both parties are equally powerful. In a triad with nodes A-B-C, according to traditional measures of centrality, В is the most powerful node and A and C both depend on B. In a 4-node path A-B-C-D, actors В and C hold power, while A and D are dependent on either В or C. Finally, in a 5-node path A-B-C-D-E, the centrality measures discussed in the previous subsection would assert that C is the central or most powerful node. Flowever, according to this second line or argumentation, В and D are the powerful ones because they are connected to the powerless (i.e., A and E). In sum, it can be argued that by being connected to a less powerful one, an actor becomes powerful because it controls the resources that create dependency on the other party.
Proposition lb: The power of an actor is inversely correlated to the power of its neighbors, with the most powerful node being the most likely to eco-innovate.
Strong ties and incremental innovation
The previous propositions discussed how a firm's propensity to innovate with its buyer or supplier was contingent on the firm’s power position in a network. The central premise of this section is that by relying on certain types of ties or inter-firm relationships, the focal firm can access strategic resources beyond its boundaries (Lewis, Brandon-Jones, Slack, & Howard, 2010). Because ties enable the acquisition and exchange of valuable knowledge and capabilities between buyers and suppliers in a network, they represent a fundamental driver for eco-innovations. Tie strength, therefore, stands as another important network feature worth being considered.
In particular, the existence of strong ties between a firm and its supply network has been found to be conducive to cooperative and innovative behavior between suppliers and buyers, as they facilitate knowledge and technology exchange during the product development process (Johnston, McCutcheon, Stuart, & Kerwood, 2004; Koufteros, Edwin Cheng, & Lai, 2007; Michel- felder & Kratzer, 2013). In relation to sustainability, strong ties between a buyer and its suppliers are needed to achieve environmental performance improvements and to foster knowledge exchange and innovation (Geffen & Rothenberg, 2000; van Bommel, 2011).
According to Granovetter (1073), the strength of a tie is a linear combination of: (i) the amount of time, (ii) the emotional intensity, (iii) the intimacy, and (iv) the reciprocal services experienced by the parties that make up the tie. Tie strength is thus characterized by strong interpersonal connections that are reflected in high levels of trust, cooperation, and a sense of mutual dependence among the parties in a relationship. Trust, in particular, has been a widely discussed concept in management studies and it reflects the buyer’s or the supplier’s belief in the other party’s reliability and integrity. Besides uncovering the effect of power balance on the birth of eco-innovations, Franco (2017) also reported that collaboration for eco-innovation in a textile value chain depended on the level of trust between the engaged partners. Trust facilitated information exchanges and lowered the costs of engaging in arm’s length contracts with suppliers. Several case-studies have also demonstrated that trust facilitated the implementation of sustainability practices across suppliers, including collaboration for innovation (Geffen & Rothenberg, 2000).
Although strong ties facilitate the recombination of knowledge for the development of eco- innovations, it is important to recognize the type of innovation we are referring to. Simard and West (2006) suggest that strong ties are characterized by redundant, homogeneous information, or in other words, by a situation in which the knowledge bases of the nodes in a network overlap. Information is redundant because nodes attached by strong ties tend to exhibit similar characteristics, such as comparable values, beliefs, or norms (a mechanism also known as “homophily”), this being the reason why the nodes got so closely connected in the first place. One could therefore assume that although strong ties lead to the formation of relational capital and, by extension, to the development of eco-innovations, these innovations are often incremental in nature (Roscoe, Cousins, & Lamming, 2016). In the context of the CE, this could mean that although network nodes connected through strong ties will tend to innovate, they will do so only incrementally. Marginal eco-improvements could include, for instance, alterations or modifications to existing materials and processes to fit the requirements of the CE.
Proposition 2: A firm with strong ties to its buyer or supplier is more likely to develop incremental eco-innovations.