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Brokers and Competitive Advantage

Melbourne Business School, University of Melbourne, 200 Leicester Street, Carlton, VIC 5053, Australia
Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, Ontario, Canada M5S 3E6 and London Business School, Regent’s Park, London NW1 4SA, United Kingdom
m.ryall{at}mbs.edu
olav.sorenson{at}rotman.utoronto.edu

The broker profits by intermediating between two (or more) parties. Using a biform game, we examine whether such a position can confer a competitive advantage, as well as whether any such advantage could persist if actors formed relations strategically. Our analysis reveals that, if one considers exogenous the relations between actors, brokers can enjoy an advantage but only if (1) they do not face substitutes either for the connections they offer or the value they can create, (2) they intermediate more than two parties, and (3) interdependence does not lock them into a particular pattern of exchange. If, on the other hand, one allows actors to form relations on the basis of their expectations of the future value of those relations, then profitable positions of intermediation only arise under strict assumptions of unilateral action. We discuss the implications of our analysis for firm strategy and empirical research.

Key Words: games–group decisions; bargaining; organizational studies; networks–graphs; social networks; biform games; strategy
History: Received: February 15, 2006;