Seeking knowledge or gaining legitimacy? Role of social networks on new practice adoption by OEM suppliers

This study tests two competing views (namely, institutional theory and organizational learning theory) regarding the role of social networks on firms' new practice adoption from 1999 to 2008 in Taiwanese high-tech sector firms that operate under the Original Equipment Manufacturer (OEM) supplier model. Empirical data analysis shows that the sampled suppliers adopt customer relationship management (CRM) systems mostly to gain legitimacy, while they adopt supply chain management (SCM) systems with joint desires of gaining legitimacy and seeking knowledge in the OEM network. The findings indicate that social networks provide firms with a dedicated mechanism for assessing the logic of adopting new practices.