How the Network Neighborhood Influences Partnerships: From Handshakes to Formal Collaboration among US Fire Departments

Abstract

This paper extends and develops the concept of the “network neighborhood,” which we define uniquely for pairs of collaborating organizations. The analysis examines how the network neighborhood influences a collaborating pair within the neighborhood. Specifically, we study how collaborating U.S. Fire Departments assess a possible switch from established informal agreements to formal contracts after an exogenous shock advances into the population the option of switching to a formal contract. In this context, the pair seeks to avoid making the switch because of the loss of flexibility that comes with formality. We find that, all else equal, collaborators successfully resist formality when (a) the network neighborhood includes significant numbers of mutual ties and (b) the network neighborhood includes significant numbers of informal agreements. However, formal contracts tend to be adopted when one or both members of the collaborating pair have exclusive formal ties in the network neighborhood. We interpret these results as an indication that both the structure and the level of formality of the network neighborhood significantly influence the way that collaborators work together. We conclude by arguing that the governance choices of collaborating pairs cannot be understood fully without considering the network neighborhood.