From Relational Stability to Network Resilience: Annual Negotiated versus Competitive Municipal Bond-Issuing Networks

Abstract

While the public contracting literature has explored the advantages and limitations of competitive versus relational/collaborative contracting ties, network research focuses on how structural characteristics influence a network's stability and ability to withstand environmental disruptions. However, little scholarship examines how collaborative versus competitive ties affect network stability and resilience to environmental shocks. This study addresses this gap by exploring the impacts of relationships of different natures (collaborative versus competitive) on network stability and resilience. Drawing on theories of relational embeddedness and network resilience, we compare annual networks formed by bond underwriters and financial advisors in negotiated (collaborative) versus competitive relationships from 2000 to 2015, analyzing California's municipal bond primary market before and after the 2008 Great Recession. The empirical results reveal that negotiated networks display higher stability, and faster recovery compared to competitive networks. Based on our findings, we develop a model of network resilience to systemic shock, highlighting the resilience of collaboration-oriented networks over efficiency-oriented networks in responding to systemic shocks.