Note on Industry Peer Networks

By Stoyan Sgourev, Ezra Zuckerman
2002 | Case No. OB63
Peer networks are sets of non-competing firms in the same line of business, gathering on a regular basis to share information on relative performance and business practices. Peer networks provide a unique solution to the growing need of firms to collaborate with others in order to stay competitive without sacrificing their independence or control over decision-making. The main benefits of membership relate to learning and enhanced motivation to improve. Members tend to attribute the improvement in their companies’ performance to the knowledge generated at other companies in the network or through creative interaction at group meetings. The motivational benefit of membership revolves around the ability to pinpoint one’s standing relative to industry peers. The sharing of private information serves both to expose individual limitations and to motivate members to surmount them. By way of mutual monitoring and criticism peer networks can exact additional discipline on firms, supplementing the discipline due to market forces.
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