Friendships among competitors in the Sydney hotel industry

Friendships with competitors can improve the performance of organizations t hrough the mechanisms of enhanced collaboration, mitigated competition, and better information exchange. Moreover, these benefits are best achieved wh en competing managers are embedded in a cohesive network of friendships (i. e., one with many friendships among competitors), since cohesion facilitate s the verification of information culled from the network, eliminates the s tructural holes faced by customers, and facilitates the normative control o f competitors. The first part of this analysis examines the performance imp lications of the friendship-network structure within the Sydney hotel indus try, with performance being the yield (i.e., revenue per available room) of a given hotel. This shows that friendships with competitors lead to dramat ic improvements in hotel yields. Performance is further improved if a manag er's competitors are themselves friends, evidencing the benefit of cohesive friendship networks. The second part of the analysis examines the structur e of friendship ties among hotel managers and shows that friendships are mo re likely between managers who are competitors.