The Nobel Prize in economics in 2012 was given to Lloyd
Shapley and Alvin Roth for their contributions to the theory of matching.
Matching is when two sides of a relation needs to find a suitable other in order
to make something of value. For example, workers need to be matched with jobs
that match their skills and interests, students need to be matched with schools
and subjects, and cargos need to be matched with ships and routes. Each match
can have varying quality, and an objective may be to get the best possible match
quality in total – but of course that does not mean that each individual match
is perfect. In fact, often the best one can do is to make sure that the match is stable, meaning that nobody wants to trade places. Because the units that are being matched are
selfish, so they don't care about the total quality of matches, only their own
match quality, the theory and
practice of matching is complicated and well worth studying. In fact, it gets even worse if one lets the quality of matches become uncertain, but that is another field of research again.
Most of the matching studies have been in markets that have
been allowed to operate freely, or have been given specific mechanisms to
improve efficiency. Economists are particularly interested in efficient
markets, and Shapley, Roth, and others inspired by them have made great
progress in market matching. To show some of the range, Roth has been involved
in applications as varied as medical resident assignment, school choice, and
organ donor matching.
Management scholars have recently taken an interest to
matching too, but in a different context: networks. The idea is that we now
know much about what networks do, but not enough about where they come from.
Matching seems like a logical explanation because networks in business are relations
where two sides need to find a suitable other in order to make something of
value. That's exactly a matching problem. Following that logic, Hitoshi
Mitsuhashi and I found that alliances in the shipbuilding industry could be
explained by matching based on compatibility of resources and complementarity
of markets. Moreover, alliances that are better matched also show better
performance.
That study was done on firms operating trans-oceanic
container routes, which means that they are sizable corporations. But it also works for small entrepreneurs who are making
interpersonal networks to start a new business. Balagopal Vissa looked at their
intention to form a tie with others they had met and the actual establishment
of exchange between the two ties, and found that – again – compatibility and
complementarity played a role, this time in the form of social similarity and
task complementarity. Entrepreneurs want
to be reassured by having someone similar to themselves on social dimensions in
the other firm, but they also want the businesses to complement each other in value
creation.
For network scholars, this is a new way of thinking because
it means looking inside each node in the network and comparing it with the
others. Now it matters who you are and what you can do. For those who are used
to thinking about matching, that has always mattered, so it is an easy logic to
follow. It is a powerful combination of ideas, and now matching is becoming increasingly
important to understand the networks that connect firms, both large and small.
