Current research in public management reports a positive effect of agency network activity in the interorganizational network on its performance (degree centrality hypothesis). This study presents a different hypothesis: The embeddedness of agency network relations in cohesive subgroups in the interorganizational network positively affects its performance (‘‘cohesive subgroup’’ hypothesis). The dependent variable in the present study is organizational performance and measured in terms of individual client satisfaction. The hypotheses are tested using data on the interorganizational network of Dutch colleges for the training of primary education teachers (n 5 28). These data are combined with college-level performance and contextual data for 2002–2005 (n 5 90), and with the evaluations of college graduates in a large sample of graduates for the same period (n 5 7,119). Multilevel logistic regression analyses show that colleges’ cohesive subgroup membership rather than college degree centrality significantly contributes to a positive evaluation by graduates. These analyses control for various control variables at the college level and the graduate level.