Ties that tear apart: The social embeddedness of strategic alliance termination

Abstract

Strategic alliances between firms are inherently unstable, and many alliances fail before the planned termination date. Most studies of the instability of strategic alliances focus on internal factors, such as tensions between alliance partners. In the present study social networks, in particular the centrality of firms in an alliance network, are considered as factors explaining alliance instability. The study examines 1061 ICT-alliances that were formed in the period 1975–1989. As expected, it was found that differences in centrality increase alliance instability. Contrary to the expectation, the sum of centralities of firms in an alliance does not affect alliance instability.

Keywords:

• Social networks
• Social embeddedness
• Strategic alliances
• Alliance failure

Notes

1 Tel.: [phone].

2 Tel.: [phone].

3 It is assumed that resources that are exchanged in an alliance are comparable across different alliances.