THE EFFECT OF INTER-FIRM MANAGERIAL SOCIAL TIES ON ALLIANCE FORMATION: HOW POORLY EMBEDDED FIRMS OVERCOME NETWORK DISADVANTAGES

42 Pages Posted: 11 Jul 2015 Last revised: 24 May 2021

See all articles by Ke Yang

Ke Yang

Lehigh University

Jianjun Zhu

The University of Hong Kong

Michael D. Santoro

Lehigh University - Department of Management

Date Written: May 19, 2020

Abstract

Recent research suggests preexisting network structural dynamics can hamper inter-organizational alliance formation particularly for poorly embedded firms. However, this research fails to fully explain how poorly embedded firms can overcome these structural barriers when forming alliances. This study adds to the existing knowledge on network dynamics by proposing how interpersonal relational embeddedness alleviates such constraints and facilitates alliance formation of firms poorly embedded in existing alliance networks. We highlight the informational and sociological benefits of inter-firm managerial social ties (IFMSTs) formed through interpersonal social experiences beyond those originated from prior business exchange activities between potential partnering firms. Our empirical investigation employs an extensive sample of U.S. public firms and shows strong evidence that IFMSTs help poorly embedded firms overcome the obstacles imposed by their inferior network structure embeddedness when forming alliances. The negative effect of inferior network structural embeddedness is more muted by IFMSTs when both firms in a dyad are at the periphery of the alliance network than when they occupy asymmetric structural positions. This mitigation effect of IFMSTs is more salient when the ties originate from activity-based social experiences than from shared educational affiliations.

Keywords: managerial social ties, alliance formation, relational embeddedness, structural embeddedness

Suggested Citation

Yang, Ke and Zhu, Jianjun and Santoro, Michael D., THE EFFECT OF INTER-FIRM MANAGERIAL SOCIAL TIES ON ALLIANCE FORMATION: HOW POORLY EMBEDDED FIRMS OVERCOME NETWORK DISADVANTAGES (May 19, 2020). Available at SSRN: https://ssrn.com/abstract=2628979 or http://dx.doi.org/10.2139/ssrn.2628979

Ke Yang (Contact Author)

Lehigh University ( email )

621 Taylor Street
Bethlehem, PA 18015
United States
6107583684 (Phone)
6107586429 (Fax)

Jianjun Zhu

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Michael D. Santoro

Lehigh University - Department of Management ( email )

Bethlehem, PA 18015
United States

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