A circumplex model of the behavioural antecedents of unintended strategic alliance termination: a PLS-based analysis

Abstract

How do firms terminate unsatisfactory strategic alliances? Previous literature on alliance termination has considered exiting an alliance to be a single event. Drawing on circumplex response strategy literature, we propose that alliance termination is part of an integrated system of behavioural responses to adversity. The findings of a scenario-based experiment, obtained through PLS modelling, demonstrate that alliance termination is part of an integrated structure of response strategies governed by two active-passive and constructive-destructive dimensions, which suggests that intermediate behavioural responses precede alliance termination. The article also shows that alliance termination can occur through two alternative termination paths depending on the nature of the adverse situation. Building on these findings, the article concludes with some guidelines for managers confronted with alliance termination.