Centrality Asymmetry and Partner Complementarity as Influences on Alliance Dissolution

Abstract

Research on interfirm alliances indicates that partner firms' asymmetry in network centrality increases the likelihood of alliance dissolution because it gives rise to a power imbalance and opportunism in the partnership. We contend that this view of centrality asymmetry does not consider the binding force that network resource complementarity can provide in an alliance, which motivates partners to ally for the long term. We propose that centrality asymmetry can have both divisive and cohesive forces in an alliance, whichwhen considered together-lead to a prediction that centrality asymmetry has a U-shaped relationship with alliance dissolution. Moderate levels of asymmetry lead to lower rates of dissolution than high and low levels of asymmetry. The degree of cooperation between partners and the degree of external competition reduce the effects of centrality asymmetry on alliance dissolution because they mitigate power imbalances while encouraging partners to strengthen the alliance to withstand competitive challenges.

Processes Underlying Interfirm Cooperation

“…That is, IFC processes may be theorized using antecedents at the macro/external level, firm level and individual level. Two papers that explain the use of macro-level factors are Adomako et al (2021) and Hu, Jain and Delios (2021). The first paper uses institution-based theory and suggests that a key aspect of the institutional environment (institutional voids) in emerging markets can affect how firms engage in IFC processes.…”

“…For example, while three papers (Adomako et al, 2021;Hettich and Kreutzer, 2021;Park, Ritala and Velu, 2021) contribute to the first sub-process (formation and partner selection), five papers (Buckley and De Mattos, 2021;Hettich and Kreutzer, 2021;Mueller, 2021;Park, Ritala and Velu, 2021;Rui and Bruyaka, 2021) relate to the second (design and governance) subprocess. Further, we can relate six papers (Adomako et al, 2021;Buckley and De Mattos, 2021;Hettich and Kreutzer, 2021;Mueller, 2021;Park, Ritala and Velu, 2021;Rui and Bruyaka 2021) with the next sub-process (management) and two papers (Hu, Jain and Delios, 2021;Mueller, 2021) with the evaluation sub-process. Finally, the contribution of one paper (Hu, Jain and Delios, 2021) fits with the last (continuation/termination) subprocess.…”

“…Further, we can relate six papers (Adomako et al, 2021;Buckley and De Mattos, 2021;Hettich and Kreutzer, 2021;Mueller, 2021;Park, Ritala and Velu, 2021;Rui and Bruyaka 2021) with the next sub-process (management) and two papers (Hu, Jain and Delios, 2021;Mueller, 2021) with the evaluation sub-process. Finally, the contribution of one paper (Hu, Jain and Delios, 2021) fits with the last (continuation/termination) subprocess. The above reveals that the published papers exhibit significant overlap across IFC subprocesses.…”

The Effect of Inter‐firm Managerial Social Ties on Alliance Formation: How Poorly Embedded Firms Overcome Network Disadvantages

“…Third, peripheral firms are often seen as the weaker party when it comes to partnering with more central firms not only from their perceived or real informational and reputational deficien-cies, but also due to power differences resulting from network asymmetry (Hu, Jain and Delios, 2021). Hu, Jain and Delios (2021) added to the dearth of literature on peripheral firms by suggesting that peripheral firms could gain more durable alliances by partnering with a firm that has moderately higher centrality, which in turn would help them expand their network and progress to more central positions in the network.…”

“…Third, peripheral firms are often seen as the weaker party when it comes to partnering with more central firms not only from their perceived or real informational and reputational deficien-cies, but also due to power differences resulting from network asymmetry (Hu, Jain and Delios, 2021). Hu, Jain and Delios (2021) added to the dearth of literature on peripheral firms by suggesting that peripheral firms could gain more durable alliances by partnering with a firm that has moderately higher centrality, which in turn would help them expand their network and progress to more central positions in the network. We further add to this literature by suggesting that IFMSTs may not only allow peripheral firms to partner with more central firms in the network by mitigating informational and reputational deficiencies, but by perhaps levelling the field when it comes to power asymmetry due to network positioning.…”