Do ongoing networks block out new friends?Reconciling the embeddedness constraint dilemma on new alliance partner addition

Abstract

Research Summary: This study addresses a theoretical dilemma regarding how alliance network constraint (reflected by network cohesion) affects a firm's alliance formation with new partners. Using a network pluralism approach, we separate a firm's ego alliance network into two activity-based networks-an exploratory network and an exploitative network-based on the primary value chain activity involved in each alliance. We argue that the cohesion of exploratory or exploitative networks has an inverted U-shaped effect on the addition of new partners in the same activity-based network, and a positive effect on the addition of new partners in the other network. Results based on data from the biotechnology industry largely support our predictions with one exception. Our study contributes to both scholarly understanding of network embeddedness and alliance practice. Managerial Summary: The structure of firms' ongoing alliance networks may have paradoxical implications for their efforts to search for and form alliance with new partners. That is, when a firm's alliance partners are tightly connected with each other, the cohesive network tends to both encourage and impede the focal firm to add new partners. We resolve this dilemma by showing that when a firm is deeply entrenched in a cohesive alliance network conducting a certain type of activities (e.g., R&D activities), it may not easily add new R&D alliance partners. However, it may still be able to escape from the cohesive R&D alliance network by seeking new partners conducting other activities (e.g., manufacturing activities).

Non‐profit organizations as a nexus between government and business: Evidence from Chinese charities

“…At the same time, embeddedness may constrain the new relationships that an organization can form (Jiang, Xia, Cannella, & Xiao, 2018). A charity's political ties can give rise to concerns and risks for donors.…”

Sequential Alliance Portfolios, Partner Reconfiguration and Firm Performance

“…We expect new partner inflow will negatively influence firm performance. First, from a resource flow perspective, although external new partners bring novel and non-redundant resources into the alliance portfolio [12], the acquisition and utilization of these resources are challenges for the firm [42]. On the one hand, the novel and non-redundant resources possessed by the new partner may not match the existing resources of the alliance portfolio in the short term [43].…”

“…As changes occur in the external or internal environment, firms continuously re-structure the partner composition of their alliance portfolio based on the last alliance portfolio [8,11]. Previous work has found that alliance partners frequently undergo significant change over a firm's life [12,13]. Due to the need for complementary partner resources and stable cooperative relationships, a partner may enter the alliance portfolio or leave it.…”

The Impact of Fairness Concerns on the Formation of Retailers Alliance with Consideration of Transshipment

“…Wassmer and Madhok based on data from the global aviation industry, found that resource balance at the portfolio level helps airlines to improve performance, and pointed out that managers should be careful to obtain excessive resources through a few partners [17]. Jiang et al studied how network constraints (network cohesion) of the alliance affect a company's alliance with new members and found that when a company's alliance members are closely connected to each other, a cohesive network often encourages and hinders the company from adding new alliance members [18].…”