Greener Pastures: Outside Options and Strategic Alliance Withdrawal

Henrich R. Greve (), Hitoshi Mitsuhashi () and Joel A. C. Baum ()
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Henrich R. Greve: INSEAD, Singapore 138676
Hitoshi Mitsuhashi: Keio University, Minato-ku, Tokyo 108-8345, Japan
Joel A. C. Baum: Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada

Organization Science, 2013, vol. 24, issue 1, 79-98

Abstract: Departing from prior work that demonstrates the stickiness and stability of alliance networks resulting from embeddedness, we extend matching theory to study firms' withdrawal from alliances. Viewing alliance withdrawal as a result of firms' pursuit of more promising alternative partners (outside options) rather than failures in collaboration, we predict that a firm is more likely to withdraw from an alliance when there is a higher density of outside options that have better match quality than the current partners. We also propose that, because matching is two-sided, outside options have a greater impact on a firm's withdrawal when they are more likely to initiate new alliances. Using data on alliances in the global liner shipping industry, we show that, controlling for internal tensions in the alliance, outside options predict alliance withdrawals. Thus, despite the alliance stickiness and stability, firms alter their alliances in response to the availability of promising outside options, even leaving alliances that appear successful.

Keywords: interorganizational networks; alliance withdrawal; matching theory; market complementarity; embeddedness; rivalry; shipping industry (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:24:y:2013:i:1:p:79-98

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