Organizations form and disband partnerships and alliances, changing the shape of organizational networks. These interface changes affect outcomes ranging from the employment opportunities of individuals to the wealth of nations. The proposed PDW on alliance instability and dynamics aims to contribute to the 2017 Academy of Management central topic by advancing academic discussion about strategic alliances as important interfaces. Alliance instability refers to major changes in (i.e., alliance dynamics) or dissolutions of alliances that are unplanned from the perspective of one or more partners (Inkpen & Beamish, 1997; Das & Teng, 2000). Voluntary inter-organizational cooperation remains popular in the face of empirical evidence related to high termination rates and alliance instability. Given the prominence of alliances as a pragmatic strategy it is critical to make progress in resolving this conundrum.
At present, our knowledge about the antecedents, processes, consequences of alliance instability remains fragmented and incomplete. As a result, this PDW seeks to highlight research opportunities that derive from the phenomenon of alliance instability in relationship to alliance formation, alliance dynamics and evolution, and alliance outcomes:
First, alliance instability may be rooted in the composition of partners determined during formation. Key factors influencing partner selection include the firms’ objectives to gain access to resources, manage interdependence, and mitigate collaborative hazards. These objectives are often difficult to reconcile leading to alliance instability by design. Given, that alliance instability seems inevitable why do firms keep forming alliances? Does that fact challenge existing wisdom? In fact, the effects of certain factors (e.g., network embeddedness) on alliance dissolution are not simply the mirror image of their effects on alliance formation (Polidoro, Ahuja, & Mitchell, 2011). Specifically, the same factors that encourage alliance formation often also lead to instability or termination (Bertrand & Lumineau, 2016; Heidl, Steensma, & Phelps, 2014). This intriguing evidence calls for more research in order to understand antecedents of alliance instability, and how firms manage tensions between alliance formation incentives and collaboration challenges.
The workshop participants will be able to discuss possible fruitful ways to integrate research on alliance formation and alliance terminations, and shed more light on the progress that has been made in understanding internal and external sources of alliance instability.
Second, the dynamic aspects of strategic alliances have received increasing attention from both .processes in organizations, and their interactions (i.e., microfoundations) being overlooked as units of analysis. Similarly, applying a network perspective, research has only begun to disentangle the complex relationship between network dynamics within and beyond the focal alliance and alliance instability (Polidoro, Ahuja, & Mitchell, 2011). Applying an evolutionary perspective, new insights into alliance instability can be gained by close examination of the interaction between process and contractual structure (Arino & de la Torre, 1998; Reuer & Arino, 2007).
The PDW participants will have an opportunity to discuss how to study alliance instability at different levels of analysis. The discussion topics/questions include but not limited to the foundations of the micro-perspective on alliance instability and dynamics; the relationships between micro-level organizational boundary spanning and macro-level outcomes; reciprocal influence of industry network and multi-partner alliance dynamics; factors promoting collaborative resiliency under conditions of alliance instability; conditions under which the partners’ general and specific contracting experience promote or prevent alliance instability.
Third, alliance instability has often been studied as an outcome of interest with studies on the consequences of such instability and dynamics being relatively scarce. Alliance instability can affect firm valuation (Wassmer & Meschi, 2011; Fakharizadi, 2014), firms’ ability to form new relationships, and to maintain their existing relationships (Polidoro et al., 2011). While these effects are often assumed to be negative, alliance instability may be functional when disruptive events signal the need for partners to make positive adjustments (Kane, Johnson, & Majchrzak, 2014). Furthermore, strategic alliances involve uncertainty, interdependence and vulnerability, which often creates adverse situations. As such it is important for partner firms to understand and anticipate alliance partners’ behavior such as exit or willingness to help (Tjemkes & Furrer, 2010), which determine the consequences of alliance instability.
The participants of the workshop will be able to discuss examples of alliance instability resulting in positive outcomes at the firm and alliance level; conditions under which the effects of alliance instability could be positive or negative or neutral; discuss the nature and magnitude of consequences of alliance instability for various stakeholders including alliance partner firms, firm employees, suppliers and customers related to the alliance, and a broader network where the alliance is embedded.