Do Inter-Firm Managerial Social Ties Matter? The Mediating Effect of Strategic Alliances on Innovation Performance

Abstract

We investigate how inter-firm managerial social ties (IFMSTs) facilitate strategic alliances formation by arguing that IFMSTs serve as an information channel critical for alliance formation. Using an extensive sample of U.S. public firms from the years 2000 to 2008, we find strong evidence firms connected through IFMSTs are more likely to form alliances and the effect of these social ties on alliance formation interacts with the preexisting alliance network structure to enhance alliance formation particularly for poorly embedded firms. Furthermore, poorly embedded firms benefit most from activity-based IFMSTs as these interpersonal ties engender an alternative mechanism for information exchanges at the firm level. We integrate insights from both relational embeddedness and structural embeddedness theories and exemplify the multiplexity nature of social embeddedness in inter-organizational behaviors.