Effects of the Social Origins of Alliances on Alliance Performance

Abstract

This research responds to the charges of two criticisms about the embeddedness approach—(1) that it does not treat embeddedness as a variable and (2) that it does not explain economic performance—by investigating how variations in the social origins of alliances account for alliance performance. The hypotheses of this research state that the strength of ties between individuals who initiate alliance formation processes is positively related to alliance performance, because such ties eliminate the uncertainty that firms face when forming alliances, reduce the likelihood of partners’ malfeasance, and facilitate information exchange for sharing tacit knowledge. However, analysis of the mail survey data on biopharmaceutical R&D alliances indicates that such a simple association does not exist. Rather, one possible interpretation of the findings is that the activation of strong ties in forming alliances seems to be a double-edged sword that not only creates an opportunity for building successful alliances but also restricts the ability of organizations to acquire heterogeneous information and cutting-edge knowledge.