Open versus Closed Alliance Networks as a Precaution for Organizational Disruptions

Abstract

This study explores effective alliance network structures that prevent organizational disruptions by focusing on two types of structures: open and closed alliance networks. Open and closed alliance networks both have potential effects that may help organizations prevent unexpected disruptive events. The former offers organizations great accessibility to diverse knowledge throughout the alliance network that may lead to organizational learning for the prevention of disruptions. The latter generates a social sanction that makes the organization mindful against disgraceful disruptions that may harm their trustworthiness in the alliance network. This study hypothesizes that the latter is more essential for preventing disruptions, and tests the hypothesis using longitudinal data of airline accidents or incidents and code-sharing alliances in the global airline industry. The analysis results show that (1) organizations in a closed alliance network are less likely to experience disruptions, and that (2) such a tendency strengthens when the organizations are stigmatized by their own previous disastrous events, and ultimately disappears when the industry is stigmatized by a disastrous event at the institutional level. The implications for the literature on organizational disruptions and strategic alliances are that organizational mindful behaviors to maintain trustworthiness are an important mechanism for preventing organizational disruptions, and that strategic alliance networks induce such a mechanism.