Ties that tear apart: The social embeddedness of strategic alliance termination

• We propose that social networks are important factors explaining the instability of strategic alliances between firms.
• The more firms in a strategic alliance differ in the number of alliance partners they have, the more likely that a strategic alliance will be unstable.
• The total number of partners that two firms engaging in an alliance have, does not affect alliance stability.

Strategic alliances between firms are inherently unstable, and many alliances fail before the planned termination date. Most studies of the instability of strategic alliances focus on internal factors, such as tensions between alliance partners. In the present study social networks, in particular the centrality of firms in an alliance network, are considered as factors explaining alliance instability. The study examines 1061 ICT-alliances that were formed in the period 1975–1989. As expected, it was found that differences in centrality increase alliance instability. Contrary to the expectation, the sum of centralities of firms in an alliance does not affect alliance instability.