The aim of this paper is to create a more comprehensive framework for business-network termination and to highlight the different factors that in several ways can drive alliance failure in small and medium-sized enterprises (SMEs). Beginning by examining the previous literature, the study classifies factors that influence the duration of inter-firm networks into six main groups: 1) prior experience; 2) goal definition; 3) partner compatibility; 4) risk–return balance; 5) governance mechanisms; 6) soft items. The results find many factors that drive network failure in several ways. Some of these factors are “hard” (e.g., governance mechanisms) and others are “soft” factors (e.g., trust-building initiatives). In addition, the results demonstrate that factors affecting network termination are not absolutely positive or negative; in contrast, their effect is relative, that is, these factors can play a positive or negative role in network termination depending on the specific context in which they act. This paper contributes to the existing literature focusing on alliance termination by providing a taxonomy of factors that are important for interpreting inter-firm network termination. In addition, the study has managerial implications for the detection of potential risk factors and the consequent prevention of their transformation into negative outcomes.
When things go wrong: untangling the origins of inter-firm network termination
VERNIZZI, Silvia;CANTELE, SILVIA
2017-01-01
Abstract
The aim of this paper is to create a more comprehensive framework for business-network termination and to highlight the different factors that in several ways can drive alliance failure in small and medium-sized enterprises (SMEs). Beginning by examining the previous literature, the study classifies factors that influence the duration of inter-firm networks into six main groups: 1) prior experience; 2) goal definition; 3) partner compatibility; 4) risk–return balance; 5) governance mechanisms; 6) soft items. The results find many factors that drive network failure in several ways. Some of these factors are “hard” (e.g., governance mechanisms) and others are “soft” factors (e.g., trust-building initiatives). In addition, the results demonstrate that factors affecting network termination are not absolutely positive or negative; in contrast, their effect is relative, that is, these factors can play a positive or negative role in network termination depending on the specific context in which they act. This paper contributes to the existing literature focusing on alliance termination by providing a taxonomy of factors that are important for interpreting inter-firm network termination. In addition, the study has managerial implications for the detection of potential risk factors and the consequent prevention of their transformation into negative outcomes.
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