When Network Embeddedness Does Not Work: The Impacts of Partner Choice Set in Alliance Networks

Research has shown that network embeddedness (i.e., strength of relationships and strength of the relational structure) between two firms facilitates their alliance formation contributing to network evolution. This study examines the opposite case, namely, when network embeddedness inhibits firms’ alliance formation deterring network evolution. By proposing a construct of partner choice sets, defined as groups of multiple options given by the firm’s network embeddedness, I propose hypotheses that potential partners are less likely to form an alliance as basis on network embeddedness when they have partner choice sets characterized by excessive number of options and equally embedded options. Analysis results using the data of codeshare alliances in the global airline industry support the hypotheses, and confirm significant roles of partner choice set in alliance network evolution.

Key words: network embeddedness, alliance formation, partner choice set, network evolution