Alliance group formation: enabling and constraining effects of embeddedness and social capital in strategic technology alliance networks

The role of embeddedness and social capital in the process of alliance group formation in strategic technology alliance networks is examined. In particular, the social mechanisms that enable and enforce alliance group formation is studies. It is argued that the enabling effect of embeddedness during the first stages of the group formation process may turn into paralyzing effects as the group formation process progresses. Through the formation of subsequent ties, firms in social systems tend to rely heavily on their direct and indirect contacts in forming new partnerships. This so-called local search enables firms to create trustworthy and preferential relations. Over time, those relations tend to develop into strong ties, as firms rely on the same partners by replicating their existing ties. This enabling effect of embeddedness at the group level can, however, turn into a paralyzing effect as actors become locked-in, because they rely on partners only in their closed social system