When things go wrong: untangling the origins of inter-firm network termination

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