Ships and relationships: Competition, geographical proximity, and relations in the shipping industry

Abstract Geographical and industry proximity are positively correlated with the likelihood of relationship formation. However, studies of this interrelationship are scarce, have yielded mixed results, and have failed to unveil the mechanisms behind the effects of different types of proximity and their links with tie formation. This paper investigates the roles of geographical proximity and industry proximity with a focus on competitors. It examines the interplay of these two types of proximity in the context of relationships in the shipping industry. Based on a quantitative case study, I find that geographical proximity is not a prerequisite for relationship formation. On average, shipbrokers are more likely to enter into new deals with counterparties external to the industry than with shipping parties or competitors. However, geographical proximity positively moderates the likelihood of dealing with competitors. I explain this on the basis of coopetition, simultaneous competition, and cooperation among firms within local clusters.