Embeddedness across Governance Modes: Is There a Link between Pre-Merger Alliances and Divestitures?

The current study explores whether and how an organization’s different types of governance modes—alliances, mergers, and divestitures—may be intertwined over time. As such, we consider whether boundary decisions may be socially embedded not just within, but across different governance modes. In particular, we focus the analysis on a specific three-stage temporal sequence, which represents a common trajectory of consecutive governance modes: (1) alliance, followed by (2) merger, followed by (3) divestiture. Based on data from the Securities Data Company (SDC) Platinum database and Compustat database, our survival analysis results indicate that pre-merger alliances are significantly associated with divestiture likelihood: mergers between organizations that had been involved in an alliance before entering into the merger are found less likely to be divested. The paper’s results underline the merits of simultaneously considering multiple types of ties when analyzing issues related to organizational embeddedne...