Viewing both contagion and competition are localized, this study investigates how an organization models its decision of partner abandonment based on tie dissolution and tie continuance experienced by its competitors. On the one hand, an organization may evaluate a current partner's future performance or trustworthiness by examining whether socially proximate others, i.e., its competitors terminate or retain their relationships with that particular partner, thus leading to contagious 'co-movement' of partner abandonment or maintenance. On the other hand, competitors' partner abandonment (maintenance) decisions may increase (decrease) the attractiveness of maintaining the tie with the commonly used partner as a result of avoiding similar elements in the services or products the same part...[ Read more ]

Viewing both contagion and competition are localized, this study investigates how an organization models its decision of partner abandonment based on tie dissolution and tie continuance experienced by its competitors. On the one hand, an organization may evaluate a current partner's future performance or trustworthiness by examining whether socially proximate others, i.e., its competitors terminate or retain their relationships with that particular partner, thus leading to contagious 'co-movement' of partner abandonment or maintenance. On the other hand, competitors' partner abandonment (maintenance) decisions may increase (decrease) the attractiveness of maintaining the tie with the commonly used partner as a result of avoiding similar elements in the services or products the same partner provides, thus causing competitive 'counter-movement' of partner abandonment or maintenance. A dynamic analysis of agency-client relationships in Korean television advertising industry from 1985 through 1996 demonstrates that: 1) competitors' advertising agency abandonment decisions dampen a focal client's propensity to terminate the tie with that agency, lending credence to the competition argument; 2) competitors' agency maintenance decisions seem to exert little impact on a focal client's inclination to abandon its current agency, possibly suggesting a focal client's asymmetric attention allocation to competitors' tie dissolution and tie continuance decisions; and 3) competitors' tie dissolution decisions matter more for a focal client when the advertising agency they draw on in common is specialized in making advertisement for a certain industry. Implications of the findings are discussed.