When an interfirm relationship is ending : the dark side of managerial ties and relationship intimacy

Abstract

Close interfirm relationships have attracted considerable research attention because of their importance to firms’ performance. However, the literature focused on relationships at the formation and maintenance stages; studies of relationship dissolution are relatively scarce. Drawing on social exchange, social capital and relational governance theories, and transaction cost economics, this study investigates how destructive acts affect a firm's intention to exit an exchange relationship and how this intention affects the firm's opportunistic behavior. It also explores the roles of managerial ties (i.e., business ties and political ties) and relationship intimacy in moderating these effects. Analysis of data from 158 distributors in China shows that suppliers’ destructive acts tend to increase distributors’ exit intention. Business ties positively moderate this effect, but political ties do not. Moreover, a distributor's exit intention is positively related to its opportunistic behavior, and relationship intimacy amplifies this effect. Theoretical and managerial implications of these results are discussed.