The Alliances of Spin-Offs Versus Start-Ups: Social Ties in the Genesis of Post-Soviet Alliances

  • Sedaitis J
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This paper links the alliance strategy o f emergent firms to the structural relations in the network of new finn organizers. Data gathered in Russia from 1991 to 1993 on nine post-Soviet com- modity exchange markets demonstrate how the difference in intemal social structure between spin-off and startup exchatiges shapes the strategy of their inter-firm networks and initial per- formance. The way in which managers come together structures their diversity and openness to the outside environment. In tum, the social structure intemal to the ftrtn affects the range and scope of their ties to other organizations. I show how the high range of overlap among the ties between spin-off founders has a more concentrated connection to the outside environment than the exchanges created by more loosely-linked startup founders. The relational costs of the more concentrated ties increases the cost of search, however, it lowers the cost of malfeasance. Thus, the mcKlel suggested proposes that the relative advantage of investing in relational capital is a double-edged sword which poses constraints along with its particular advantages. Finally, the model also brings to question the relative merits of concen- trated alliances supposedly advantageous to new firms in par- ticular by suggesting that conditions of transition and institu- tional instability m ay under-cut the relative advantage of familiarity and specialization found in Westem settings.

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  • Judith Sedaitis

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