This paper investigates the relationship between managerial exit from advertising agencies and advertisers and the dissolution of dyadic market ties. We examine how the amount and locus (advertiser vs. agency) of managerial exit and the hierarchical level from which exit occurs (executives vs. exchange managers) influence the likelihood that dyadic market ties will dissolve. We theorize that managerial exit disrupts dyadic market ties through its effect on three mechanisms of social capital: investments in relationship-specific assets; formal control over market ties; and the intensity of interaction with exchange partners. We consider how market tie fragility, the financial performance of advertisers, and the duration of market ties condition the effects of managerial exit on market tie dissolution. In short, we theorize about which managerial roles matter more to market tie dissolution, why they matter and when they matter. Using longitudinal data on 232 dyadic ties between advertisers and New York City advertising agencies, we find that the number of executives and exchange managers who exit on both sides of market ties affects tie dissolution. However, these effects are neither symmetrical between exchange partners nor uniform across the hierarchical levels from which exit occurs, and vary with the strength of market ties.
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Academy of Management Journal
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