Collocation, Competition and Alter-broker Tie Persistence

Extant work in the network literature suggests that brokers’ advantages dissipate quickly as alters come to know about brokerage. However, taking the alter’s perspective, we ask whether and under what conditions an alter might choose to continue its relationship with the broker despite having information about the broker and the other alter. We argue that the broker-alter relationship is more likely to persist when they are geographically collocated, for reasons of trust, informal multiplex ties and lowered transaction costs. We further posit that the relationship between alter and broker is less likely to persist if the other alter is a competitor. Finally, we posit that the positive effect of collocation between alter and broker will be negatively moderated in case of transactions with a competing alter. We test our hypotheses using a unique dataset of 2166 transactions between a ship operator (the focal alter) over the period 2011-2015, with 191 brokers and 522 associated alters (charterers) in the bulk shipping industry. Our results broadly support our theorizing. We thereby contribute to the stream of research studying the role of geography and network persistence, and also explore the contingent effects of alter characteristics on the continuation of the structural hole.