Time to Break Up: Social and Instrumental Antecedents of Firm Exits from Exchange Cliques

In a sample of Canadian investment bank cliques from 1952 to 1990, we examined whether social similarity and cohesion reduced exits of members from these cliques; whether complementarity through differentiated roles reduced such exits; and whether inequality in structural holes increased exits. We found that complementarity and inequality were more powerful antecedents of clique exits than similarity and cohesion. Our results suggest that clique stability is a function of three social and instrumental processes: building social attraction to govern exchanges, developing complementarity to accomplish collaborative tasks, and distributing the value created by a clique among its members.