Relational Antecedents of Multimarket Contact

Despite the wealth of research on the antecedents of multimarket contact, we know little about how it is shaped by social ties between firms. In the absence of social ties, firms increase their multimarket contact to benefit from tacit collusion. Social ties affect the firms’ ability to engage in explicit collusion, deep learning as well as in giving and receiving support. These considerations affect the firms’ decisions to increase or decrease the extent of their dyadic multimarket contact. We predict that strong ties between firms lead to the expansion of their dyadic multimarket contact while weak ties reduce their dyadic multimarket contact. Examining ties between owner families of Korean business groups over a 40 year period, we find support for these arguments.