Will the Friends of Your Foes Today Become Your Friends Tomorrow?

Firms are embedded in networks of partners and rivals, so their operations and ultimate performance are influenced not only by their capabilities and strategies but also by the actions as well as interfirm ties among their direct and indirect partners and rivals. Despite this understanding, we still lack a theory to explain how collaborative relations among firms affect their competitive ties and vice versa. Moreover, under what conditions can firms foresee their future partners and rivals? Using temporal exponential random graph models (TERGM) fitted to a dataset including 4,679,697 dyad-year observations on 9,675 firms in 10 networks during a 13-year period, we identify several conditions under which firms develop collaborative and competitive ties. Together, these conditions guide scholars and managers which indirect partners and rivals today could become direct allies and competitors tomorrow.