Do ties break from the changing of the guard? Executive mobility and the market ties of firms

We test the proposition that the mobility of top managers in advertisers and advertising agencies weakens client-agency relationships. Social embeddedness theory suggests that if client-agency relationships are embedded in top managers' social relations then the exit of top managers should increase the likelihood of their dissolution. However, previous research on advertising agencies has failed to find empirical support for this prediction, casting doubt on social embeddedness arguments. We investigate executive mobility and market tie dissolutions in samples of advertisers and advertising agencies and find support for social embeddedness but not always in the ways predicted by previous research. For advertisers, the dissolution of market ties depends not on the exit of executives but by how executive vacancies are filled. For advertisers, the exit of incumbents and internal succession weaken market ties, but these effects depend on the size and strategy of advertising agencies. We discuss the implications of these findings for social embeddedness theory and research on market ties and executive mobility.