Dynamics of Interorganizational Attachments: Auditor-Client Relationships

Abstract

The order of authorship is randomly assigned. Earlier versions of this paper were presented at the TIMS/ORSA meetings, May 1987, Academy of Management, August 1987, and the Law, Economics and Organization Workshop at Yale University. We gratefully acknowledge support from a Faculty Development Grant from Carnegie-Mellon. We have benefited from conversations with Bill Baber, Robert Kaplan, Jody Magliolo, and Jim Noel and appreciate their help in understanding the nature of the audit relationship. We also thank Linda Argote, Alison Davis-Blake, Jack Brittain, John Freeman, Jerry Ross, Jerry Salancik, Mark Seabright, Kathryn Shaw, and three anonymous ASQ reviewers for their comments on a prior draft. We used the techniques of event-history analysis to examine empirically the duration of dyadic interorganizational attachments through a study of auditor-client relationships. These attachments were found to have positive duration dependence. In the early stages of these attachments the rate at which these interorganizational relationships ended increased with time. After this early honeymoon period, the rate at which relationships ended decreased with time, consistent with notions that assets specific to the relationship develop over time. Furthermore, we found that relationships in which the task was more complex tended to be of longer duration.'