Competitive tension is a common problem in inter-firm collaborations, often leading to disappointment and eventual dissolution of the relationship. Yet prior work suggests that partners should be able to foresee and manage competitive tension. Why, then, does competitive tension remain an issue? We suggest that whether partners actually perceive each other as competitors is a key yet understudied aspect of how competition shapes collaboration. We hypothesize that misaligned perceptions where one firm perceives the other as a competitor, but not vice versa, lead to misplaced expectations about partner behavior and collaboration outcome, and thus to expectancy violations and mismanagement of the collaboration. Consequently, collaborations with misaligned perceptions are the least likely to renew. We test our theory by leveraging a longitudinal dataset of collaborations in the US enterprise software industry and find indeed that collaborations where the perceptions are misaligned tend not to be renewed. An examination of structural context illustrates how third parties can moderate the effect of misaligned perceptions. We contribute to the literature on interfirm collaboration and perception in social networks.
