Loyal To Whom? The Effect of Relational Embeddedness and Managers' Mobility On Market Tie Dissolution

Loyal to Whom?
The
Effect of Relational
Embeddedness and
Managers Mobility on
Market Tie Dissolution*
Administrative Science Quarterly

2016, Vol. 61(2)254290
The Author(s) 2015
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DOI: 10.1177/0001839215619198
asq.sagepub.com
Y. Sekou Bermiss1 and Bruce E. Greenbaum2
Abstract
In this study we use a social embeddedness perspective to investigate the
paradoxical role that individual-level embedded relationships have on the dissolution of interorganizational ties. Prior studies have found that managers who
form close interpersonal relationships with clients can stabilize market ties, but
these relationships can also be a source of increased market tie dissolution
in the event of an exchange managers departure from the firm. Using data
on all state-level lobbyists and clients in the Texas lobbying industry from
2001 to 2009, we confirm that a client is more likely to remain with a firm
than to follow a departing manager to a new firm, but the depth, focus, and
shared ownership of a managers client relationship moderate the impact of
his or her mobility on market tie dissolution. We find that the tenure of the
relationship with a manager, the number of clients on a managers roster,
the level of attention received from a manager, and the presence of an additional manager relationship at the same firm all influence where a client
places its business when a manager departs. Our results suggest that
embeddedness explanations strongly predict interpersonal market tie dissolution when managers are stationary but lose their predictive power when
managers move to new firms. We propose that an alternative logic of interorganizational market ties, based on power and resource dependence, may be
at play in such situations.
Keywords: embeddedness, mobility, client relationships, lobbying industry
The emergence of the knowledge economy has changed the relationship

between firms and their employees. As firms have grown more reliant on
their human assets (Coff, 1997), we have seen radical shifts in employment
* This article has been corrected since it was published in OnlineFirst. The earlier version is available
at http://asq.sagepub.com/content/early/2015/11/19/0001839215619198.abstract.
1
University of Texas at Austin
2
California Polytechnic State University
Downloaded from asq.sagepub.com by guest on May 24, 2016
Bermiss and Greenbaum
255
practices (Bidwell et al., 2013) and employment stability (Powell and

Snellman, 2004). As a result, interorganizational market exchange has
become increasingly affected by the mobility of personnel (Wade, Porac, and
Yang, 1999). A firm engaged in an ongoing market exchange with a partner
firm often must decide whether to follow the primary contact who has left to
join a new firm or to keep its business with the original firm (Broschak and
Block, 2014). Research on partner selection for market exchange has been
strongly influenced by the concept of embeddedness, based on the premise
that economic exchange is shaped and influenced by the network of social
relationships in the market (Granovetter, 1985). One of the key factors influencing the creation, maintenance, and dissolution of interorganizational relationships is the strength of the personal ties that develop between exchange
managers from each organization. The valuable relationship-specific assets
that develop over time between exchange partner firms are largely managed
by individuals in each firm (Seabright, Levinthal, and Fichman, 1992). These
individual-level embedded relationships are valuable because they attenuate
many of the factors that lead to market tie dissolution. Embedded, as
opposed to arms-length, relationships between exchange managers engender trust and reduce the opportunistic behaviors associated with competition
that can negatively affect market ties (Uzzi, 1997). Embedded interorganizational relationships also last longer than arms-length ties because both
parties work together to overcome transactional issues that arise, such
as shifting resource needs (Seabright, Levinthal, and Fichman, 1992; Uzzi,
1997).
Though the benefits of interorganizational embedded relationships are well
established, embedded ties at the individual level can also present challenges for a firm, particularly when individuals move between firms.
Employees with strong embedded ties to clients (i.e., exchange managers)
hold a measure of control over those relationships, which are vital for firms
success, and wield significant bargaining power in their organizations, which
they can leverage to their own personal benefit and at the expense of the
firms profitability (Coff, 1999). The most significant bargaining threat available to exchange managers is to take their accumulated human and social
capital to a competing firm. When such an exit occurs, clients working with
that exchange manager must often choose between continuing their relationship with the exchange manager at the new firm or ending their relationship
with the exchange manager and keeping their account at the firm he or she
left. Embeddedness research has separate arguments for each of these outcomes, observing how interorganizational attachment, defined as the inertial or binding force between exchange partners that leads to the
maintenance of an existing relationship (Seabright, Levinthal, and Fichman,
1992: 126), occurs at both the individual level (Broschak, 2004) and the firm
level (Gulati and Sytch, 2007). Though extant research assumes that firmlevel attachment is the stronger predictor of exchange tie dissolution, it does
not address the conditions under which clients are more likely to remain with
individual exchange managers who change firms and thus dissolve their original firm-level ties.
This paper addresses this specific gap in the embeddedness literature
by applying an individualist perspective of relational embeddedness
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Administrative Science Quarterly 61 (2016)
(Granovetter, 1973) to the phenomenon of exchange managers mobility and

market tie dissolution. We analyze how the depth, prioritization, and shared
ownership of an exchange managers relationship with a client influence the
dissolution of market ties when employees move. We study client relationships in the legislative lobbying industry, where firms rely heavily on social
capital for competitive advantage (Pennings, Lee, and van Witteloostuijn,
1998), making the industry an ideal context in which to investigate market
relationships at both the individual and firm level and the effects of managers mobility on tie dissolution.
RELATIONAL EMBEDDEDNESS AND MANAGERS MOBILITY
According to the embeddedness view of market exchange, when strong ties
exist between two parties, these parties will likely continue to transact and do
so in a manner that is mutually beneficial (Macaulay, 1963). In contrast to structural embeddedness, which is defined as the configuration of ties between the
networks of two focal actors, relational embeddedness refers to the nature
of the interpersonal relationship that develops between two focal actors
because of ongoing interactions (Nahapiet and Ghoshal, 1998). Originally,
relational embeddedness was specific to the individual level and measured
by the amount of time, emotional intensity, intimacy, and reciprocity that
characterizes an interpersonal relationship (Granovetter, 1973).
Subsequently, relational embeddedness research has focused on transactional relationships between firms (Dacin, Ventresca, and Beal, 1999) and
specifically on how market forces shape the continuity of firms exchange
relationships (Baker, Faulkner, and Fisher, 1998). The dominant view from
relational embeddedness research suggests that firms engaged in repeated
market exchange over time will make relationship-specific investments that
drive efficient interorganizational coordination (Rowley, Behrens, and
Krackhardt, 2000). These investments can be as simple as co-locating offices
with exchange partners or as complex as developing standardized policies
and procedures to govern interorganizational communication. Because
relationship-specific investments are idiosyncratic to a specific exchange and
difficult to imitate, they often become a source of competitive advantage for
both exchange partners (Dyer and Singh, 1998).
In the context of market exchange, relational embeddedness occurs at both
the firm and individual levels. The mechanisms of embeddedness are assumed
to operate similarly at different units of analysis (Dacin, Ventresca, and Beal,
1999: 338), so we define them similarly for the purposes of our comparative
investigation. We define firm-level embeddedness as the process by which
firm-level social relations shape economic actions. At the firm level of analysis,
relationships become strongly embedded through repeated firm-level interactions, such as strategic alliances, over time (Gulati, 1995). Embeddedness at
the firm level is also the result of increased resource interdependence between
exchange partners, which reduces the likelihood of opportunistic behavior
(Provan, 1993; Gulati and Sytch, 2007). Though firm-level factors are important,
interorganizational relationships are in practice managed by employees and
shaped by the actions and symbolic interpretation of individuals (Van de Ven
and Walker, 1984: 604). To account for this facet of interorganizational
257
relationships, we define embeddedness at the individual level as the process

by which individual-level social relations shape economic actions. The knowledge exchange and development of trust that become the stabilizing forces of
interorganizational relationships are partially driven by the interactions at the
individual level (Uzzi, 1997; Hite, 2003). Specifically, individual-level relationships between exchange managers are the primary conduits of information
exchange between firms. Uzzi and Lancaster (2003), for example, highlighted
how the relationships that bank loan managers develop with their customers
are the primary way in which the bank gains important market knowledge, a
critical input for firm-level learning processes.
Despite the existence of embedded relationships, interorganizational
exchange relationships are continually at risk of dissolving. The hazard rate of
dissolution for interorganizational exchange relationships is low at the onset
of the relationship and increases for a short time before declining slowly
thereafter (Fichman and Levinthal, 1991). Dissolution is driven by a partner
selection mismatch, whereby one exchange partner is unable to satisfy the
resource requirements of the other (Seabright, Levinthal, and Fichman,
1992). In the lobbying context, for example, clients change their lobbyist representation if they believe that their desired legislative goals are not being
pursued or that their current representatives will not commit the resources
necessary to achieve those goals. In 2010, one of the largest lobbying firms
in Washington, DC lost its highest-paying account to a rival firm because the
client believed it was not getting the level of service and attention commensurate with its costly retainer fee (Jerome, 2010). Exchange managers are
central to the durability of interorganizational exchange ties, as their primary
role is to interpret the needs and expectations of exchange partners on
behalf of their employers. If this task is not performed adequately, the performance of the exchange will suffer, leading to the eventual dissolution of the
relationship.
Just as individual-level embeddedness helps to stabilize interorganizational
market ties, managers mobility can have the inverse effect and create a destabilizing force for market ties (Broschak, 2004). Managers mobility is driven by
the prospect of an improved opportunity at another firm that may, for example,
provide increased recognition from top management (Klepper and Thompson,
2010). When exchange managers move between firms in the same industry,
they take with them critical human and social capital such as knowledge about
the firms routines and procedures (Phillips, 2002; Bermiss and Murmann,
2015) and the clients trust and goodwill (Macaulay, 1963; Uzzi, 1997). As a
result, a managers new firm becomes similar to his or her previous firm in
terms of internal processes and strategic decision making (Boeker, 1997;
Kraatz and Moore, 2002). It is not surprising that departing managers attempt
(and prefer) to take existing clients with them and that the firms they leave
attempt to keep their existing clients from moving.
When an exchange manager moves to a rival firm, each of his or her clients
can select from one of four choices. First, the client may choose to maintain
the relationship with the exchange manager at the rival firm and dissolve its
relationship with the focal firm. Second, the client may choose to maintain the
relationship with the focal firm, dissolving its relationship with the exchange
manager and switching to a new exchange manager at the focal firm. Third, a
258
client may decide to maintain its relationships with both the exchange manager
at the rival firm and with the focal firm (and a new exchange manager). Lastly,
a client may decide to dissolve its relationship with both the exchange manager
(at the rival firm) and the focal firm. The first two outcomes are examined the
most frequently in previous mobility research and are the most salient outcomes considered by both firms immediately following an exchange managers
departure (Bendapudi and Leone, 2002).
Employee mobility is particularly hazardous to firms in knowledge-intensive
industries, in which the most critical resources are largely embedded within
employees minds (Coff, 1997). As such, firms actively attempt to restrict the
market relationships their former employees can engage in through contractual
means such as non-compete agreements (Marx, 2011). Additionally, managers
mobility events can reduce the inertial forces that maintain the continuity of
market ties over time. The departure of an exchange manager from a seller
firm, for example, brings critical attention to the market tie and allows competing firms an opportunity to influence the buying firms future purchasing decisions (Carnahan and Somaya, 2013). Firms vehemently fight to retain their
clients, making it rare for two rival firms to share a client after an exchange
manager moves. As a result, much of the previous work on employee mobility
and interorganizational relationships has focused on the factors that determine
when an exchange managers departure affects a client firms decision to dissolve its relationship with a service firm (Seabright, Levinthal, and Fichman,
1992; Broschak, 2004; Broschak and Block, 2014; Rogan, 2014). We follow
prior research and similarly focus on the likelihood of this outcome as compared with the most common alternative, in which a client firm follows a
departing exchange manager to a rival firm, which allows us to build on current
theorizing about the effects of mobility on market exchange relationships.
Despite the research on the effects of mobility on market ties, the dominant
perspective in embeddedness research suggests that the firm itself, rather
than any specific individual, is the repository of critical relationship-specific
investments (Seabright, Levinthal, and Fichman, 1992). Firms often employ
strategies that purposefully aim to reduce clients relationship attachments at
the individual level, such as training and knowledge transfer procedures that
minimize the variance in quality among exchange managers (Lovett, Harrison,
and Virick, 1997), contractual constraints on exchange managers if they leave
the firm (Marx, 2011), and the use of client teams (Rose and Hinings, 1999). In
the financial advisory industry, for example, as money managers mobility
becomes increasingly common, firms have adopted client management systems that function to make exchange managers more interchangeable and
keep the clients attachment at the firm level. As the founder of a small New
York City investment firm explained, When advisors join us, we say we want
all of you to stay for as long as you want to stay, but what youre going to be
doing is less of a relationship-based model and more of a process-based model
so someone can come in and take over when youre not here (Sullivan, 2012).
Firms also use defensive maneuvers such as non-compete agreements to prevent the loss of vital knowledge to rival firms (Somaya and Williamson, 2008).
For example, a technical professional who signs a non-compete agreement is
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more likely to leave his or her field than risk a lawsuit by working with a competing firm (Marx, Strumsky, and Fleming, 2009).
Interorganizational attachments may also outweigh interpersonal attachments in market exchanges because of the central role of interorganizational
trust in market exchange. Trust serves as a primary governance structure in
embedded ties (Uzzi, 1997), and in the context of market exchange, interorganizational trust emerges as the dominant influence on exchange processes and
outcomes (Zaheer, McEvily, and Perrone, 1998a: 156). Though interpersonal
trust is considered important for market exchange, research suggests it is
directed and facilitated by the organizational routines developed between
exchange partners, making interorganizational trust more likely than interpersonal trust to reduce conflict and improve outcomes between exchange partners
(Zaheer, McEvily, and Perrone, 1998b; Lui, Ngo, and Hon, 2006). In congruence
with prior research on interorganizational relationships, we suggest that market
tie attachment likely occurs more prominently at the organizational level than at
the individual level. Thus, when a manager leaves a firm, clients are more likely
to dissolve their relationship with the manager and remain with the firm. Thus
we hypothesize:
Hypothesis 1: When an exchange manager leaves one firm for a rival firm, his or her
clients are more likely to remain at the previous firm than follow the exchange
manager to the new firm, increasing the likelihood of the manager losing those
clients.
Individual-level Attachment
Recent work in both organizational theory and strategy has sought to incorporate individuals more prominently in the analysis of firms capabilities (Felin
et al., 2012) and market exchange (Barden and Mitchell, 2007). This stream of
research, referred to as the strategic micro-foundations approach, suggests that
individuals in an organization, rather than collective structures like organizational
routines, may serve as the primary locus of knowledge, and it attempts to disentangle the true source of knowledge and value creation within the firm
(Rothaermel and Hess, 2007). This approach specifically emphasizes the importance of the interorganizational mobility of human capital (Campbell et al., 2012),
assuming that who turns over or who joins the organization has a significant
impact on how the organization performs (Felin and Hesterly, 2007: 213).
An exchange manager, as an external representation of the firm, plays a central role in interorganizational market ties by embodying the resources, knowledge, and competency of the firm to exchange partners. He or she also serves
as a communications hub, gathering and relaying information between the focal
firm and exchange partner (Uzzi and Lancaster, 2003). In knowledge-intensive
industries, exchange managers are particularly important because the services
being transacted are often customized, making comparative valuation difficult.
As a result, a clients satisfaction is largely based on its interactions with the
service firm and is directly influenced by the exchange manager. Clients are
also acutely aware of which individuals in an organization have the knowledge
that is critical for the firm to deliver quality services. A qualitative study of the
design services industry found that clients strongly prefer to interact with the
individuals at the design firm who perform the work they are purchasing (in this
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case creative directors), as well as individuals who understand the clients strategic vision, such as account directors (Vafeas, 2011). Findings also revealed
that clients bypass individuals whom they believe do not have important knowledge related to their purchased services, the turnover of whom does not influence the interorganizational market tie.
Research on managers mobility has taken some initial steps toward exploring the role of individual-level embeddedness and how it affects the duration
and success of firms relationships. Several longitudinal mobility studies have
provided evidence that the departure of a firms exchange manager leads to
declines in the firms performance and increased chances of its failure
(Pennings, Lee, and van Witteloostuijn, 1998; Phillips, 2002; Wezel, Cattani,
and Pennings, 2006; Somaya, Williamson, and Lorinkova, 2008). These negative outcomes, however, are attenuated when the perspectives of clients and
exchange managers have a higher likelihood of being misaligned. In the advertising industry, Baker and colleagues (1998) found that dyadic market ties were
less likely to dissolve following the departure of a top manager. Similarly,
Broschak (2004) found that advertising agencies lose fewer market ties after
the departure of their creative managers as compared with the departure of
other types of exchange managers. Though losing a creative manager potentially weakens an advertiseragency market tie, because creative managers
often disagree with the perspectives of their clients, the loss of a creative manager can soothe conflict and allow new creative ideas into the exchange relationship, which may actually strengthen the market tie (Broschak, 2004: 634).
We accept as a guiding assumption that interorganizational market ties are,
on average, more closely attached at the firm level than at the individual level.
Yet several characteristics of an exchange managers relationship with a client
could moderate the strength of individual-level attachment and influence
whether, upon the movement of that exchange manager to a rival firm, a client
will choose to end its relationship with that exchange manager and remain with
the original firm or to follow the exchange manager to his or her new firm.
These include the depth and focus of the relationship and whether the
exchange manager shares the relationship with any other manager in the firm.
Relationship Depth
One of the key measures of an embedded relationship is the depth of the relationship, or the amount of time that each party spends engaged in actions specific to the connection (Granovetter, 1973). The longer a relationship lasts
between two firms, the more relationship-specific investments are made
between the two parties (Seabright, Levinthal, and Fichman, 1992; Gulati,
1995), creating an embeddedness logic of exchange such that the relationship is governed by trust and reciprocity as opposed to contractual obligation
(Uzzi, 1997). Parties engaged in trusted embedded relationships are more likely
to share private knowledge with one another, increasing the opportunity for
mutually beneficial innovations and cost savings (Uzzi and Lancaster, 2004).
Whereas arms-length market ties are governed primarily by price mechanisms,
firms engaged in embedded market ties strive to maintain the continuity of the
relationship by providing beneficial terms to the exchange partner party, even if
doing so means risking financial losses. In the film industry, for example, distributors demonstrate a preference for contracting and financing films that
261
involve personnel (i.e., actors, directors) with whom they have worked in the
past (Sorenson and Waguespack, 2006). Distributors continue to support these
films even if they perform worse at the box office than films made by personnel with whom they have had no previous exchange relationship. This example
suggests that attachment developed within embedded market ties may substantively exist at the individual level.
Though relationship depth stabilizes interorganizational ties, the departure of
an exchange manager who has established a deep relationship with a client
may significantly increase the likelihood of firm-level market tie dissolution
(Somaya, Williamson, and Lorinkova, 2008) because the loss of an exchange
manager makes the relationship between the client and the firm more purely
transactional (Broschak, 2004: 613) and more sensitive to factors influencing
the costs of exchange. Moreover, under certain conditions clients will follow
exchange managers from firm to firm, dissolving their firm-level market relationships while maintaining their interpersonal market relationships. Firms that
are able to attract exchange managers from competing firms under these conditions are also more likely to attract business from the clients of the competing firm (Broschak and Niehans, 2006; Somaya, Williamson, and Lorinkova,
2008). Thus we hypothesize:
Hypothesis 2: The likelihood of an exchange manager who exits a firm losing a client
decreases the longer he or she has individually serviced that client.
Professional service firms commit significant resources to acquiring new clients. An increased client portfolio is correlated with a firms growth and is
widely considered to be a strong signal of a firms value. As a firms client portfolio increases in size, however, the risk of losing any individual client relationship increases (Broschak, 2004), in part because a larger client load decreases
the time and other resources available to devote to building client relationships.
A larger client load can also reduce the depth and subsequent level of attachment of the firms existing market ties with clients. This dynamic is likely to
operate even more punitively at the interpersonal level, at which balancing client time is a zero-sum game.
For an individual exchange manager, time is a critical constraining resource:
an hour spent with one client is an hour that cannot be spent with another.
Exchange managers with relatively large client loads are more likely to struggle
with dedicating the desired amount of time to meet each clients specific
needs. Compared with exchange managers with only a few clients, those with
large client loads have less time to communicate with clients and work on their
critical issues, both of which are critical steps in developing relationship depth
and interpersonal trust (Valley, Moag, and Bazerman, 1998). The inability to
dedicate the necessary or desired time to clients concerns also means that an
exchange manager must forgo opportunities to engage in joint problem solving
with clients, another activity that provides relationship depth and exemplifies
an embedded relationship (Uzzi, 1996). In many professional service industries,
relationship managers are asked to carry a large number of accounts, which
affects their ability to be at their clients disposal. In Tyler and Stanleys (2001:
251) investigation of UK banking relationships, one banking client said that . . .
the will is there by the relationship manager, but the ability through sheer time
pressures is not. Though a firm can hire additional exchange managers to
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address an increasing client load, an individual exchange manager in this situation cannot easily expand his or her resource base. Therefore a manager with a
high client load is less likely to have established deeply embedded interpersonal attachments, and if he or she moves to a rival firm, his or her clients are
more likely to dissolve the tie with the manager and remain with the firm the
manager left. Thus we hypothesize:
increases as the exchange managers client load increases.
Relationship Focus
Firms are more likely to focus their valuable resources on embedded exchange
partners than on arms-length interorganizational market ties (Sorenson and
Waguespack, 2006), as evidenced by a firms distribution of its business
among its exchange partners. At any given time, a firm that carries a mix of
both embedded and arms-length interorganizational ties is likely to give a large
percentage of its business to its embedded exchange partners while spreading
the smaller amounts of its remaining business among its arms-length partners
(Uzzi, 1996). For example, in the early 1980s, General Motors distributed its
investment banking business among 27 banks but placed 67 percent of its
business with three banks and smaller amounts in the remaining 24 (Baker,
1990). It is unclear, however, whether the concentration of business operates
similarly at the interpersonal level.
One of the most valued resources in a firm is employees time, which is particularly true for exchange managers in professional services firms, as evidenced by the central importance of hourly billing rates (Uzzi and Lancaster,
2004). Given the finite work time available to exchange managers, they must
prioritize the time and effort spent working on clients issues (Briscoe, 2007),
choosing which clients tasks to spend the most time on.1
One of the attributes that determines the embeddedness of an exchange
relationship is the intensity of effort and energy that an exchange partner is willing to expend on behalf of the other (Hite, 2003: 28). Exchange partners that
have developed a strong attachment will often go out of their way to help each
other, such as spending significant time on tasks outside the letter of the contract to solve coordination issues that arise (Uzzi, 1997). The time and effort
spent on joint problem-solving activities with specific exchange partners come
at the cost of spending that time with other exchange partners. In his study of
the New York City garment industry, Uzzi (1996) provided qualitative examples
of how firm owners gave preferential treatment and attention to partners with
whom they had developed close interpersonal ties. Firm owners took time to
1
We recognize a correlation between relationship focus and managerial attention, but we believe
there is a conceptual difference between relationship prioritization and the concept of attention. As
defined by Ocasio (1997), managerial attention is a multi-faceted construct that interrelates
organizational-level, environmental, and individual-level elements to guide firms behaviors from the
top down. Our theory asserts that individual exchange managers exert significant control over the
allocation of their time and resources when managing specific exchange relationships. This bottomup approach aligns with our own qualitative investigations of the lobbying industry, as well as previous research on knowledge-intensive industries in which clients needs are largely idiosyncratic and
unlikely to be governable by top-down attention routines and procedures.
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visit with partners personally, engaged in fine-grained information transfer, and

sent their partners work to help them survive in the short run, even though
the same work could have been sent to another shop that offered immediate
volume discounts (Uzzi, 1996: 682).
Because of differences in embeddedness in relationships, exchange managers attention is unevenly distributed. Some high-focus exchange relationships
receive an inordinately large share of an exchange managers time, while other
low-focus relationships receive an inordinately small share of time. An
exchange managers low-focus client relationships are more likely to operate
with a market logic of exchange in which both parties regularly evaluate alternative exchange partners and are more likely to switch partners if there is an
opportunity for economic gain (Lazzarini, Miller, and Zenger, 2008). The priority
that exchange managers give to their high-focus client relationships, in contrast, should increase the strength of the interpersonal attachment that develops, which may come to outweigh the firm-level attachment. The relationship
between a client and an exchange manager develops based on repeated interpersonal exchanges that cannot be easily replaced by firm-level routines and
procedures (Seabright, Levinthal, and Fichman, 1992). As such, we suggest
that individual-level attachment with an exchange manager is more likely to
develop with a client whose account receives a comparably higher amount of
that managers focus than a client whose account receives less focus. Thus
we propose:
decreases when that client receives a higher amount of the exchange managers
focus prior to departure.
Relationship Sharing
Interorganizational coordination through exchange is often driven by firms perceived need for external resources (Van de Ven and Walker, 1984), and one of
the primary drivers of interorganizational tie dissolution is a change in resource
fit, when either partys material situation changes significantly enough that the
transaction may no longer be fruitful (Van de Ven, 1976). The resource fit
effect, however, is moderated by embedded interpersonal relationships
between exchange managers. The more embedded the relationship between
two firms at the individual level, the less resource fit will predict tie dissolution
(Seabright, Levinthal, and Fichman, 1992). Though interpersonal relationship
strength may decrease the chances of dissolution, addressing clients needs is
a more direct way to manage the issue of resource fit. One way that firms
address this issue is to build multiple connections to their exchange partners
and thus transform a singular tie into a multiplex tie (Kenis and Knoke, 2002).
Multiplex ties are characterized by increased levels of complex knowledge
sharing and learning activities (Beckman and Haunschild, 2002), which often
accrue benefits to each exchange partner and stabilize the interorganizational
relationship. Within the advertising industry, for example, agencies client
teams are composed of employees specializing in account services, creative
services, production, and media who are tasked with managing different components of the client issues that arise (Miracle, 1977). In fact, advertising firms
that develop non-competing multiplex ties to clients are less likely to lose those
clients in the event of a managers departure (Rogan, 2014).
264
One of the primary reasons that a client may follow an individual manager to
a different firm is that the client believes the critical value of service it received
may be embedded within the individual rather than within the overall firm (Felin
and Hesterly, 2007). The client must decide whether another individual at the
firm can provide the same level of service as it received from the departing individual (Bendapudi and Leone, 2002). This decision is influenced by the embeddedness of the clients relationship with the departing manager, which will be
particularly strong if the client has not interacted with any other individuals at
the firm, making the exchange manager the sole representation of the firm to
the client. In contrast, the formation of multiplex ties encourages knowledge
sharing within the firm and reduces the importance of the individual exchange
manager (Vafeas, 2011). A client with a team working on its account is more
likely to develop embedded ties with multiple individuals at the firm rather than
developing deep relationships with any single manager, reducing the likelihood
that the client will dissolve its relationship with the firm in the event that its
exchange manager exits. Accordingly, we hypothesize:
increases if he or she shares that client relationship with another exchange manager at the departed firm.
METHOD
Context: Texas State Lobbying Industry
The context for our analysis is the legislative lobbying industry in Texas.
Lobbying is a client service, knowledge-based profession, with lobbyists designated by an interest group to represent it to government for the purpose of
influencing public policy in the groups favor (Rosenthal, 1993: 1920).
Additionally, the lobbying industry is one of several prominent professional services markets that combined constitute a significant sector of the economy,
whether measured by size, numbers, or influence (Greenwood et al., 2005:
661). Though lobbyists work on behalf of their clients, they also serve as an
information conduit between the client and the legislature and serve as a critical resource for both parties. Many lobbyists are also practicing lawyers, but
though an attorney is often advocating for a client in a specific case, a lobbyist
may advocate for a client on an ongoing basis for a variety of issues over a
number of years.
The legislative lobbying profession has grown in size and specialization in
the past two decades. We conducted a series of interviews with state lobbyists to gain a more comprehensive understanding of the industry. We also
interviewed the president of a state-level lobbying professional association that,
similar to the American League of Lobbyists, exists to enhance the development of the occupation of lobbying as a profession. The Lobbying Disclosure
Act of 1995 defines a lobbyist as an individual who spends at least 20 percent
of his or her time on lobbying activities, but what we found is that most lobbyists spend a majority of their time on lobbying or lobbying-related activities.
One state lobbyist in Texas explained why: Most large states have moved to
[having legislative sessions] every year. Even in Texas where its biennial, you
cant introduce a bill and get it passed in the same session. Legislative committees meet in between sessions to produce reports in the even years. In our
265
sample, a majority of lobbyists work full time in that domain, either in a full-time
lobbying firm or as part of the government relations area of a major law firm.
This arrangement allows them the flexibility to work even when the legislative
body is not in session or, as one lobbyist put it, to make the work less
seasonal.
Additionally, we learned that though lobbyists come in many forms, the
industry can be best understood by examining contract lobbyists, the hired
guns who are most publicly associated with the lobbying industry. They typically do not widely advertise but instead depend on reputation and referrals to
attract new clients. Many contract lobbyists come to the profession from
careers as either legislators or legislative staffers. Former legislators are considered the most influential type of lobbyist because they have strong preexisting
relationships with legislators, which is an inherent advantage that can greatly
benefit the contract lobbyists clients (Baumgartner et al., 2009).
One challenge for the majority of contract lobbyists is the need to manage
time, their most precious, finite resource. Not only do lobbyists perform direct
lobbying by interacting with legislators and their staff, but they exert significant
effort on indirect lobbying, including preparing for those interactions and supporting their clients legislative directives in other ways (Rosenthal, 1993).
Lobbyists spend time building coalitions of various groups to support particular
issues they are advocating for on behalf of their clients, generating support
through grassroots efforts at the community level and spreading their clients
messages through advertising and public relations efforts. Each of these efforts
claims a portion of lobbyists time and invariably forces them to prioritize their
efforts for various clients.
Lobbyists also need to be cognizant of potential conflicts among their clients
or potential clients. Successful contract lobbyists will be in demand and can
often attract prospective clients on opposite sides of an issue. To avoid conflicts of interest, contract lobbyists are diligent in screening current and potential clients. Even among their existing clients, not every clients interests can
be represented equally, and certainly not in the same [legislative] session
(Rosenthal, 1993: 57).
The Texas lobbying industry, in particular, offers an ideal context in which to
test our hypotheses on exchange managers client relationships in professional
service firms. Texas lobbying firms are characterized by the central elements
that define professional service firms: high knowledge intensity, low capital
intensity, and a professionalized workforce (Von Nordenflycht, 2010). Placing
our study in this context allows us to build on previous work on human capital
mobility in professional service firms in advertising (Baker, Faulkner, and Fisher,
1998; Broschak, 2004; Rogan, 2014), accounting (Pennings, Lee, and van
Witteloostuijn, 1998), investment banking (Groysberg, Lee, and Nanda, 2008),
and the legal sector (Somaya, Williamson, and Lorinkova, 2008; Campbell et al.,
2012). Research in these contexts has suggested that a significant proportion of
the value provided by professional service firms to their clients is embedded in
the skills and social relationships of the individual professionals in the firms. But
firms in these industries do not publicly disclose granular exchange information
at the individual level (i.e., individual billing totals), which is necessary to test our
theoretical propositions. For this reason, we chose the legislative lobbying industry, which, after the 1995 Lobbyist Disclosure Act, requires lobbyists to disclose
information on the nature of their individual interactions with clients. We chose
266
to focus on the state level because reporting processes tend to be more transparent than at the federal level (de Figueiredo and Tiller, 2001: 97). Every state
requires individuals who perform a significant amount of lobbying activity to register with a central governing body for purposes of transparency and ethics governance. Only four statesMaine, Nebraska, Texas, and Washingtonrequire
state lobbyists to report the compensation they receive for their lobbying
efforts. Of these states, Texas has the largest and most comprehensive state
legislature in terms of the topical areas of legislation, industry, and demography,
and thus it has the most representative state lobbying industry in the U.S.
Despite these differences, our qualitative research of the industry provided no
evidence that lobbying activities and industry dynamics in Texas are substantively different than in other states or at the federal level.
The Texas lobbying industry is competitive and growing. Total spending on
lobbying services has grown from approximately $150 million in 1995 (the earliest year that lobbying spending figures are publicly available) to $345 million in
2011 (Wheat, 2012), with one firm, AT&T, estimated to have spent up to $9.1
million on lobbying fees in the state for that year alone (Chang and Stiles,
2013). Aside from the personal influence that lobbyists wield, they also spend
millions of dollars annually providing food, entertainment, and travel to legislators, staffers, and other government employees in efforts to influence their perspectives on legislation on behalf of their clients (Chang and Stiles, 2013).
A recent mobility event between two prominent lobbying firms in Texas,
HillCo and Focused Advocacy, provided a rare public glimpse into how a client
weighs its relationship to an individual lobbyist against its relationship to the
lobbying firm. Two lobbyists, Brandon Aghamalian and Snapper Carr, left HillCo
and joined Focused Advocacy in 2010, bringing a number of clients with them
to their new firm. Most of these clients were cities and municipalities that
lobby the Texas legislature for transportation funding. HillCo sued the two lobbyists, claiming that they engaged in a scheme to denude HillCo of clients and
confidential information for their own personal gain and for that of their future
employer.2 One of the clients in question, the City of Irving, went on record
regarding its decision to leave its longtime lobbying firm, HillCo, to go with
Aghamalian and Carr when they left to join Focused Advocacy because they
had been the citys main contacts at HillCo (Hu and Smith, 2010). Another large
client, the city of Fort Worth, did not immediately decide to move its business
to Focused Advocacy but reopened its bidding process for lobbying services
after Aghamalian and Carrs departure from HillCo. The two departing lobbyists
counted the city of Fort Worth among their largest clients while the two were
working at HillCo (Hu and Smith, 2010). Other lobbyists did not become publicly involved in the dispute, saying that nobody wants to back the wrong team
in a business where personal alliances and discretion are everything (Smith,
2010). Ultimately, discretion may have prevailed, as HillCo dropped its lawsuit a
month after filing its initial complaint (Hu and Smith, 2010). The HillCoFocused
Advocacy example demonstrates that lobbying clients are aware of their relational attachments at both the individual and organizational levels and that the
nature of these attachments influences their decisions about ending the relationship when exchange managers change firms.
2
HillCo Partners (2010) Original Petition and Application for Temporary Injunction against Snapper
Carr, Brandon Aghamalian, and Focused Advocacy, LLC.
267
Sample
The Texas lobbying industry is governed by the Texas Ethics Commission
(TEC) and operates with fairly specific and regular reporting requirements for
lobbyists. In accordance with government code, individuals must register and
file activity reports with the TEC if their total compensation related to lobbying
activities is over $1,000 in a calendar quarter.3 We collected data on lobbyists
activities from registration and activity reports filed with the TEC from 1998
through 2009. Lobbying activities are conducted by a variety of parties, including dedicated lobbying firms, lobbying departments of law firms, lobbying
departments of corporations, special interest organizations, advocacy groups
and/or charities, and sole practitioners. Each annual registration form details the
lobbyists activities on behalf of each client and includes information such as
the lobbyists name and address; the general subject matters covered by the
lobbyist (i.e., animal rights, law enforcement, oil and gas, etc.); and information
on each client, such as its name, address, and level of compensation for the
year (segmented into 15 categories, ranging from $ 0 to $500,000 + ). The registration data also include the firm where the lobbyist is employed. We used
this field to code firm-level results, as well as to code relationship-sharing
details for each lobbyist. Because TEC reporting requirements prior to 2001
generated less reliable data for the years 1998, 1999, and 2000, we omitted
these records from the final dataset. The final dataset includes 44,982 lobbyistclient-year observations from the years 2001 to 2009, incorporating 854 lobbyists, 156 firms, and 5,739 clients.
Although the lobbying industry represents a context with strong individuallevel client attachment, we also considered the firm-level attributes (i.e., size,
reputation) of the lobbying/law firms in our sample as important factors clients
consider in choosing their representation. Our qualitative data, including interviews with practicing lobbyists in Texas, suggested that attachment exists at
both the individual and firm levels. Lobbyists we interviewed stated that clients
often seek out a specific lobbyist to hire, with a secondary concern about the
associated lobbying firm. Our interviewees also noted, however, that the representative lobbying firm is pertinent to clients because they need to be aware of
any potential conflicts of interest at the firm level before contracting with a specific lobbyist. Additionally, as many lobbyists are members of a larger law firm,
their clients can also be represented by the same firm in other legal areas (i.e.,
mergers and acquisitions). Lastly, a client knows that its representative lobbying firm makes campaign contributions to legislators and that these contributions provide increased access to all lobbyists of that firm (Austen-Smith,
1995). Taken together, there is ample qualitative evidence to assume that market ties in the lobbying industry operate at both the individual and firm levels of
analysis. The question as to whether lobbyists own their client relationships,
we believe, is an empirical one that we explicitly test in our analysis.
Dependent Variable
Our dependent variable, lobbyistclient relationship dissolution, is a dichotomous variable indicating the termination of a relationship between a lobbyist
and client. A relationship dissolution is defined as a market tie that existed in
3
Chapter 305, Texas Government Code.
268
year t but not in any year between t + 1 and the end of the observation period
(2009). We did not code a gap in years between lobbying activity between a
lobbyist and client as a dissolution because the Texas legislature meets biennially and lobbying activity is significantly lower in off-session years. Thus only
the final occurrence of the lobbyistclient dyad in the database was coded as
dissolved, and other prior occurrences of the lobbyistclient dyad were coded
as ongoing. All lobbyistclient entries in 2009 were considered right censored,
and as a result, no dissolutions were coded in 2009. In the final dataset, there
were 9,600 dissolutions.
Independent Variables
We measured lobbyist departure as a dichotomous variable that indicated
when a lobbyist left one firm and joined another. The variable equals 1 for the
last year that a lobbyist worked for a particular firm before appearing in the
dataset associated with another firm, as a sole practitioner, or with any other
entity captured in the dataset. As with the dependent variable, all entries for
2009 were considered right censored, and we coded no lobbyist departures in
that year. Each firm in the dataset was coded with a unique identification number, including self-employment, which was used as the basis for comparison
for coding the firm-change variable.
Relationship tenure measured the duration of the relationship between each
lobbyistclient dyad and was a means to measure the potential impact of the
depth of the relationship between lobbyist and client. Many of the lobbyist
client relationships last for more than a single year, generating fees for lobbyists
over a number of years and leading to more-intimate exchange relationships.
For example, if a lobbyistclient dyad first appears in 2002, we coded the relationship tenure value as 1 for that year, and if the next appearance of the
lobbyistclient dyad is in 2004, we coded the relationship tenure variable as 3
for that year. Client load was measured as the number of unique clients a lobbyist services in a given year. Any potential issues associated with double
countinggiven the potential for more than one activity report filed by a lobbyist
for any one client in a particular yearwere eliminated, as the source material
from the Texas Ethics Commission contains only one record per year for each
lobbyistclient relationship. The natural log of the client count was computed to
accommodate an uneven distribution. Client focus accounts for the level of time
and attention each client receives from its lobbyist in any year when compared
with other clients. For each lobbyist, we created a client relationship focus measure for each year by computing the percentage of each clients fees of the
focal lobbyists total fees for that year. A higher percentage in a year indicates
that the client received a higher share of the lobbyists time and attention.
To explore the relationship sharing of any exchange manager, we coded lobbyists as working on a team when more than one lobbyist from the same firm was
serving the same client in a focal year. For the purposes of coding this variable,
the composition of the teams did not matter, as teams may change members
over the course of a firms relationship with a client. This coding method
appeared to be the most direct measure of relationship sharing, as lobbyists file
activity reports and registration forms with the Texas Ethics Commission on an
individual basis.
269
Control Variables
Individual-level controls. Lobbyists are compensated on a traditional time
and materials basis, and lobbyist fees per year, or total fees per year for any
one lobbyist, can be considered a proxy for a lobbyists quality. A lobbyist with
higher-than-average total fees either serves a larger number of clients, commands higher fees from clients, or spends more hours working for any one client than the average lobbyist. Regardless, higher fees are a strong indication of
a lobbyists quality of service. Given that lobbyists annual registration statements record fees only in ranges, we used the midpoint of each of the 15 fee
ranges to compute fee-related data. We computed the natural log of the fee
total to accommodate an uneven distribution.
As a means of evaluating the relative levels of experience at a specific firm
for each of the lobbyists in the dataset, we computed lobbyistfirm tenure as
the duration of a lobbyistfirm relationship in the dataset using the same formula as used to calculate relationship tenure. We do not have the data to measure a lobbyists overall industry experience, as the registration process is done
annually and no historical or biographical information is required of each lobbyist.
Unlike other segments of the professional services sector, the lobbying
industry has no published ranking of lobbyists performance or market share at
the state level. As seen in various research into investment banking performance (Podolny, 1993), the annual or quarterly rankings of banks and bankers
based on deal volume, market share, and fees are widely disseminated, easily
interpretable indications of performance (Shipilov, 2006). To gain further insight
into lobbyists performance in our dataset, we generated a leading lobbyist measure that was coded when a lobbyists total annual fees were among the top 25
in Texas for each year of a rolling two-year window. We coded the leading lobbyist measure in the final year of each of the two-year rolling analysis periods.
Though many of the lobbyists in our dataset are part of larger firms (see the
firm type variable below), a number are sole practitioners. Given the lobbying
industrys low barriers to entry and low operating capital requirements, many
professionals operate in the industry as sole practitioners (often referred to as
single shingles). We coded a control variable, sole practitioners, to account
for the presence of single-practitioner businesses in our dataset. A single shingle firm cannot experience a mobility event but can add employees over time,
after which a manager mobility event becomes a viable option. We have
excluded from our dataset the single shingles that remained sole practitioners throughout the duration of our sampling time frame. Comparing the
fees per client generated by the lobbyist in the focal year, we coded the largest
client per year for each lobbyist in the dataset, which serves as a useful control
for the overall amount of attention that a lobbyist gives to a client. In the event
that two or more clients fees qualified as the largest fee for that focal year,
both of the clients generating those fees were coded as largest client.
Firm-level controls. We added several variables to our analysis to account
for firm-level causes of market tie dissolution that have been highlighted in previous research. Firm size, in particular, has been demonstrated to have a large
and robust effect on market tie dissolution (Levinthal and Fichman, 1988;
Broschak, 2004), so we included several measures to account for the role of
270
firm size in our analysis. Firm clients per year, the number of unique clients per
year for each firm, serves as an effective control for the size and load of each
focal firm in the dataset. As the type of lobbyist varies across our dataset, the
number of clients per firm varies significantly. Firm fees per year also serves as
a valuable control for firm size and was calculated as the sum total of fees
billed by all of the lobbyists at a firm in a given year. We computed the natural
log of these two size variables because they both demonstrated right-skewed
distributions. Finally, as a further evaluation of firm size and the presence of
each firm in the marketplace, we computed lobbyist count by firm per year.
Though the relationship between a lobbyist and client may deepen over time
and generate greater trust, the relationship between a client and lobbying firm
can also engender feelings of commitment and trust at the firm level (Gulati,
1995). To investigate any potential impact on dissolution, we included a variable
for firmclient relationship tenure, measured as the duration of the relationship
between a client and a firm, regardless of which lobbyist from that firm might
be providing services to that client. Finally, we included a variable for firm failure to capture any firms that ceased operating during our sampling frame.
Unlike many state legislatures, the Texas legislature meets only every other
year. We created a dummy variable, legislative session, to indicate the years in
which the legislature met. In our sampling frame, the legislature met in 2001,
2003, 2005, 2007, and 2009. Lobbying activities occurred in all years of the
dataset, but a control for the biennial nature of the legislative calendar in Texas
seemed appropriate for our study in the event clients decided to suspend lobbying activities in years with no formal legislative activity.
In regard to market exchange conditions, lobbying firms that exclusively service only one client operate differently than firms with multiple market ties.
Most single-client firms are special interest groups, corporations, or public
advocacy groups, such as the Texas Library Association or the Beer Alliance of
Texas, LLC, that lobby on behalf of one representative organization. Tie dissolutions between these firms are much less likely because the lobbyists are not
actively looking to take on additional clients and their client is not looking to
move that business to another firm. To identify firms that may be servicing only
one client, we coded a dichotomous variable, single-client firm, to capture firms
with only one client in a year. Approximately 1 percent of all records in the dataset are single-client firms.
Given the variety of firms in the dataset, we created dichotomous variables
indicating membership in one of three categories of firm types: attorneys/law
firms, lobbying firms/legislative consultants, and corporate/not-for-profit advocates. Each of the dichotomous variablesfirm type attorneys, firm type lobbying firm, and firm type corporatewas coded for each year a firm appeared in
the dataset through a firm-by-firm analysis of the function of each firm entry.
Though all three firm types conduct lobbying activities, the mobility of
exchange managers in the groups may differ. Attorneys at law firms and lobbyists at dedicated lobbying firms could be expected to be more mobile than
employees of not-for-profit advocates or corporate lobbyists. To construct the
strictest test of our hypotheses, we excluded the corporate/not-for-profit advocates from our final dataset. The composition of the final dataset is as follows:
lobbyists (51 percent of total records) and attorneys (49 percent).
Although embedded relationships between exchange managers and clients
may be expected to reduce the likelihood of market tie dissolution, clients may
271
attempt to distribute their business among various providers to create competition for their services (Baker, Faulkner, and Fisher, 1998). To account for the
impact of these competitive forces on market tie dissolution, we created a variable, firms by client count, to track the number of lobbying firms employed by
a client in any year. The mean number of lobbying firms hired by each client
firm is 2.1 with a standard deviation of 3.5. Approximately 59 percent of the client firms in our sample employ only one lobbyist firm in a year, while 22 percent employ two lobbying firms, 9 percent employ three lobbying firms, 4
percent employ four lobbying firms, and 6 percent employ five or more lobbying firms in a year.
Estimation Procedure
Given the dichotomous nature of our dependent variable and the potential
endogeneity concerns with modeling mobility, we used a weighted logistic
regression model to test our hypotheses. One of the primary methodological
issues for mobility research is endogeneity through selection bias, namely that
the mobility patterns of employees are not random but are endogenously determined by existing regression equation covariates. This hinders claims of causal
inference due to biased and inconsistent regression coefficients. To address
this issue, we used a propensity-score estimator (Rosenbaum and Rubin, 1984)
to calculate each lobbyists propensity for mobility based on our control variables. We graphically verified that the distribution of propensity scores for lobbyists who departed (the treatment group) overlapped with scores for lobbyists
who stayed with their firms (the control group), and we used the NearestNeighbor matching procedure (Becker and Ichino, 2002) to search the control
group for an observation that was closely similar (based on control variables) to
each treated observation. These propensity scores were inverted into odds and
used to reweight the treatment and control observations to equalize the distribution of the control variables between both groups. Thus we used propensityscore weights to approximate the test of randomization used in experimental
designs and to make the treatment and control groups appear as if they were
randomly assigned (Nichols, 2007: 517). Additionally, we used fixed effects at
the individual lobbyist level to account for any unobserved heterogeneity
among the lobbyists.
Table 1 reports the means, standard deviations, and correlations among all
variables for this study. Given the large sample size, a great majority of correlations are significant at the p < .05 level. Variance inflation factors (VIFs) for
each predictor variable were calculated across the models as a test for collinearity (Menard, 2002). All VIF scores were below the recommended ceiling of
ten (Chatterjee and Hadi, 2006). As a further robustness check, we estimated
our models using random effects, but the Hausman test suggested that the
fixed-effects estimates were more appropriate given the nature of our sample
(Cameron and Trivedi, 2009).
RESULTS
Controls
Table 2 reports results from our logistic regression modeling of the chance of
dissolution of the lobbyistclient relationship. Model 1 presents the effects of
272
our control variables on lobbyistclient relationship dissolution. As expected,

the occurrence of a Texas legislative session significantly reduces the likelihood
of tie dissolution, as both lobbyists and their clients consider the year of a legislative session a critical time to pursue their influence programs. The interorganizational effects on interpersonal relationships are in the expected directions.
Clients with long-tenured relationships with lobbying firms are less likely to dissolve their relationships with individual lobbyists. In line with previous embeddedness research, the results suggest that firm size, represented by lobbyist
count by firm, increases the likelihood of market tie dissolutions (Broschak,
2004). Lobbyists at law firms are more likely to lose their client relationships
Table 1. Descriptive Statistics and Pearson Correlations (N = 44,982)
Variable
Mean S.D.
10
1. Lobbyistclient rel. dissolution

.21 .41
2. Lobbyist fees per year*
12.88 1.36 .06
3. Lobbyist firm tenure
5.56 2.72 .00
4. Leading lobbyist
.09 .29 .00
5. Sole practitioner
.06 .24 .02
6. Largest client
.31 .46 .07
7. Firm clients per year*
4.78 1.33 .10
8. Single client firm
.00 .04 .01
9. Firm fees per year*
14.59 1.29 .08
10. Firm client relationship tenure
3.79 2.22 .23
11. Lobbyist count by firm
7.75 7.58 .09
12. Legislative session
.56 .50 .18
13. Firms by client count
1.96 2.27 .03
14. Firm typeattorneys
.51 .50 .04
15. Firm failure
.02 .15 .03
16. Lobbyist departure
.08 .27 .14
17. Relationship tenure
3.42 2.18 .30
18. Client load*
3.28 .96 .12
19. Relationship focus
.11 .16 .05
20. Relationship sharing
.83 .38 .06
21. Lobbyist dep Relationship tenure
.25 1.02 .03
22. Lobbyist dep Client load
.27 .95 .13
23. Lobbyist dep Relationship focus
.01 .05 .11
24. Lobbyist dep Relationship sharing
.06 .24 .13
.13
.38
.03
.41
.29
.07
.57
.02
.03
.01
.00
.09
.03
.03
.06
.55
.50
.08
.04
.05
.07
.02
.11
.11
.18
.27
.01
.21
.29
.31
.09
.02
.05
.11
.24
.41
.10
.07
.08
.17
.24
.16
.21
.05
.15
.02
.01
.15
.01
.10
.06
.03
.19
.01
.01
.12
.14
.14
.02
.03
.02
.03
.01
.04
.36
.14
.37
.04
.23
.02
.06
.01
.06
.00
.03
.09
.05
.33
.01
.01
.01
.03
.04
.05
.13
.00
.02
.00
.00
.01
.05
.04
.07
.21
.12
.01
.04
.05
.02
.03
.13
.80
.02
.73
.03
.10
.15
.04
.04
.12
.76
.41
.36
.01
.09
.05
.08
.12
.00
.03
.00
.00
.00
.03
.01
.00
.12
.18
.04
.00
.01
.00
.01
.05
.52
.02
.04
.00
.05
.04
.11
.61
.39
.30
.03
.07
.05
.07
.06
.06
.01
.06
.10
.09
.72
.01
.03
.23
.02
.08
.04
.04
Variable
14
15
16
17
11
12. Legislative session

13. Firms by client count
14. Firm typeattorneys
15. Firm failure
16. Lobbyist departure
17. Relationship tenure
18. Client load*
19. Relationship focus
20. Relationship sharing
21. Lobbyist dep Relationship tenure
22. Lobbyist dep Client load
23. Lobbyist dep Relationship focus
24. Lobbyist dep Relationship sharing
.08
.10
.28
.07
.03
.20
.37
.08
.15
.01
.07
.02
.05
12
13
.00
.02 .09
.02 .01
.08 .03
.08 .03
.01 .07
.04 .06
.01 .02
.08 .05
.09 .02
.00
.05
.07 .02
.05
.01
.39
.05 .00 .03
.05 .00
.05
.04 .01 .00
.05 .01 .01
.04 .41 .84
.00
.40 .97
.01
.14 .56
.01 .39 .89
18
.03
.06 .67
.09 .27
.11 .04
.03 .10
.05 .08
.02 .07
p < .05.
* These variables are logged.

19
20
21
22
23
.23
.02 .00
.03 .00 .82
.23 .03 .40 .44
.01 .12 .76 .89 .46
273
Table 2. Weighted Logistic Regression Models of Lobbyistclient Relationship Dissolutions

with Lobbyist Departure*
Variable
Model 1
Lobbyist departure
Relationship tenure
Client load (log)
Relationship focus
Relationship sharing
Lobbyist departure
Relationship tenure
Lobbyist departure
Client load
Lobbyist departure
Relationship focus
Lobbyist departure
Relationship sharing
Individual-level controls
Lobbyist fees per year (log)
0.22
Lobbyist firm tenure
0.19
Leading lobbyist (flag)
Firm-level controls
Sole practitioner (flag)
0.16
Firm fees per year (log)
0.69
Firm client relationship
0.62
tenure
Lobbyist count by firm
0.08
Single client firm (flag)
Firm typeattorneys
0.93
Firm failure (flag)
0.73
Client-level controls
Largest client (flag)
0.07
Firms by client count
0.07
Legislative session (flag)
1.67
Constant
13.58
Observations
44,982
Log likelihood
4.1E + 08
Model 2
2.21
1.20
0.41
0.41
0.56
Model 3
(0.28) 3.26
(0.11) 0.91
(0.15) 0.36
(0.46) 0.25
(0.22) 0.48
0.46
Model 4
(0.34) 5.50
(0.12) 1.19
(0.16) 0.66
(0.56) 0.22
(0.23) 0.51
(0.12)
Model 5
(0.65) 1.74
(0.11) 1.19
(0.15) 0.35
(0.43) 1.41
(0.22) 0.55
Model 6
(0.29) 2.49
(0.11) 1.25
(0.14) 0.28
(0.61) 0.46
(0.21) 0.58
(0.44)
(0.12)
(0.13)
(0.52)
(0.31)
0.93 (0.20)
4.34 (1.03)
0.03
(0.40)
(0.07) 0.08
(0.10) 0.02
(0.22) 0.14
(0.09) 0.21
(0.11) 0.05
(0.10)
(0.02) 0.42 (0.04) 0.36 (0.10) 0.41 (0.04) 0.41 (0.04) 0.43 (0.04)
0.51
(0.29) 0.51
(0.41) 0.54
(0.29) 0.01
(0.29) 0.52
(0.29)
(0.16)
(0.09)
(0.05)
0.17
(0.42) 0.66
(0.46)
0.06
(0.14) 0.01
(0.22)
0.19 (0.06) 0.17 (0.06)
(0.01) 0.03
2.13
(0.08) 0.34
(0.15) 1.87
(0.14)
(0.02)
(0.24)
(1.04)
0.42
0.02
1.26
1.26
44,289
2,159.7
0.12
(0.43)
0.06
(0.13)
0.19 (0.06)
(0.02) 0.01
(1.73) 1.54
(0.20) 0.41
(0.24) 1.93
(0.02) 0.03
(1.69) 3.01
(0.21) 0.20
(0.31) 1.80
(0.15)
(0.02)
(0.22)
(2.22)
(0.49)
(0.02)
(0.21)
(2.18)
0.24
0.02
1.16
1.42
44,289
2,144.8
0.42
0.03
1.37
1.17
44,289
2,132.4
0.59
(0.43)
0.16
(0.14)
0.19 (0.05)
(0.01) 0.03
(1.75) 3.11
(0.19) 0.38
(0.23) 1.82
(0.14)
(0.02)
(0.21)
(2.08)
0.36
0.03
1.34
0.57
44,289
2,143.0
omitted
0.15
(0.13)
0.19 (0.05)
(0.01) 0.02
(0.01)
(1.71)
omitted
(0.18) 0.36 (0.17)
(0.24) 1.95 (0.22)
(0.17)
(0.02)
(0.21)
(2.21)
0.38
0.02
1.17
2.73
41,547
2,031.1
(0.15)
(0.02)
(0.19)
(2.21)
p < .05; p < .01.

* Robust standard errors are in parentheses.
than are lobbyists at lobbying firms. At the individual level, lobbyists are more
likely to lose clients the longer they have been employed at their firm.
Exchange Manager Departure
Model 2 reports the results of testing hypothesis 1 that, controlling for all factors, firm-level attachment would be stronger than individual-level attachment
and thus market ties between a lobbyist and client are more likely to dissolve
when that exchange manager departs his or her employing firm. This hypothesis is fully supported. The lobbyist departure measure generates a positive
and significant coefficient, indicating a strong positive effect of departure on
market tie dissolution. The main effect of departure on market tie dissolution is
robust, remaining positive and significant in all of the models in our analysis.
This effect is supported by a difference-in-difference analysis, in which we
274
used the propensity scores to match each lobbyist who departed his or her firm
(treatment group) with a lobbyist who stayed at the firm (control group). The
average treatment effect for the departed lobbyists when compared with their
matched control was positive and significant (ATE = 0.297, p < .01), indicating
that lobbyists who depart are 30 percent more likely to lose their client relationships than similar lobbyists who stay at their firms.
Relationship Depth
Hypotheses 25 each test the moderating effect of a third variable on the relationship between lobbyists mobility and the likelihood of that individual-level
exchange relationship dissolution. Testing these hypotheses requires interpreting interaction coefficients, the straightforward interpretation of which can be
misleading when using logistic regression (Hoetker, 2007). We computed and
graphed the true interaction effect (Ai and Norton, 2003) of each moderator
variable for every observation in the data set. While the calculated marginal
effects of logit model interaction terms should not be the primary basis for
hypothesis testing, they do provide an informative interpretation of the implications of the estimated model (Greene, 2010). We analyzed these observations
graphically for two reasons: (1) to verify that the calculated marginal effect
appears to remain at nonzero values over the range of predicted values for market tie dissolution, and (2) to verify that the sign of the calculated marginal
effect does not change over the range of predicted values (Wiersema and
Bowen, 2009). Tables 36 list the calculated marginal effect of manager departure on market tie dissolution of each moderating variable one standard deviation above and one standard deviation below the sample mean.
Table 3. The Effect of Relationship Tenure on the Marginal Effect of Firm Change on the
Probability of Lobbyistclient Tie Dissolution
Value of moderator relationship tenure
Low
Mean
High
Marginal effect on firm change*

0.339
0.393
0.044
* Computed at sample mean value of firm change.
Table 4. The Effect of Client Load on the Marginal Effect of Firm Change on the Probability of
Lobbyistclient Tie Dissolution
Low
Mean
High

0.450
0.463
0.366
275
Hypothesis 2 suggests that although departing exchange managers are

more likely to lose their client relationships, this effect is negatively moderated
by the length of their relationship with the client. This hypothesis is supported.
As seen in model 2 of table 2, the main effect for relationship tenure is negative, supporting the findings in the embeddedness view, which states that the
longer an exchange manager works with a client, the less likely that tie is to
dissolve. In model 3, the interaction term for lobbyist departure and relationship
tenure measure is negative and significant, indicating a lower likelihood of tie
dissolution for longer exchange relationships at the individual level. This finding
is supported by the analysis of true interaction effects. Table 3 lists the marginal effects of departure on market tie dissolution at low, medium, and high
levels of relationship tenure while holding all other predictors at their mean values (Aiken, West, and Reno, 1991). At low and medium levels of relationship
tenure, a departing lobbyist is 33.9 percent and 39.3 percent, respectively,
more likely to lose a client. The marginal effect drops to 4.4 percent for lobbyists who have a high level of tenure with their clients. Additionally, the true
interaction effect does not appear to be different from zero at the highest levels
(90th percentile and above) of relationship tenure, which suggests that departure does not have a significant effect for lobbyists with the longest client
tenures in the sample. The marginal effects are also plotted in figure 1, which
clearly shows a decreasing slope for the marginal effect moving from low to
high levels of tenure.
The results do not support hypothesis 3, that an exchange managers client
load will positively moderate the effect of departure on market tie dissolution,
and in fact suggest the opposite effect. As indicated in model 2 of table 2, the
main effect for client load on tie dissolution is significant and positive, suggesting that lobbyists with large client loads are, in general, more likely to experience tie dissolutions. This finding is consistent with research on the effects of
client load and market tie dissolution at the firm level (Broschak, 2004). The
interaction of client load and lobbyist departure, however, is negative and significant (model 4), indicating a weakening of the effect between departure and
market tie dissolution for lobbyists with increasing levels of client load. As
shown in table 4, the calculated marginal effects of lobbyist departure on tie
dissolution suggest a threshold interaction effect for increasing values of client
Figure 1. Relationship tenure moderating the effect of lobbyist departure.
1.00
Dissolution
0.80
0.60
0.40
0.20
0.00
No Departure
High Relationship Tenure
Departure
Mean Relationship Tenure
Low Relationship Tenure
276
Figure 2. Client load moderating the effect of lobbyist departure.

1.00
Dissolution
0.80
0.60
0.40
0.20
0.00
No Departure
Departure
High Client Load
Mean Client Load
Low Client Load
load. Lobbyists with low and mean client loads experience a similar marginal
increase in the likelihood of tie dissolution upon departure, 45.0 percent and
46.3 percent, respectively. This effect drops to 36.6 percent for lobbyists with
high levels of client load. The plotted graph of the marginal effects in figure 2
shows how the ordering of marginal effects reverses from the no-departure
condition to the departure condition. Lobbyists with the largest client loads are
the most likely to lose clients when stationary but the least likely to lose clients
when they change firms. These results suggest that, regardless of mobility,
lobbyists with a large client load experience more tie dissolutions than lobbyists
with small client loads. But lobbyists with low and medium client loads experience a significantly greater increase in tie dissolutions when they leave a firm
than lobbyists with high client loads. Thus there appears to be a client-load
threshold, and for lobbyists who surpass this threshold, increased client load
becomes a signal of a lobbyists quality and status (Greenwood et al., 2005)
and reduces the likelihood that he or she will lose clients when departing a
firm.
Relationship Focus
Hypothesis 4 stated that although departure increases market tie dissolution,
this effect will be negatively moderated for clients who get more attention from
an exchange manager. The findings do not support this hypothesis and in fact
suggest the opposite effect. The main effect of relationship focus is not statistically significant. The interaction term for lobbyist departure and relationship
focus, however, is positive and significant (model 5), suggesting that the more
focus a lobbyist gives to a client in comparison with other clients, the more
likely he or she is to lose that client upon departure from the current firm. The
plot of the interaction effect, shown in figure 3, suggests that the moderating
effect of relationship focus is fairly large. As seen in table 5, lobbyists are 22.1
percent more likely to lose their low-focus clients (one standard deviation
below the mean level of focus) if they leave their current firm, whereas they
are 33.2 percent more likely to lose their high-focus clients (one standard deviation above the mean level of focus) when they leave their current employer.
277
Figure 3. Relationship focus moderating the effect of lobbyist departure.

1.00
Dissolution
0.80
0.60
0.40
0.20
0.00
No Departure
High Rel. Focus
Departure
Mean Rel. Focus
Low Rel. Focus
Table 5. The Effect of Relationship Focus on the Marginal Effect of Firm Change on the
Low
Mean
High

0.221
0.286
0.332
These results suggest that clients who receive a large proportion of an

exchange managers attention do not weight the interpersonal relationship as
highly as they weight the interorganizational tie. The high-focus clients may also
attract greater attention from the firms management, as they consume greater
portions of exchange managers time, which may facilitate greater efforts at
the firm level to retain these clients when an exchange manager departs. We
examine this counter effect in more depth in the Discussion section.
Relationship Sharing
Hypothesis 5 stated that sharing a client relationship with an exchange manager at the same firm positively moderates the effect of lobbyist departure on
relationship tie dissolution. As sole practitioners are unable to serve clients as
part of a team, we ran these models on a subset of observations with the sole
practitioners removed, which lowered our observations from 44,982 to 41,547.
The baseline model for the logistic regression, model 2 in table 2, suggests that
the likelihood of tie dissolution is lower for lobbyists who share their client relationships than for those who manage the relationship alone. In model 6 of the
logistic regression results, the interaction term for lobbyist departure and relationship sharing is not significant, suggesting that lobbyists are neither more
nor less likely to lose a shared client than a non-shared client when they depart.
The analysis of the true interaction effect, as shown in table 6 and the plot in
figure 4, implies that there may be a small marginal difference in the likely
278
Table 6. The Effect of Relationship Sharing on the Marginal Effect of Firm Change on the
Value of moderator relationship sharing*
Marginal effect on firm change
No team
Team
0.522
0.603
* Sample excludes sole practitioners.

Computed at sample mean value of firm change.
Figure 4. Relationship sharing moderating the effect of lobbyist departure.

1.00
Dissolution
0.80
0.60
0.40
0.20
0.00
No Departure
Team
Departure
No Team
dissolution of shared versus unshared client ties. The marginal increased likelihood of an exchange manager losing a singularly serviced client relationship is
52.2 percent, and it is higher, 60.3 percent, when that client relationship is
shared with another exchange manager.
Robustness Checks
We conducted a variety of robustness checks to address alternative explanations for our results.
Reverse causality of mobility. One primary concern about lobbyist mobility
was the possibility of reverse causality, or that we are observing lobbyists who
change firms to follow clients that independently chose to move their lobbying
business to an alternate firm. We examined our data to determine whether
lobbyistclient relationships existed after a client left one firm for another firm.
To do this, we searched for relationships in which a connection between a lobbyist and client existed in time t at one firm, ceased to exist in time t + 1, and
was then reconnected in time t + 2 at a different firm. We used the one-year
interval between the movement of the client and the reestablishment of the
lobbyistclient relationship to make a stringent test of the pull of the client to
279
the new firm. We did not discover any pull effect of clients attracting their lobbyists to new firms. A clients decision to change lobbying firms may indicate
the need for a new strategic direction for its lobbying strategy or a new set of
legislative and executive branch contacts that the prior lobbyist could not provide. Either of these reasons reduces the likelihood of a client pulling its lobbyist to a new lobbying firm.
Year dummies. As an additional set of controls, we conducted our regression analysis using a set of year dummies. To avoid multicollinearity, we
excluded the legislative session control variable from this regression. The
results for our hypothesized effects were not substantively changed.
Left censoring. Our dataset suffers from potential left censoring in that
many of the lobbyistclient relationships were already in existence at the beginning of our observation period. To address this issue, we eliminated all records
for lobbyistclient relationships that existed in 2001, the first year of our observation period, creating a subset of approximately 28,100 records for lobbyist
client relationships that started after 2001. The outcomes of this analysis are
consistent with our original results.
Unexpected departure. In some cases, lobbyists may exit a firm and not
reappear in the dataset, because they left the industry, relocated to a market
outside of Texas, or died (Palmer, 1983). Though it is difficult to analyze the
effects on lobbyistclient relationships of lobbyists who leave the industry or
leave Texas, we do have the ability to analyze the client movement for clients
of lobbyists who died during the sampling period. In our dataset, we identified
17 lobbyists who died at some point in our sample, with nine of these lobbyists
functioning as sole practitioners. In their final year in the dataset, the eight lobbyists who were not sole practitioners served a total of 30 clients. Of these 30
clients, 26.7 percent, or eight clients, ended their lobbying activities altogether
and do not appear again in our sample. For the clients that continued lobbying
activities, 77.3 percent, or 17 clients, maintained their relationship with the firm
of the deceased lobbyist, while 22.7 percent, or five clients, discontinued their
relationship with the firm of the deceased lobbyist. Although the sample size is
small, it does appear that a significant percentage of clients faced with the
unplanned departure of their exchange manager chose to preserve their firm
relationships.
DISCUSSION
By focusing on the decisions that clients make after an exchange managers
departure, this study provides evidence about which aspects of individual-level
embedded relationships lead clients to become attached to an exchange manager, as well as to the firm. The results highlight how individual-level characteristics of exchange relationships operate both to stabilize and destabilize
interorganizational relationships, and thus it complements firm-level research
on exchange relationships (Baker, Faulkner, and Fisher, 1998; Gulati and
Gargiulo, 1999; Subramani and Venkatraman, 2003). By highlighting the interpersonal components of interorganizational exchange relationships, our study
280
also extends current theories about managers mobility and may help explain
some of the contradictory results on the impact of managers departure on
firms. In the research on exchange ties, interorganizational attachment is theorized to operate at both the interpersonal and interorganizational levels
(Seabright, Levinthal, and Fichman, 1992: 126). Though we acknowledge that
interorganizational attachment is one of the leading factors predicting market
tie dissolution, we explored what interpersonal relationship characteristics
would lead to comparatively strengthening the interpersonal attachment
between exchange managers and clients. Basing our arguments on the
embeddedness perspective, we proposed that individual-level embeddedness,
characterized by the depth, focus, and sharing of market relationships, can
serve to either intensify or attenuate the attachment that the client feels
toward the exchange manager as compared with the firm overall. Our results
generally support an embeddedness logic of exchange, but some results run
directly counter to embeddedness explanations (i.e., relationship focus) and
instead suggest an alternative model of exchange based on power and
resource dependence. Moreover, our analysis suggests that the characteristics
of individual-level embeddedness differentially affect market tie relationships
when exchange managers remain stationary versus when they change firms.
Our study contributes to research on the embeddedness perspective by
emphasizing the interpersonal aspect of relational exchange and addresses the
call for research that explores the interplay between individual- and firm-level
embeddedness (Fichman and Levinthal, 1991; Broschak, 2004).
The results of our analysis on relationship depth provide mixed support for
the embeddedness view. On one hand, clients are less likely to dissolve their
relationships with departing exchange managers if those relationships are longstanding. On the other hand, lobbyists with large client loads, who have less
time to spend working on each client relationship, are less likely to lose a client
relationship when they move to a new firm. This finding runs counter to the
embeddedness argument that individual-level attachment should increase
when exchange managers spend more time interacting with each of their
clients.
We also found mixed support for the embeddedness perspective in our analysis of how relationship focus affects market tie dissolution. We argued that
due to time and resource constraints, the amount of comparative attention that
lobbyists pay to each client should influence the level of individual-level attachment that develops. We found that lobbyists who divide their time equally
among their clients are less likely to lose them, which loosely aligns with an
embeddedness logic, as clients that receive little attention are more likely to
feel neglected and to dissolve the market tie. But exchange managers who
concentrate their time and effort toward one client are more likely to lose that
client than managers who spread their time out more evenly. Taken together,
the results on relationship depth and focus suggest that market ties in our context are operating under an alternative model of exchange based on a power
logic as opposed to an embeddedness logic.
When power imbalances exist between exchange partners, the more powerful party will often exploit the weaker party for economic gain (Dore, 1983;
Provan and Skinner, 1989). This exploitative behavior includes using adversarial
tactics such as structuring contracts to maximize ones own benefit and purposefully keeping relationships at arms length to maintain a power advantage
281
(Mudambi and Helper, 1998). This is particularly true for the dissolution of market ties, as buyers and sellers have different interests in the stability of market
ties (Baker, Faulkner, and Fisher, 1998). Previous research suggests that the
risk of market tie dissolution increases when buyer firms have more power
than seller firms and, conversely, that the risk of dissolution decreases when
seller firms have more power than buyer firms. Our study highlights how this
interest struggle within interorganizational market relationships (Swedberg,
1999) occurs at the individual level. An individual exchange manager with a
large client roster should garner a strong reputation in the market and the corresponding benefits, such as reduced learning costs and the ability to charge a
premium for services (Greenwood et al., 2005). Our results suggest that a
highly reputable exchange manager may also experience no significant client
loss when he or she moves between rival firms. Thus, though the embeddedness view would suggest that a larger client load would lead to higher dissolution, the findings of this study suggest a countering explanation based on a
power logic of interorganizational market ties.
Similarly, our unexpected findings on the impact of relationship focus on
market tie dissolution align with a power logic explanation. An exchange managers relationship focus may be the result of the power imbalance with the client (Casciaro and Piskorski, 2005), in which a powerful clients demands
cannot be ignored. In these cases, the level of interpersonal attachment to the
client is low despite the high proportion of time exerted working on the clients
issues. Though fully analyzing the antecedents of relational embeddedness is
outside the scope of this study, we hope our analysis has identified a new factor, relationship focus, as worthy of investigation in future research.
Lastly, the results from our models imply that sharing an exchange relationship may also affect the likelihood of dissolution, though only slightly. When
stationary, lobbyists who share a client relationship are significantly less likely
to lose that client. When lobbyists leave their firms, however, they may be
more likely to lose a shared client relationship than a solely served client relationship. This implication highlights how the effects of embeddedness can
operate differently depending on the nature of work within the firm and suggests specific ways in which firms, whether intentionally or not, manage their
client relationship portfolios via the interpersonal relationships of their exchange
managers. In a professionalized workforce, autonomy and temporal flexibility,
defined as the ability of employees to control the timing of their own work, are
deeply held norms (Von Nordenflycht, 2010). Allowing exchange managers to
work independently provides this autonomy, but it also creates constraints on
temporal flexibility (Briscoe, 2007). Variations in work practice among exchange
managers increase the specificity of the exchange managerclient relationship,
which in turn limits the ability of an exchange manager to leverage coworkers
to complete certain tasks. Thus every client issue must be addressed by a single exchange manager, which reduces his or her temporal flexibility and hinders
his or her individual performance.
When exchange managers work as part of a client team, however, they are
able to share the client workload. This has the dual benefit of applying more
resources to a clients issue and providing each exchange manager the temporal flexibility necessary for other tasks, such as professional development,
separate client work, or worklife balance. Thus exchange managers working
in client teams may offer better service to their clients even if they have less
282
control over the relationship (Rogan, 2014). Our results suggest that this
improved service may lead to higher levels of client attachment at the firm level
when compared with attachment at the exchange manager level.
Our study focuses on the mechanisms underlying the relationships between
individual exchange managers and their clients, but it also lends insight into
how the dissolution of lobbyistclient relationships affects the firms to which
they belong. One central issue faced by professional services firms is how to
manage their human assets such that they provide benefits when employed at
the firm but dont adversely affect the firm when they depart (Coff, 1997).
Firms have a vested interest in helping exchange managers develop close
embedded relationships with clients, but not so close that the exchange managers come to own the clients. Based on our findings, an exchange managers client relationship tenure poses a paradoxical embeddedness threat to
firms: the same characteristic that prevents a client from dissolving a tie when
an exchange manager is in a firms employi.e., a long tenure with the
clientalso increases the likelihood of losing that client if the exchange manager moves to another firm. Conversely, an exchange managers client relationship load and client relationship sharing operate in alignment with the firms
interests regardless of the exchange managers mobility. Exchange managers
with low client loads retain clients when stationary and are less likely to take clients with them if they depart. Clients jointly serviced by more than one
exchange manager are also less likely than solely serviced clients to dissolve
their relationships when the exchange managers depart or stay. Taken
together, our results suggest how employers benefit from client relationships
structured in ways that decrease the perceived inimitability of the exchange
manager and refocus it on the relationship with the firm (Lovett, Harrison, and
Virick, 1997).
A few limitations of this study are worth noting. First, though lobbyist data
are publicly available, their client data are not. Thus we have attempted to
examine individual-level embeddedness with data from only one side of the
relationship dyad. Previous research has shown that client-side manager mobility also has a significant impact on market tie dissolution (Broschak, 2004). We
believe that these effects, however, are complementary to the effects we
detail in this study. In other words, though our data may provide insights into
only the seller side of the exchange, our findings align with research on the
buyer side. A useful focus of future work would be to investigate how
individual-level embeddedness operates within client firms and affects market
ties.
Second, certain aspects of the context may affect the generalizability of our
results. We find only rare instances in which a lobbyist changes firms and the
client then decides to split its business between the departed firm and the
departed lobbyists new firm. This is not a rare occurrence in other professional
service industries such as patent law, in which clients normatively spread their
business around to multiple competing law firms (Somaya, Williamson, and
Lorinkova, 2008). Thus research on other industries should look specifically at
this potential outcome of exchange managers mobility.
Third, clients in the lobbying industry do not always measure the value of a
lobbyists services through time spent on an issue but, rather, use the overall
success of the firms intended influence on legislative issues as the measure
of a lobbyists value. A lobbyist may not need to spend inordinate amounts of
283
time wielding influence on behalf of a client to be successful. Though this is a

valid concern that was voiced in interviews we conducted with lobbyists, the
outcome of lobbying efforts is also a difficult variable to measure (Hillman,
Zardkoohi, and Bierman, 1999; McKay, 2012). Success may be measured by a
variety of outcomes, including a bills passage or alteration or the nomination of
a state official. For this reason we chose to analyze the tangible economic
proxy of billing to help us understand the nature of exchange relationships in
this domain.
Fourth, a boundary condition of our study is that it is most relevant to
knowledge-intensive industries. The lobbying profession is similar to other professional service industries in that the inputs are intangible and the outputs are
complex and customizable (Greenwood et al., 2005). Based on these criteria,
results from our context are applicable to other prominent professional service
industries such as advertising, public relations, legal services, and consulting.
This poses a limit to the generalizability of our results, but we agree with the
current argument in the literature that professional service firms are distinct in
ways that will be increasingly relevant to non-PSFs (Von Nordenflycht, 2010:
155). For example, the recent shift in the organization of technical work suggests that the costs of capital assets and transportation have decreased significantly, making the value of human capital increasingly important (Colombo and
Grilli, 2005). The findings of our study should be applicable to other businessto-business contexts in which exchange is driven by a combination of organizational and individual factors. The value of human capital investment in technology firms, for example, makes the mobility of individual managers relevant
within the manufacturing sector as well (Agarwal et al., 2004; Chatterji, 2009).
We encourage future research in contexts outside of the professional services
sectors, which is likely to provide further insights into the impact of embeddedness on economic activity.
Our study provides support for the embeddedness view of interorganizational market ties while emphasizing its micro-foundations. Findings show that
the role of exchange managers within the embeddedness perspective is complex in part because individuals represent a valuable yet highly mobile resource
in the firm. Similar to findings in interorganizational research, we find there are
potential hazards of having individuals engaged in overembedded relationships
with clients (Uzzi, 1997). Firms must balance each clients perception of the
relationship as equally embedded between the firm and its representative
exchange managers. Our study provides some insight into one component of
embedded relationships. Several extensions to our research can benefit from
combining our findings with recent research on the impacts of human capital
on mobility (Campbell et al., 2012), as well as propositions on how relational
embeddedness dynamics can be attenuated by formal contracts (Lazzarini,
Miller, and Zenger, 2008). These extensions would improve our understanding
of how firms navigate relationships with internal and external stakeholders to
engage in profitable economic activity.
Acknowledgments
We are grateful to Ethan Burris, Benjamin Campbell, Craig Crossland, Andy Henderson,
Rory McDonald, Flannery Stevens, Maxim Sytch, three anonymous ASQ reviewers, and
Editor Jerry Davis for their comments and suggestions on earlier versions of this paper.
284
We thank the Texas Ethics Commission for its assistance with data collection and several Texas state lobbyists for many useful discussions.
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Authors Biographies
Y. Sekou Bermiss is an assistant professor of management at the McCombs School of
Business, University of Texas at Austin, 2110 Speedway, Austin, TX 78712 (e-mail:
ysb@austin.utexas.edu). His research explores the micro-foundations of competitive
advantage by studying the antecedents and consequences of manager mobility and
how different forms of employee movement affect a firms ability to compete with
rivals. He received his Ph.D. in management and organizations from Northwestern
University.
Bruce E. Greenbaum is an assistant professor of management at the Orfalea College
of Business, California Polytechnic State University, 1 Grand Avenue, San Luis Obispo,
CA 93407 (e-mail: bgreenba@calpoly.edu). His research focuses on micro-foundational
effects on firm decision making and corporate strategy, including the influence of CEO
personality on firm innovation and new product development. He received his Ph.D. in
strategic management from the University of Texas at Austin.
Corrigendum
Administrative Science Quarterly

2016, Vol. 61(2)NP24NP25
The Author(s) 2016
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Bermiss, Y. S., and B. E. Greenbaum

2015 Loyal to whom? The effect of relational embeddedness and exchange
managers mobility on market tie dissolution. Administrative Science Quarterly, 61:
254290. (Original DOI:10.1177/0001839215619198). First published OnlineFirst on
November 19, 2015, available at http://asq.sagepub.com/content/early/2015/11/19/
0001839215619198.abstract.
This article has been corrected since it was initially published OnlineFirst.
Incorporating Greenes (2010) suggestions for interpreting marginal effects,
the article was revised to reflect a more precise interpretation of the interaction effects proposed in hypotheses 25 by removing the statistical tests of
the marginal effects presented in tables 36. The marginal effects (tables 3
6) and interaction graphs (figures 14) are presented for illustrative purposes
to assist the reader in evaluating the implications of the interaction results
presented in models 36 in table 2. Text in the Method and Discussion sections was revised to correspond to the changes to the tables. The corrections
to the article prevent readers from potentially misinterpreting the partial interaction effects; however, these corrections do not materially change the
results of the study nor the inferences derived from the marginal effects
analysis.
The following changes were made to the online version before the article
was included in the June 2016 print issue of the Administrative Science
Quarterly, 61: 254290:
On page 21, in the paragraph under the heading Relationship Depth, Thus
to properly interpret our results was deleted and the sentence begins with
We computed. . .; in the next line, and z-statistic was deleted and a new
sentence was inserted after the period: While the calculated marginal effects
of logit model interaction terms should not be the primary basis for hypothesis
testing, they do provide an informative interpretation of the implications of the
estimated model (Greene, 2010). In the following sentence, the interaction
effect was statistically significant was changed to the calculated marginal effect
appears to remain at nonzero values, and the sign of the interaction value was
changed to sign of the calculated marginal effect. Tables 36 list the value
and significance was changed to Tables 36 list the calculated marginal effect.
. . . In tables 3 and 4, the columns headed z-statistic have been deleted, as
have bullets denoting the significance of the marginal effects at p < .01.
On page 22, the sentence beginning Additionally, the true interaction effect
is not significant has been changed to Additionally, the true interaction effect
does not appear to be different from zero.
NP25
On page 24, in tables 5 and 6, the columns headed z-statistic have

been deleted, as have bullets denoting the significance of the marginal effects
at p < .01.
On page 25, the first complete sentence, We found support for our hypothesis only in the computed true interaction results, has been deleted; the sentence, The analysis of the true interaction effect, however, provides support
for our hypothesis, as shown in table 6 and the plot in figure 4, has been changed to The analysis of the true interaction effect, as shown in table 6 and the
plot in figure 4, implies that there may be a small marginal difference in the
likely dissolution of shared versus unshared client ties.
On page 28, Lastly, we found that sharing an exchange relationship also
affects the likelihood of dissolution, though only slightly, has been changed to
Lastly, the results from our models imply that sharing an exchange relationship may affect the likelihood of dissolution, though only slightly. The sentences, When lobbyists leave their firms, however, they are more likely to
lose a shared client relationship than a solely served client relationship. This
finding highlights how the effects. . . . have been changed to When lobbyists
leave their firms, however, they may be more likely to lose a shared client relationship than a solely served client relationship. This implication highlights how
the effects. . . .
On page 33, the following reference was added: Greene, W., 2010 Testing
hypotheses about interaction terms in nonlinear models. Economics Letters,
107: 291296.

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Administrative Science Quarterly

Y. Sekou Bermiss1 and Bruce E. Greenbaum2

The emergence of the knowledge economy has changed the relationship

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practices (Bidwell et al., 2013) and employment stability (Powell and

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Administrative Science Quarterly 61 (2016)

(Granovetter, 1973) to the phenomenon of exchange managers mobility and

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relationships, we define embeddedness at the individual level as the process

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Administrative Science Quarterly 61 (2016)

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Bermiss and Greenbaum

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visit with partners personally, engaged in fine-grained information transfer, and

Administrative Science Quarterly 61 (2016)

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Administrative Science Quarterly 61 (2016)

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Chapter 305, Texas Government Code.

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our control variables on lobbyistclient relationship dissolution. As expected,

1. Lobbyistclient rel. dissolution

12. Legislative session

* These variables are logged.

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Table 2. Weighted Logistic Regression Models of Lobbyistclient Relationship Dissolutions

p < .05; p < .01.

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Marginal effect on firm change*

* Computed at sample mean value of firm change.

Marginal effect on firm change*

* Computed at sample mean value of firm change.

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Hypothesis 2 suggests that although departing exchange managers are

Low Relationship Tenure

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Figure 2. Client load moderating the effect of lobbyist departure.

High Client Load

Mean Client Load

Low Client Load

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Figure 3. Relationship focus moderating the effect of lobbyist departure.

Low Rel. Focus

Marginal effect on firm change*

* Computed at sample mean value of firm change.