In this study, we examine the relationship between cognitive similarity among competitors about the state of competition and their propensity to form technology alliances. Drawing from the embeddedness perspective, we argue that when the cognitive similarity is low, it will be reflective of an uncertain competitive environment and induce firms to form alliances. We further argue that membership of business associations and the develop ment of market intermediaries in the city where a company is based will nfluence the level of competitive uncertainty and moderate the above rela tionship. We test our hypotheses on survey data collected from Chinese managers and find support for the hypotheses.