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Moving Beyond Firm Boundaries: A Social Network Perspective on Reputation Spillover

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Abstract

A change in an organization's reputation has consequences and implications that may go beyond that organization's boundaries. Drawing on social network and stakeholder research, we introduce the construct of reputation spillover to examine the process in which a reputational crisis occurred to one organization may spillover to other organizations that are either proximate or structurally equivalent to the focal organization. We argue that this process occurs mainly through the perceptions and reactions of stakeholders and is contingent upon the network centrality of the focal organization, the network structure of the industry and the past reputation of potential recipient organizations.

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Notes

  1. A different version of reputation spillover has been examined previously (Mayer, 2006) as a function of a firm's performance. In this view if a firm performs poorly in an exchange the result may be a spillover to its future business with negative consequences.

  2. By distance we refer to path length of a network: the number of steps required to get from one organization to another.

  3. It is important to note that the concept of network centrality focuses on an individual organization's location within a network. So it is an organization-level construct. By contrast, the notion of a centralized network captures how a network is structured based on the density of ties among all member organizations, so it is a network-level construct.

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Acknowledgements

We would like to thank Albert A. Cannella Jr., David L. Deephouse, Javier Gimeno, Peter S. Ring, Metin Sengul and Guest Editors Michael Barnett and Andy Hoffman, for their helpful comments and discussions. An earlier version of this paper was published in the Best Paper Proceedings of the Academy of Management (August 2002).

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  1. Carroll School of Management, Boston College, Chestnut Hill, MA, USA

    Tieying Yu

  2. Department of Management, Texas A&M University, College Station, TX, USA

    Richard H Lester

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Yu, T., Lester, R. Moving Beyond Firm Boundaries: A Social Network Perspective on Reputation Spillover. Corp Reputation Rev 11, 94–108 (2008). https://doi.org/10.1057/crr.2008.6

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