Getting Away With It: How Do Firms Avoid Damage to Their Network After Allegations of Misconduct?

How do firms avoid losing network centrality following accusations of organizational misconduct? In this paper, we argue that while accusations generally lead to a decrease in the network position of the focal firm, there are certain strategies firms can use to mitigate this relationship. We examine the impact of status volatility, showing that firms that maintain a more stable network position are affected less by accusations, and expectancy violation, arguing that firms that act in line with negative expectations are less likely to receive punishment by their peers. We test our predictions in the setting of corporate venture capital investments by firms operating in the U.S. IT industry (1985-2018) and show that under certain conditions, firms can ‘get away’ with accusations of misconduct.