Abstract
Conflicting evidence exists regarding the response of JV partners to focal firm misconduct: some firms chose to avoid the risk of negative spillovers by ending the inter-partner relationship, while others are more likely to maintain the relationship. In this study, we analyze whether the status of focal firms, generated from alliance networks, may motivate such behavioral differences. Drawing on insights from the stigma anxiety and status literature, we hypothesize and find that firm status may have a curvilinear effect on JV dissolution following misconduct. We tested our hypotheses on a sample of firms in the computer industry from 2000 to 2018. Our results indicate that a low to a moderate level of focal firm status can be a burden for JV dissolution as it increases the visibility of misconduct; while a moderate to a high level of firm status serves as a buffer for JV dissolution as it increases the power of focal firms’ resource control. These findings reveal the “double-edged sword” nature of firm status following misconduct. Furthermore, we propose that the effects of firm status will be moderated by the misconduct publicity and brokering position of focal firm.
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