Advocacy or Adversary Response Strategy to an Alliance Partner’s Reputational Crisis?

Abstract

It has been established that one firm’s misconduct can have reputational consequences for alliance partners, as well as whole industries. Whilst responses to the latter have been examined, strategies to limit negative spillovers from an alliance partner’s reputational crisis have received little prior consideration. This article identifies two preliminary alternative response strategies; advocacy or adversary. Using the context of an environmental scandal, and drawing on theory around the notion of escalation of commitment, we formulate hypotheses on when each is employed. Empirical verification is pursued through a policy capturing method, with a sample of Norwegian CEOs. Among the study’s contributions is extending literature on the influence of third parties on reputation damage repair.