Hazardous Connections: Conflictual Ties, Common Intermediary, and Tie Dissolution

Abstract

Although the positive role of a common third-party organization in the formation and the maintenance of relationships between two organizations is well documented, recent studies reveal that connections to a common third-party organization may sometimes be perceived as liabilities. In this paper, I explore interorganizational conflict between two organizations as a key driver that propels them to negatively evaluate their existing connections to the common third-party organization. Conceptualizing interorganizational ties as informational conduits, I argue that connections to a common third-party organization may serve as indirect channels of leaking private and sensitive information to the opponent organization in on-going conflict. I hypothesize that organizations will subsequently engage in a defensive strategy to sever their connections to a common third-party organization when it is also connected to the opponents in conflict. I test my idea in the empirical context of corporate litigation events among U.S. public firms and the subsequent termination of their relationships with intermediary firms in the market for political influence (i.e., lobbying firms) between 1998 and 2018.