Organizations Non-Gratae? The Impact of Unethical Corporate Behavior On Interorganizational Networks

We investigate whether the size and quality of the networks of firms engaging in illegal/unethical acts are affected by those acts. Using legitimacy, status, and resource dependence theories, we hypothesize that size will be affected and quality will deteriorate. Using a sample of 208 firms, we find that network size increases, but network quality deteriorates as the result of unethical acts. We also find the more illegitimate the act, the greater the deterioration in quality.