Business Groups after Incidents of Wrongdoing: Exploring the Effectiveness of Differentiated Versus Aligned Impression Management Tactics

We use attribution theory to understand how people evaluate a company when another company in the same business network does something wrong. In studying business groups, we find that when one company affiliated with a group commits wrongdoing, the strategies used by other affiliated companies to manage how they are evaluated are only effective when they use tactics that differ from those used by the deviant firm. Specifically, results from three experimental studies suggest that affiliated firms should use differentiated technical and ceremonial impression management tactics to help evaluators distinguish between innocent and deviant companies. Our findings also reveal the conditions for such successful differentiation, demonstrating that it is particularly effective when companies have a history of wrongdoing but can backfire if external stakeholders become aware that these actions are intentionally coordinated. Our findings provide novel insights into the impression management literature by exploring the dynamic interplay between the impression management strategies of connected but noncompeting organizations. We also contribute to the business group literature by revealing the delicacy of coordinating affiliates.